Translate
Text Highlighter

Bookmark

PDF

Share

Report a problem
AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • — Mr. B. B. Ahuja, Advocate.
  • — Mr. B. B. Ahuja, Advocate.
Judges
  • Mr. Justice Charanjit Talwar
Acts
  • section 14 (1) of the Wealth Tax Act, 1957, (hereinafter called the Act).
  • provisions of section 18 (2-A) of the Wealth Tax Act
  • SECTION 273 INCOME TAX ACT
  • section 14 (2) of the Wealth Tax Act)
  • SECTION 148 INCOME TAX ACT
  • Nadu Entertainment Tax Act
  • section 14 (2),
Are you a practicing lawyer?
Enhance your digital presence and reach by creating a Casemine profile.
Upload pleading to use the new AI search
Click here to upload
Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • — Mr. B. B. Ahuja, Advocate.
  • — Mr. B. B. Ahuja, Advocate.
Judges
  • Mr. Justice Charanjit Talwar
Acts
  • section 14 (1) of the Wealth Tax Act, 1957, (hereinafter called the Act).
  • provisions of section 18 (2-A) of the Wealth Tax Act
  • SECTION 273 INCOME TAX ACT
  • section 14 (2) of the Wealth Tax Act)
  • SECTION 148 INCOME TAX ACT
  • Nadu Entertainment Tax Act
  • section 14 (2),
See more information ...
Smart Summary

Factual and Procedural Background

The petitioner, Shri A. N. Sarvaria (since deceased), challenged an order dated 30th December 1974 passed by the Commissioner of Wealth-tax, New Delhi, which refused to reduce or waive penalties imposed by the Wealth Tax Officer. The penalties related to alleged late filing (and, in one year originally, concealment) of wealth tax returns for assessment years 1965-66 to 1971-72.

Key factual points (as stated in the opinion):

  • Returns for the years 1965-66 to 1970-71 were filed by the petitioner on 29th December 1970; petitioner contends he had not received any notice under section 14(1) of the Wealth Tax Act, 1957.
  • The return for 1971-72 was filed on 8th July 1971 after receipt of a notice dated 16th June 1971 under section 14(2) of the Act; the petitioner did not challenge the penalty for 1971-72 in the writ petition.
  • After filing returns the petitioner paid wealth tax under section 15-B and the declared net wealth was accepted by the Wealth Tax Officer as per assessment orders (Annexures A-1 to A-7).
  • The Wealth Tax Officer initiated penalty proceedings under section 18(1)(a) (late filing) for assessment years 1965-66, 1966-67 and 1968-69 to 1971-72. For 1967-68 a proceeding under section 18(1)(c) (concealment) was initially started but later dropped by the Inspecting Assistant Commissioner; penalty proceedings under section 18(1)(a) were directed by the Commissioner thereafter.
  • On 29th December 1973 the petitioner filed an application under section 18(2A) of the Act before the Commissioner seeking waiver of minimum penalty on the ground that the returns were voluntarily filed and that he had made full disclosure of net wealth.
  • The Commissioner, by the impugned order of 30th December 1974, held that the returns were not voluntary, referring to a departmental survey report dated 22nd December 1970 which had earlier brought the assessee's affairs to the Department's notice.
  • The respondents did not file a counter-affidavit to the rule nisi; during argument the Revenue raised a preliminary objection about maintainability of a single writ petition challenging multiple assessment years.

Legal Issues Presented

  1. Whether the returns filed by the assessee for the assessment years 1965-66 to 1970-71 were "voluntary" within the meaning of section 18(2A) of the Wealth Tax Act (pari materia with section 273A of the Income-tax Act) so as to justify waiver of the minimum penalty.
  2. Whether a single writ petition challenging the refusal to waive penalty in respect of multiple assessment years was maintainable, or whether separate writ petitions were required for each year (preliminary objection raised by Revenue).

Arguments of the Parties

Petitioner's Arguments (as recorded)

  • The petitioner filed returns for 1965-66 to 1970-71 on 29th December 1970 without having received notices under the Act, and thus those returns were voluntary.
  • Returns were followed by payment under section 15-B and the declared net wealth was accepted by the Wealth Tax Officer; no concealment was found in the assessments.
  • Counsel for the petitioner (Mr. Ahuja) relied on decisions of various High Courts (including Kundan Lal Behari Lal and Madhukar Manilal Modi) to argue that returns filed before the service of notice or filed voluntarily even if prompted by advice/suggestion can still be voluntary if there was full disclosure in good faith.

Respondents' Arguments (as recorded)

  • At the Commissioner level, the Revenue contended (as recorded in the impugned order) that returns filed after a departmental survey (survey report received on 22nd December 1970) could not be said to be voluntary because the survey brought the assessee to the Department's attention and the filing was motivated by that initiative.
  • At the hearing before the High Court, Revenue's counsel (Mr. Wazir Singh) raised a preliminary objection that the petitioner should have filed separate writ petitions for each assessment year rather than a single petition challenging the refusal to waive penalty across multiple years, relying on A.P. Vasudevan v. State of Madras.
  • In support of the Commissioner's finding on voluntariness the respondents relied on Hakam Singh and others v. Commissioner of Income-tax, Meerut (search/seizure facts), to submit that returns filed because the assessees were afraid of detection are not voluntary.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
A.P. Vasudevan v. State of Madras, 1978 Tax L.R. NOC 97 (1) Authority cited by Revenue for the proposition that a common order challenging multiple assessment orders cannot be assailed via a single writ petition (maintainability issue). The court observed that reasons for that decision were not given in the report and held the preliminary objection to be misconceived and raised too late. The court declined to dismiss the petition on that ground.
Madan Mohan & another v. The District Excise and Taxation Officer, Bhatinda & another, (1964) 15 S.T.C 648 Authority supporting that a petition assailing assessments for more than one year may be entertained where grounds are identical. The court relied on this authority to reject the Revenue's late preliminary objection and to justify entertaining a single petition covering multiple assessment years because the grounds were the same.
Hakam Singh & others v. Commissioner of Income-tax, Meerut, (1980) 124 I.T.R 228 Held that returns filed after search and seizure (where books showed taxable income) were not voluntary; returns prompted by fear of detection are not voluntary. The Revenue relied on this case to support the Commissioner's finding. The court distinguished Hakam Singh on facts, noting that survey (here) was not equivalent to search and seizure and therefore the reasoning in Hakam Singh did not apply to the present facts.
Kundan Lal Behari Lal v. Commissioner of Wealth Tax U.P. & another, (1975) 98 I.T.R 359 Principle that a notice is not "issued" to a person unless served on him; a return filed before actual service of notice can be treated as voluntary for the purposes of waiver under section 18(2A). The court cited and treated this decision as supporting the petitioner's contention that returns filed before service of notice (even if a notice had been dated earlier) can be voluntary. The decision weighed in favour of finding voluntariness for the years in question which were filed without notice.
Madhukar Manilal Modi v. Commissioner of Wealth Tax Gujarat-V & another, (1978) 113 I.T.R 318 Held that filing a return on advice, suggestion or at the behest of authorities (other than a formal notice under section 14(2)) does not necessarily make the return non-voluntary; the word "voluntary" must be read with "made full disclosure of his net wealth". The court noted this authority as supporting the view that "voluntary" must be read in context with full disclosure. The court also noted that Hakam Singh had distinguished this Gujarat decision on its facts.

Court's Reasoning and Analysis

The court's analysis proceeded in the following steps, relying strictly on the materials and authorities cited in the opinion:

  1. Preliminary Maintainability Objection: The court considered the Revenue's late preliminary objection that separate writ petitions should have been filed for each assessment year (citing A.P. Vasudevan). The court observed the absence of reasons in the Vasudevan report and relied on Madan Mohan to hold that a petition assailing assessments for multiple years with identical grounds need not be dismissed as incompetent. Given that the respondents had not filed a counter-affidavit and raised the objection late, the court held it would be unjust to entertain it at that stage.
  2. Nature of the Commissioner's Finding: The Commissioner had rejected the petitioner's application under section 18(2A) on the ground that returns filed on 29th December 1970 were prompted by a departmental survey report dated 22nd December 1970 — that is, the affairs of the assessee had come to the Department's notice and the returns were filed only after that survey.
  3. Comparison with Authorities on Voluntariness: The court noted two lines of authority relied upon by the parties:
    • Hakam Singh: where returns filed after search/seizure and where seized books showed taxable income, the courts held the returns were not voluntary because they were prompted by fear of detection. The respondents relied on this case to support the Commissioner's order.
    • Kundan Lal and Madhukar Manilal Modi: authorities holding that a return filed before actual service of a notice may be voluntary, and that filing prompted by advice/suggestion (as opposed to formal notice or seizure) does not necessarily make a return non-voluntary, particularly when there is full disclosure.
  4. Distinction between Survey and Search/Seizure: The court emphasized that the departmental survey report (which noted landholdings and other assets) could not be equated with search and seizure (and the consequent production of seized books). The court found it cannot be held that the survey alone imposed such a constraint or fear as to make a full disclosure involuntary.
  5. Application of Facts to Legal Standard: The court observed that the returns for 1965-66 to 1970-71 were filed without notice, the petitioner made full disclosure of net wealth, and the assessment orders did not detect concealment. On these facts, and having distinguished the Hakam Singh line of cases, the court concluded that the returns for those years were voluntary within the meaning of section 18(2A).
  6. Remedial Disposition: Because the court concluded the Commissioner's finding that the returns were not voluntary was incorrect (as to the years 1965-66 to 1970-71), it set aside the impugned order insofar as those years are concerned and remanded the matter to the Commissioner for fresh decision on the petitioner's application dated 29th December 1973 in respect of those years.

Holding and Implications

Holding: The petition is allowed; the impugned order of the Commissioner dated 30th December, 1974 is set aside in so far as it relates to assessment years 1965-66 to 1970-71.

Direct consequences and implications (as expressed in the opinion):

  • The matter is remitted to the Commissioner of Wealth Tax for fresh consideration and decision of the petitioner's application dated 29th December, 1973 (Annexure 'D') insofar as it relates to assessment years 1965-66 to 1970-71.
  • No order as to costs was made.
  • The opinion limits its reasoning to the facts before the court: the court distinguished cases based on the presence of search/seizure versus a departmental survey and grounded its decision on the absence of notice, the presence of full disclosure, and the lack of any finding of concealment in the assessments. The opinion does not purport to lay down a broader or new legal principle beyond applying existing authorities to the present facts.

Final Disposition: Petition allowed.

Show full summary ...

    Shri A. N. Sarvaria v. The Commr. Of Wealth Tax

    Charanjit Tajlwar, J.:— The petitioner Shri A. N. Sarvaria, (since expired) had challenged the legality of the order passed on 30th December, 1974, by the Commissioner of Wealth-tax, New Delhi, refusing to reduce or waive the penalty imposed on the petitioner by the Wealth Tax Officer on the ground that the returns of wealth tax for the assessment years 1965-66 to 1971-72 had not been filed voluntarily.

    2. The wealth tax returns for the years 1965-66 to 1970-71 were filed by the petitioner on 29th December 1970. According to the petitioner he had not received any notice under section 14 (1) of the Wealth Tax Act, 1957, (hereinafter called ‘the Act’). However, return in respect of the assessment year 1971-72, it is the case of the petitioner, was filed by him on 8th July, 1971, after receipt of a notice dated 16th June, 1971, under section 14 (2) of the Act. It is averred that soon after the filing of the returns the petitioner paid wealth tax on the basis of those returns as per the provisions of section 15-B of the Act. The net wealth as declared by the petitioner in the said returns, it is stated in the petition, was accepted by the Wealth Tax Officer as per assessment orders, copies of which are Annexure A-1 to A-7 to the writ petition. The Wealth Tax Officer initiated proceedings under section 18 (1) (a) of the Act for levying penalty for late filing of the returns in respect of the assessment years 1965-66, 1966-67 and 1968-69 to 1971-72. For the assessment year 1967-68, the Wealth Tax Officer initiated proceedings under section 18 (1) (c) of the Act and issued a show cause notice requiring the petitioner to state as to why penalty for concealing of wealth be not levied. This order qua the assessment year 1967-68 was however, dropped by the Inspecting Assistant Commissioner holding that there was no concealment on the part of the petitioner. Thereafter, the Commissioner of Wealth Tax acting under section 25 (2) of the Act directed that penalty proceedings under section 18 (1) (a) of the Act for late submission of return for that year be initiated. Thereafter, the petitioner by an application dated 29th December, 1973, under section 18 (2) (A) of the Act filed before the Commissioner of Wealth Tax, sought that as his wealth tax returns had been filed by him voluntarily and had been accepted penalty for late filing of those returns be not levied.
    3. The finding of the Commissioner that the returns filed were not voluntary are contained in paragraphs 4 and 5 of the impugned order, Annexure D-1 to the writ petition. It is useful to quote those paragraphs: —
    4. A perusal of the records showing that the assessee came up for survey during the course of survey operations carried out by the Department in respect of wealth-tax on agricultural properties. A survey report is on record and this was received by the W.T.O on the 22nd December, 1970. This shows the land holdings of the assessee along with his other assets, like shares and commercial plots, etc. It is only after the survey had been carried out and the affairs of the assessee noticed that he came forward and filed these returns. These returns cannot, therefore, be said to be voluntary for any of these years.
    5. Shri Sadhu Ram Aggarwal, Advocate, vehemently asserted that the filing of returns was without the issue of notices by the W.T.O That is altogether a separate condition prescribed under Sec. 18 (2A) and if that condition was satisfied, the disclosure has still to be voluntary. In this particular case, the motivating factor for the assessee to make these returns was certainly nothing other than the initiative of the Department in locating him during the course of survey. Shri Sadhu Ram further stated that the assessee paid the taxes immediately after filing the returns and that he satisfies all the other conditions. As mentioned above, the assessee has to satisfy all the conditions, and in this case he certainly does not qualify to be held as a person who came up voluntarily. As the assessee does not satisfy one of the conditions, the disclosure is rejected. In fact, there are other conditions also which the assessee does not satisfy for some of the years, like issue of notices, but it is not necessary to go into further details”.
    4. I may notice here that in the writ petition the petitioner is not challenging the levy of the penalty for late filing of the return in respect of the assessment year 1971-72. It is his own case that, that return was filed by him after the receipt of notice under section 14 (2) of the Act.
    5. I may note here another fact and that is that the respondents have chosen not to file any return to the rule nisi. However, Mr. Wazir Singh, learned counsel appearing for the Revenue, at the time of arguments took up a preliminary objection to the maintainability of the writ petition. According to him although the Commissioner passed a common order rejecting the application of the petitioner seeking quashing of the levy of penalty for the various assessment years yet the petitioner was obliged to file separate writ petition in respect of each assessment order and not a joint petition assailing the imposition of penalty in respect of all the assessment years in question. In support of his contention Mr. Wazir Singh cited A.P Vasudevan v. State of Madras, 1978 Tax. L. R. NOC 97 (1), wherein a Single Judge of the Madras High Court held that where 18 assessment orders were challenged in 18 revision petitions which were disposed of by the Commissioner appointed under the Tamil Nadu Entertainment Tax Act by a common order, a single writ petition was not maintainable challenging all those assessment orders. The reasons for arriving at this finding, however, have not been given in the report. In my view, the objection taken at the time of arguments is entirely misconceived. In the present case, as noticed above, the petitioner had filed a single application seeking waiving of the penalty imposable under section 18 (2-a) on the plea that the returns which he had filed were voluntary and that his case otherwise also fell within purview of section 18 (2-a) (a) of the Act. He was not challenging in that application the assessment orders passed. At that stage, as is clear from the facts noticed above, even the order imposing penalty, copies Annexure C-1 to C-6, dated 5th March, 1974, had yet to be passed. As noticed earlier the application was made on 29th December, 1973. However even a petition assailing the assessment of more than one years, if admitted cannot be justly dismissed as being incompetent, especially when the grounds of challenge are exactly similar. This has been held by a Division Bench of the Punjab High Court in Madan Mohan and another v. The District Excise and Taxation Officer, Bhatinda and another, (1964) 15 S.T.C 648 (2). In the present case, as noticed above, the respondents have not chosen to file a counter-affidavit. If they were so advised, they could have taken the preliminary objection in the return so that even if the principle propounded by the Madras High Court in A. V. Vasudevan's case (supra) was to be accepted for the sake of argument that the order amounts to refusal to waive penalty imposable under section 18 for different assessment years, the petitioner could have then an opportunity to meet it or file separate petition in respect of each year. The writ petition was admitted on 24th March, 1975. In my view, it is not just to entertain the objection at this late stage even if it be assumed that such an objection can be taken by the respondents.
    6. Now adverting to the reasons given by the learned Commissioner for dismissing the application of the petitioner. According to the impugned order, after the survey had been carried out by the department in respect of the wealth tax on agricultural properties, the returns filed by the petitioner on 29th December, 1970, could not be treated to be voluntary as the affairs of the assessee had come to the notice of the authorities under the Act on 22nd December, 1970, i.e, the date of the survey report. Learned counsel for the respondents in support of the contention that the order passed by the Commissioner is correct and that the petitioner was under a “constraint” to file the returns as he “was likely to be caught” and hence those returns were not voluntary, relies on Hakam Singh and others v. Commissioner of Income-tax, Meerut, (1980) 124 I.T.R 228 (3). The facts in the said case were that on 22nd November, 1973, the business premises of the petitioner in that case were searched by the Income-tax Department, and certain books were seized. Thereafter, the petitioner on 7th October, 1974, filed returns of income for the assessment years 1966-67, 1967-68, 1968-69, 1969-70, 1972-73 and 1973-74. Subsequently on 25th March, 1975, a notice under section 148 of the Income-tax Act was served on the petitioner. In due course, the Income-tax Officer initiated penalty proceedings for delay in filing the return and for not filing the estimate of advance tax under ss. 271 (1) (a) and 273 (b). Thereupon, the petitioner applied to the Commissioner under S. 273A for waiver or reduction of the imposable penalty. I may note here that the provisions of section 18 (2-A) of the Wealth Tax Act are pari materia to section 273-A of the Income-tax Act. The Commissioner dismissed the application on the finding that the filing of the return was not voluntary. He held that as admittedly the returns had been filed after the search, the provisions of section 273A were not attracted. A Division Bench of the Allahabad High Court found that the petitioner knew that according to the books seized at the search the income of the petitioner was above the taxable limit and it was only when these books came into the possession of the department that the petitioner filed returns of income. It was held, “The inference that the returns were filed because the petitioners were promoted to save themselves for the consequence of not filing the return and that they were prompted by a sense of fear does not appear to be unjustified”.
    7. The question in the said case, therefore, was whether a return filed out of sense of fear of levy of penalty or of prosecution is voluntary. Negativing the contention of the petitioner it was held in the facts of that case that the return filed were not voluntary.
    8. Mr. Ahuja, learned counsel for the petitioner, however, has invited my attention to the decisions of various High Courts in support of his argument that in the facts of the present case the Commissioner failed to exercise his jurisdiction by holding that the returns were not voluntary. His plea is that returns filed by the assessee even after the issuance of a notice under section 14 (2) of the Act but prior to its service has been held to be voluntary. [See Kundan Lal Behari Lal v. Commissioner of Wealth Tax U.P and another, (1975) 98 I.T.R 359 (4) .]. In the said case, admittedly the assessee had filed his return for the assessment years 1964-65 to 1970-71 on 2nd December, 1971. On 6th December, 1971, the assessee was served with a set of six notices under section 17 of the Act, all dated 29th November, 1971, issued by the Wealth Tax Officer calling on the assessee to file his returns for the years 1965-66 to 1970-71. The Commissioner passed the order on the assessee's application under section 18 (2A) on 7th September, 1972. He waived the penalty for the year 1964-65 as no notice under section 17 had been issued for that year but for the returns of the subsequent years he held that as the notice under section 17 had been issued prior to the submission of the returns those could not be held to be voluntary. It was held by a Division Bench of the Allahabad High Court that a notice cannot be said to have been issued to a person unless he is served with it. Therefore, an assessee who makes a full disclosure of his wealth before notice is served, is entitled to the benefit of section 18 (2A). The order of the Commissioner was accordingly set aside on the ground that he failed to exercise his discretion under the provisions of the Act.
    9. Another case cited by Mr. Ahuja is Madhukar Manilal Modi v. Commissioner of Wealth Tax Gujarat-V, and another (1978) 113 I.T.R 318 (5). The facts of that case were that the assessee filed his return of net wealth under section 14 (1) of the Act on 29th November, 1971, for the assessment year 1971-72. For the assessment years 1969-70, 1970-71 the returns were filed by him on 19th September, 1973, a few days before the assessment for 1971-72 was completed. It was the admitted case of the parties that the returns for the said two years were filed only after the assessee was asked during the course of the assessment proceedings for the assessment year 1971-72 to file those returns. The application made by the assessee to the Commissioner under section 18 (2A) praying that the minimum penalty imposable be waived, was rejected on the ground that those returns were not voluntary. A Division Bench of the Gujarat High Court has held that by the more fact that a return has been filed under the advice, suggestion or even at the behest (otherwise than by a notice under section 14 (2) of the Wealth Tax Act) it does not cease to be a voluntary return. In this judgment it has been held that though section 18 (2a) (a) uses the word ‘voluntary’, the said word has to be read with the expression “made full disclosure of his net wealth”. It has been observed that, “That condition which the legislature has imposed is that in cases where an assessee has, prior to the issue of notice to him under section 14 (2), filed a return but has not done so within the time limited by law, he must satisfy the Commissioner that he has made full disclosure of his net wealth voluntarily and in good faith. The word ‘voluntary’, therefore, has not to be read in the context of the filing of the return”.
    10. This judgment of Gujarat High Court has been distinguished on facts by the Allahabad High Court in Hakam Singh's case (supra), It was observed that the advice or suggestion of the authorities concerned to file a return for the remaining years without there being any proof that that authority had given any inducement or assurance that the penalty would be waived could be held to be anything but voluntary.
    11. In the facts and circumstances of the present case it cannot be held that merely because there was a survey of agricultural properties showing that the petitioner also owned agricultural land, he was under a ‘constraint’ to make full of his net wealth. Further, the survey report cannot, in my view, be equated with seizure of books of account of the assessee from search of his premises. The returns for the year 1965-66 to 1970-71 were filed without notice. The petitioner had made full disclosure of his net wealth. The authorities did not detect any concealment therein and, therefore, it has to be held that the returns for the said assessment years were voluntary.
    12. The result of the above discussion is that the petition is allowed and the impugned order of the learned Commissioner passed on 30th December, 1974, relating to the assessment years 1965-66 to 1970-71 is set aside. The matter is sent back to the Commissioner of Wealth Tax for decision afresh of the application dated 29th December, 1973, copy Annexure ‘D’, made by the assessee in so far as it relates to the assessment years 1965-66 to 1970-71.
    13. No order as to costs.
    Petition allowed.
    Use AI to get other relevant cases.
    Try AI Pro free for 7 days Upgrade to AI Pro

    Comments

    Shri A. N. Sarvaria v. The Commr. Of Wealth Tax
    (Nov 30, 1984)