K.A. Thanikachalam, Judicial Member -
(1.) THESE appeals are directed against the order of the AAC dated 29-11-1980. Since the questions involved in these appeals are common they are taken up together and disposed of by this common order for the sake of convenience. According to the facts of this case, originally on 30-3-1976, the WTO levied penalties under Section 18(1)(a) for the delay in filing the returns as mentioned hereunder :
Against these penalty orders, the asssesee preferred Appeals before the AAC. The AAC upheld the orders of penalty for the assessment year 1969-70, but for the other three assessment years, i.e., 1970-71, 1971-72 and 1972-73, while upholding the orders of the WTO levying the penalties, reduced the period of delay in filing the returns to 9 months, 9 months and 4 months, respectively. At the time of passing the consequential order in order to give effect to the above said orders, the WTO noticed that there was a mistake, in calculation of the penalties levied in the orders passed under Section 18(1)(a) on 30-3-1976. According to the WTO, for the assessment year 1969-70 for the delay of 41 months the penalty worked out to Rs. 2,993 as against Rs. 380 levied by him. Similarly, according to the reduced periods of delay by the AAC, as stated above, the correct penalties leviable worked out to Rs. 1,103, Rs. 2,192 and Rs. 740 for the assessment years 1970-71, 1971-72 and 1972-73, respectively.
(2.) Since according to the WTO, there was a mistake apparent from the records in calculating the penalties, he initiated action under Section 35 of the Wealth-tax Act, 1957 ("the Act"), for all these four years. The asses-see in the explanation filed on 8-11-1977 stated that there was no justification for the WTO to revise the penalties. It was further stated that even if a minimum penalty is warranted, the authorities competent to impose the penalty would be justified in refusing to impose a penalty when there was a technical or venial breach of the provisions of the Act, as stated in the decision of the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa  83 ITR 26. The assessee also stated that the WTO who had levied the penalties might have taken a lenient view for levying a lesser penalty. But, however, the WTO refused to accept the explanation offered by the assessee. He came to the conclusion that there was a clear mistake apparent from records in this case. Hence, he passed an order under Section 35 by levying the penalties as under for the periods determined by the AAC :
Aggrieved by the orders of penalties, the assessee preferred appeals before the AAC, challenging the penalties levied by the WTO for all the assessment years under consideration. The assessee reiterated the same arguments as were advanced before the WTO. Since the AAC was of the view that there was a mistake in calculation of the penalties in the orders passed under Section 18(1)(a), he came to the conclusion that the orders passed by the WTO under Section 35 were quite correct and reasonable. Not satisfied with the orders passed by the AAC, the assessee filed the present appeals before the Tribunal contending that the AAC erred in upholding the orders passed by the WTO under Section 35. He should have observed that the WTO should have proportionately reduced the penalties in accordance with the periods of delay determined by the AAC. It was further contended that the AAC was not correct in holding that once the WTO decided to levy the penalty he was bound to levy the minimum prescribed by the Act. He should have observed that the discretion of the WTO was not only to levy penalty but also to the quantum of penalty. Yet another contention put forward by the assessee was that the AAC should have held that the WTO was only to carry out the order of the AAC once his order was held against and was given direction how to determine the penalty (sic.)
(3.) BEFORE us the learned counsel appearing for the assessee contended that as the entire order of penalty levied by the WTO was the subject-matter of appeal before the AAC, the order of the WTO got merged in the order of the AAC and hence the WTO has no jurisdiction to rectify the order under Section 35. He also submitted that Section 35(8) is similar to Section 154(1 A) of the Income-tax Act. It was further contended that if at all an increase in penalties as originally levied was to be made, the power to enhancement was vested with the AAC under Section 23(5) and he could and should have done the same, if there was really a mistake calling for rectification,, when he heard the appeals against the orders imposing penalty and he having not done so, it was not open to the WTO when implementing the appellate order to enhance the penalties by having resort to the provisions of Section 35. In support of his contention, the learned counsel relied upon a decision of the Madras High Court in the case of CIT v. Indian Auto Stores  129 ITR 554. It was further contended that once a ground was taken up in appeal before him, the silence of the AAC on that particular point meant that he had confirmed the order of the WTO on that point and, therefore, the operative order was that of the AAC and the WTO had no jurisdiction to pass the order of rectification. In support of this contention, the decision of the Delhi High Court in the case of Rohtak & Hissar Districts Electric Supply Co. (P.) Ltd. v. CIT  128 ITR 52 was brought to our notice. It was further contended that the plea of merger would have to be examined in the light of what was in controversy before the appellate authority or what could have been considered by the appellate authority. According to the learned counsel appearing for the assessee, the AAC has dealt with both the quantum and the validity of imposing penalty in his order for the assessment year under consideration and, therefore, the entire order of the WTO merged in the order of the AAC. According to him, this view was fortified by a decision of the Madras High Court in the case of CIT v. City Palayacot Co.  122 ITR 430.;