Om Prakash, J. - (1.) AT the instance of the assessee, the Income-tax Appellate Tribunal, Allahabad Bench, has referred the following two questions for our opinion under Section 27(1) of the Wealth-tax Act, 1957 (briefly the Act, 1957): "1. Whether, on the facts and circumstances of the case, penalty under Section 18(1)(a) could be imposed on a legal heir, in view of the specific omission of Sections 18 and 16 from Section 19(3) in Chapter V of the Wealth-tax Act, determining the liability and tax of a deceased person payable by the legal representative ? 2. Whether, on the facts and circumstances of the case, and the absence of mens rea and of the returns having been filed in good faith by the legal representative, penalty was imposable even if it could be imposed ? "
(2.) THE facts as stated by the Tribunal, briefly, are that one Keshav Ram Narang died on January 19, 1969. On January 22, 1969, a partition of his property was made between his heirs. THE assessee, being one of the heirs, applied for obtaining a succession certificate in respect of some of the assets to the civil court on November 24, 1969, and the certificate was granted on January 17, 1970. THE dispute relates to the assessment years 1969-70 and 1970-71, the relevant valuation dates for the said assessment years being March 31, 1969, and March 31, 1970, respectively. For both the years, the due dates for filing the returns were June 30, 1969, and June 30, 1970, but they were filed on May 1, 1972. The Wealth-tax Officer, therefore, initiated penalty proceedings for default under Section 18(1)(a) of the Act of 1957, by issuing a show cause notice to the assessee. In reply, the assessee stated that Section 18 is not includedin Section 19(3) of the Act of 1957, and, therefore, no penalty proceedings could be commenced against the legal representative for late filing of the returns. The contention was repelled by the Wealth-tax Officer and he imposed penalties in the sums of Rs. 56,950 and 40,040 for these two years respectively. The assessee appealed to the Appellate Assistant Commissioner. The latter rejected the legal contention of the assessee that no penalty proceedings can be initiated as Section 19(3) does not refer to Section 18 of the Act of 1957. He, however, accepted the contention of the assessee that he was prevented in not having filed returns within time by sufficient cause in part for the assessment year 1969-70. The assessee contended before the Appellate Assistant Commissioner that he was under the bona fide belief that the value of the assets left behind by the deceased was to be included by the heirs in their own returns and as it was necessary to obtain the succession certificate in respect of some of the assets, the returns were filed only after having obtained the succession certificate. The Appellate Assistant Commissioner, therefore, held that the assessee was prevented by reasonable cause for not having furnished the returns for the assessment year 1969-70 up to January 17, 1970. So the penalty for the assessment year 1969-70, was upheld in part and the penalty imposed for the assessment year 1970-71 was fully upheld.
(3.) THE assessee carried the dispute in appeal to the Appellate Tribunal. THE latter also rejected the legal contention of the assessee that since Section 18 does not find a berth in Section 19(3), no penalty proceedings could be initiated against the legal representatives. THE Tribunal took the view that to the case of the assessee, Section 19A is applicable and not Section 19, that Section 19A is not a sub-section of Section 19, but the two sections, Section 19 and Section 19A, are distinct and they have been enacted for different purposes. THE Tribunal also held that when an assessment was made on the assessee, then to take it to a logical end, it would be within the powers of the Wealth-tax Officer to levy penalty for not having filed the returns for both the years within time. In short, the finding of the Tribunal is that when an assessment can be made on the assessee, penalty proceedings can also be initiated against the legal representatives. Coming to the question of sufficient cause, the Tribunal observed that the assessee was prevented by sufficient cause for not having filed the returns for the assessment year 1969-70 till January 17, 1970, when the succession certificate was obtained. THE Tribunal condoned the delay of two months observing: "We would further allow a period of two months during which the assessee could have collected the relevant details and then filed the return for 1969-70. THE default for this year is, therefore, restricted to 25 months and the penalty would be recalculated accordingly." So far as the assessment year 1970-71 is concerned, the order of the Appellate Assistant Commissioner confirming the penalty imposed by the Wealth-tax Officer was affirmed by the Tribunal.;