TaxTMI 
TaxTMI 
2008 (9) TMI 287
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....sessment years involved are assessment years 1968-69, 1970-71, 1971-72, 1983-84 and 1984-85. 3. Tax Appeal No. 598 of 2008 is in respect of penalty under Section 18(1)(c) for the assessment year 1984-85. Tax Appeal No. 599 of 2008 is in respect of penalty under Section 18(1)(c) for the assessment year 1983-84. Tax Appeal No. 600 of 2008 is in respect of penalty under Section 18(1)(a) for the assessment year 1968-69. Tax Appeal No. 601 of 2008 is in respect of penalty under Section 15B for the assessment year 1970-71 and Tax Appeal No. 602 of 2008 is in respect of penalty under Section 15B for the assessment year 1971-72. The question is identical in all these tax appeals except change of section. Since the common issue is involved in all these Tax Appeals, the same are being disposed of by this common judgment and order. 4. The brief facts of the case are that the deceased assessee, namely, late Shrimant F. P. Gaekwad, had furnished the returns of wealth during his life time declaring his net wealth for the relevant assessment year as under. Assessed wealth is also indicated below. Assessment year New Wealth as per return Assessed wealth 1970-71 4,04,....
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....en the view that since Section 15B and Section 18 are not included in Section 19(3) penalty cannot be levied on the legal representative of the deceased assessee. 8. Being aggrieved by the order of the learned Commissioner of Wealth Tax (A), the Revenue took up the matter before the Tribunal and the Tribunal vide its order dated 30.4.2007 confirmed the order of learned Commissioner, Wealth Tax (A) and dismissed the appeals filed by the Revenue. After careful consideration of the rival submissions, facts and circumstances of the case and the decision relied upon before the Commissioner of Income-Tax (A) and in view of the legal provisions and authorities of various High Courts referred to in the order of the Commissioner of Wealth Tax (A) the Tribunal did not find any infirmity in the order of the Commissioner of Wealth Tax (A) and hence the said order was confirmed. 9. It is this order of the Tribunal which gives rise to the present Tax Appeals. 10. Mr. K. M. Parikh, learned Standing Counsel appearing for the Revenue has submitted that Section 19(1) clearly states that, where a person dies, his executor, administrator or other legal representative shall be liable to pay ou....
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.... well as referred to in the order of the Tribunal are in favour of the assessee and consistent view is taken by all the High Courts that the penalty cannot be levied on legal representative. Such levy of penalty under Section 18(1)(a), 18(1)(c) or 15B is neither covered under Section 19(1) nor in Section 19(3) of the Wealth Tax Act, 1957. 13. From the plain reading of Section 19(1) of the Wealth Tax he has submitted that this Section does not call for any other interpretation even the word "any sum" included in Section 19(1) does not include penalty. The Section clearly states that where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge, the wealth-tax assessed as payable by such person, or any sum, which would have been payable by him under this Act if he had not died. Admittedly in the case of assessee penalty orders are passed after the death of the deceased assessee and hence the word "any sum" cannot cover the penalty levied after the death of the deceased assessee. He has further submitted that Sub Section (3) of Section....
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....eshwar Prasad v. Commissioner of Wealth-tax, reported in (1980) 124 ITR 77, wherein it is held that Chapter V of the W. T. Act, 1957, deals with liability to assessment in special cases and by Section 19 provides for situations where a legal representative is either liable to proceedings or is liable to pay the wealth-tax or any sum. Liability of a legal representative to assessment or liability to pay has to be positively found within the statutory provisions of Chapter V. If in a given situation there is no statutory provision for initiation or continuance of proceedings against a legal representative, they cannot either be initiated or continued. Liability to assessment, to tax, interest, fine, penalty, etc, is different from liability to pay. The phrase "which would have been payable under the Act if he had not died" occurring in Sec. 19 refers not to liability to assessment but liability to pay in consequence of an order passed under the Act. The existence of an order passed under the Act is a prerequisite to accrual of liability to pay. Liability to pay continues till payment is made. Sub Section (1) of Sec. 19 is confined to liability to pay and it casts upon the legal repre....
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....lidly be continued after his death against his legal representative. 17. Mr. Shah has further relied on the decision of the Madhya Pradesh High Court in the case of Commissioner of Wealth-tax v. Abdul Mazid Khan, reported in (1984) 147 ITR 53, wherein it is held that a reading of Section 18 of the W. T. Act, 1957 shows that penalty is imposed on such person, which means the person who has concealed the particulars of assets or furnished inaccurate particulars of the same. Section 18 does not provide for continuation of penalty proceedings against the legal representatives of such person. Section 19(1) which deals with the liability of a legal representative inheriting the estate of the deceased who is liable for payment of wealth tax, does not provide for the continuation of penalty proceedings against the legal representative when the assessee dies before the proceedings are concluded. The omission of Section 18 from Section 19(3) shows that Section 18 cannot be made applicable to a legal representative. Further, the definition of assessee in section 2(c) does not provide that the legal representative of an assessee would be deemed to be an assessee for all purposes under the A....
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....e on whom assessment has been made under Section 19 of the W. T. Act, 1957. Sub Section (3) of Section 19 makes it abundantly clear that though the provisions of Sections 14, 15 and 17 apply to an executor, administrator or other legal representative, Section 18 is not applicable. The omission of Section 18 in Sub Section (3) of Section 19 is quite significant, which clearly shows that intention of the legislature that in case where action would be taken under Sub Section (2) of Section 19 of the Act, the question of imposing any penalty on the legal representative cannot arise. 20. Mr. Shah further relied on the decision of the Allahbad High Court in the case of Ved Prakash Narang v. Commissioner of Wealth-tax, reported in (1988) 172 ITR 184, wherein it is held that Section 19 and 19A of the Wealth-tax Act, 1957, are applicable to two different situations. Section 19A is confined to cases where an assessee dies after executing a will and appointing an executor. Section 19(1) is applicable to a situation where a person was alive on the valuation date and was assessed to tax but died later. Section 19(2) provides for a case where a person dies without furnishing the return or aft....
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....alia, for imposing penalty against a legal representative, Sub Section (2) of Section 159 of the Income-tax Act is contextually different from sub-section (3) of section 19 of the Wealth-tax Act. The position is not similar so far as proceedings under section 18 of the Act are concerned. Penalty cannot be levied on the legal representative. 22. Based on the aforesaid decisions of the various High Courts and relevant statutory provisions of Section 19(1) and (3) of the Wealth Tax Act Mr. Shah has strongly urged that no substantial question of law arises out of the order of the Tribunal and all these Appeals therefore deserve to be summarily dismissed. 23. Having heard learned Standing Counsel Mr. K. M. Parikh appearing for the Revenue and Mr. Manish J. Shah, learned advocate appearing for the respondent assessee and having gone through the orders passed by the authorities below and further having considered the relevant statutory provisions contained in the Wealth Tax Act, 1957 as well as legal authorities referred to and relied upon by the parties before the Court, we are of the view that in absence of any contrary decision on the issue and that there is no scope for any othe....
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....n 19(1), it is not enough that the penalty proceedings should be initiated during the life time of the deceased. It is also necessary that such penalty proceedings must result into penalty orders during his life time. No penalty orders have been passed during the life time of the deceased and hence it cannot be said that any sum of penalty would have been payable by the executor, administrator or other legal representative under this Act, on the death of the deceased, if he had not died. 26. Sub Section (3) of Section 19 reads as under: "19(3) The provisions of sections 14, 15 and 17 shall apply to an executor, administrator or other legal representative as they apply to any person referred to in those sections." 27. The plain reading of this Sub-Section makes it clear that the legislature have purposefully not included either Section 18 or Section 15B of the Act. It is also in consonance with the mandate of Sub-Section (1) of Section 19. Under Sub-Section 19(1) neither the penalty can be levied on the executor, administrator or other legal representative nor it can be recovered from him. There is no question of incorporating Section 18 or Section 15B of the Act under Sub-....
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....esentative of an assessee would be deemed to be an assessee for all purposes under the Act, unlike Section 159(3) of the Income-tax Act which says that the legal representative of the deceased shall for the purposes of this Act, be deemed to be an assessee. (viii) The omission of Section 18 in Sub-Section (3) of Section 19 is quite significant, which clearly shows that intention of the legislature that in case where action would be taken under Sub-Section (2) of Section 19 of the Act, the question of imposing any penalty on the legal representative cannot arise. (ix) Sections 14, 15 and 17 contemplate and authorise initiation as well as continuance of proceedings for determining wealth-tax on the basis of the return as well as on the basis escapement of wealth against, inter alia, a legal representative. The provisions of section 18 therefore do not come within the ambit of Section 19. 29. The solitary decision of the Patna High Court in the case of Rani H. R. Laxmi (Late) through B. K. Singh v. Commissioner of Wealth Tax, [1997] 228 ITR 372 on which heavy reliance was placed by the learned Standing Counsel for the Revenue has no application to the facts of the present cas....