1982 (4) TMI 59 - HC - Wealth-tax

Successor officer not obligated to issue fresh notice under Wealth-tax Act; Tribunal wrong in deleting penalties. Department awarded costs.

Commissioner Of Wealth-Tax Versus Umrao Lal

Commissioner Of Wealth-Tax Versus Umrao Lal - [1982] 136 ITR 49, 30 CTR 269, 11 TAXMANN 41 Issues Involved:1. Obligation of the successor officer to give notice under section 39 of the Wealth-tax Act.2. Correctness of the Income-tax Appellate Tribunal in deleting penalties imposed under section 18(1)(a) of the Wealth-tax Act.Detailed Analysis:1. Obligation of the Successor Officer to Give Notice under Section 39 of the Wealth-tax Act:The primary issue was whether the successor officer was obligated to give a notice under section 39 of the Wealth-tax Act to the assessee before continuing and concluding the penalty proceedings. The court examined the statutory provisions and judicial precedents to determine the necessity of such notice.Section 39 of the Wealth-tax Act allows a succeeding authority to continue proceedings from the stage left by the predecessor. The proviso grants the assessee the right to demand reopening of the previous proceedings or a rehearing before any order is passed. The court clarified that it is not implicit in section 39 that the successor officer must always intimate the assessee of his intention to continue the proceedings. Such intimation is required only in specific circumstances, such as when the assessee has submitted an explanation or requested an oral hearing. In this case, the assessee neither appeared nor provided any explanation after receiving the show-cause notice, thus negating the need for further notice by the successor officer.2. Correctness of the Income-tax Appellate Tribunal in Deleting Penalties Imposed under Section 18(1)(a) of the Wealth-tax Act:The second issue was whether the Income-tax Appellate Tribunal was correct in deleting the penalties imposed for the assessment years 1970-71 and 1971-72 under section 18(1)(a) of the Wealth-tax Act. The Tribunal had accepted the assessee's contention that the successor officer should have provided a fresh opportunity of hearing, adhering to the principles of natural justice.The court scrutinized the Tribunal's reasoning and found it lacking a solid basis. The Tribunal's observations regarding the need for a fresh opportunity to avoid hardship were deemed speculative. The court emphasized that the statutory requirement under section 18(1)(a) mandates a reasonable opportunity of being heard, which had already been provided when the original show-cause notice was served. The assessee's failure to respond or appear negated any further obligation on the part of the successor officer.The court also referred to relevant judicial precedents, including decisions from the Kerala, Orissa, and Patna High Courts, which consistently held that the burden of proving reasonable cause for delay in filing returns lies with the assessee. The court concluded that the Tribunal's decision to delete the penalties was erroneous, as the assessee had not availed the opportunity to present any explanation.Conclusion:The court answered both parts of the reframed question in the negative, ruling in favor of the Department and against the assessee. The successor officer was not obligated to provide a fresh notice under section 39, and the Tribunal's deletion of penalties was incorrect. The Department was entitled to costs assessed at Rs. 250.