1991 (3) TMI 13 - HC - Wealth-tax

Court clarifies limits of Commissioner's jurisdiction under section 18B for penalty reduction appeals.

The High Court affirmed the Tribunal's decision that appeals against penalty orders made by the Wealth-tax Officer were not maintainable after the ... Appeal To AAC, Penalty, Wealth Tax Issues Involved:1. Maintainability of appeals against penalty orders made by the Wealth-tax Officer after reduction by the Commissioner of Wealth-tax.2. Jurisdiction of the Commissioner of Wealth-tax under section 18B of the Wealth-tax Act, 1957.3. Interpretation of section 18B and its relationship with sections 18(2A) and 18(2B) of the Wealth-tax Act, 1957.Detailed Analysis:1. Maintainability of Appeals:The primary issue was whether the Tribunal was correct in holding that the appeals against the penalty orders made by the Wealth-tax Officer were not maintainable after the Commissioner of Wealth-tax reduced the penalties. The Tribunal concluded that 'the present appeal is not maintainable. After the order for reduction dated January 10, 1986, was passed by the Commissioner of Wealth-tax, the penalty order as passed by the Wealth-tax Officer no longer existed and as such, the Appellate Assistant Commissioner could not either confirm or cancel it.' This view was upheld by the High Court, which agreed that no appeal lies against any order passed pursuant to the order made under section 18B of the Act.2. Jurisdiction of the Commissioner of Wealth-tax:The Commissioner of Wealth-tax reduced the penalties under section 18(1)(a) of the Wealth-tax Act to the extent of 50% for each of the assessment years in question. The High Court noted that the jurisdiction of the Commissioner under section 18B is limited to the reduction or waiver of penalties and does not extend to determining the existence of reasonable cause for delay in filing returns. The Commissioner's role is confined to the quantum of penalty, not the liability itself.3. Interpretation of Section 18B:The High Court discussed the interpretation of section 18B in light of previous case law. The court referred to several decisions, including those of the Madras, Karnataka, and Madhya Pradesh High Courts, which had differing views on the matter. The High Court noted that section 18B, which replaced sections 18(2A) and 18(2B), consolidates the provisions regarding the reduction or waiver of penalties. The court highlighted that, according to the decision in Smt. Ichhabai Panchal v. CWT [1982] 137 ITR 232 (Cal), an appeal would not be competent against an order passed under section 18(2A) or any order passed in pursuance thereof. The High Court concluded that the assessee, by applying under section 18B, admits the default and seeks only the reduction or waiver of the penalty, thus precluding any further question regarding the imposition of the penalty itself.Conclusion:The High Court affirmed the Tribunal's decision that the appeals were not maintainable after the Commissioner of Wealth-tax had reduced the penalties. The court emphasized that the jurisdiction of the Commissioner under section 18B is limited to the quantum of penalties and does not extend to the determination of the existence of reasonable cause for delay. The decision is consistent with the precedent set in Smt. Ichhabai Panchal v. CWT, binding on the court.Order:The reframed question was answered in the affirmative and in favor of the Revenue, with no order as to costs.