Bhatnagar, J. - (1.) THE Income -tax Appellate Tribunal at the request of the Commissioner of Wealth -tax, Rajasthan, has referred the following two questions to this court under Section 27(1) of the W.T. Act, 1957 (hereinafter to be referred as "the Act") : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not liable for penalties under Section 18(1)(a) of the Wealth -tax Act for the assessment years 1958 -59, 1959 -60, 1960 -61 and 1961 -62 ?
(2.) WHETHER the Tribunal was right in law in holding that, even after the amendment of Section 18(1)(a) of the Wealth -tax Act by Act No. 46 of 1964, the question, whether the Wealth -tax Officer should obtain the previous approval of the Inspecting Assistant Commissioner of Wealth -tax for levying a penalty under that section, was not free from doubt and in proceeding to give the benefit of that doubt to the assessee so as to cancel the penalty - 2. The assessee had failed to file the returns of his wealth for the years 1958 -59, 1959 -60, 1960 -61 and 1961 -62. The due date for filing the return for these years was 30th day of June of each one of the years 1958, 1959, 1960 and 1961. A notice under Section 17 of the Act was served upon the assessee's kamdar an January 20, 1962, for filing the return of the first three years and on February 10, 1962, for the year 1961 -62. The due date of filing the returns in response to the notices was February 20, 1962, for the years 1958 -59 60, 1960 -61 and March 10, 1962, for the year 1961 -62. However, the assessee filed the returns for all the four years on October 26, 1962, with a delay of eight months in the first three years, i.e., 1958 -59, 1939 -60, 1960 -61 and seven months for the year 1961 -62. The assessments for the years 1958 -59, 60, 1960 -61 and 1961 -62 were completed on July 9, 1967, July 29, 1967, January 31, 1968 and February 24, 1968, respectively. The Wealth -tax Officer (for short "WTO") decided to initiate proceedings for levy of penalty under Section 18(1)(a) of the Act and, therefore, issued show -cause notice to that effect to the assessee on July 29, 1967, for the first two years, on January 31, 1968, for the year 1960 -61 and on February 24, 1968, for the year 1961 -62. The WTO was of the opinion that there was about fifteen months' delay in filing the return from the date on which the assessee was liable to file the returns. The submissions of the assessee regarding the reasons for delay did not find favour with the WTO. Separate orders under Section 18(1)(a) for the assessment years were, therefore, passed and penalties for default amounting to Rs. 4,849, Rs. 8,444, Rs. 9,290 and Rs. 4,891, respectively, for the aforesaid four assessment years was imposed. The assessee preferred appeals before the Appellate Assistant Commissioner (hereinafter to be referred as "the AAC") against the levy of penalties. The AAC also was not convinced that there was any reasonable cause for not filing the returns in time and held that the penalties were validly levied. He, however, directed that for the assessment years 1958 -59 and 1959 -60, the quantum of penalty should be computed after giving the assessee credit for the tax already paid by way of provisional assessment. For the other two years, the amount of penalty levied by the WTO was confirmed. The assessee then preferred further appeals before the Income -tax Appellate Tribunal (for short "the Tribunal"). The following two grounds were mainly relied on before the Tribunal : 1. that the assessee had reasonable cause for the defaults, and 2. that the levy of the penalties, without obtaining the previous approval of the Inspecting Assistant Commissioner, was illegal.
(3.) THE learned accountant member of the Tribunal accepted the plea of the assessee that there was reasonable cause for not filing the returns of his total wealth in the individual capacity within the time prescribed by Section 14(1) of the Act. THE judicial member of the Tribunal did not agree with that opinion. THE two members were, however, in agreement regarding the applicability of the provisions of Section 18(1)(a) to the case of the assessee and held that the provisions of Section 18, as they stood prior to the amending Act No. 46 of 1964 coming into effect from April 1, 1965, were applicable to the assessee for the reason that the infringement of the provisions of the Act took place prior to the amendment of Section 18 of the Act. THE learned members were of the opinion that the question of the applicability of amended Section 18 of the Act was not free from doubt and, therefore, the benefit of doubt should be given to the assessee. In that view of the matter, the Tribunal allowed the four appeals of the assessee by its consolidated order dated January 20, 1972. THE two appeals filed by the WTO against the deduction, in the quantum of the penalty, granted to the assessee by the AAC for the assessment years 1958 -59 and 1959 -60 were dismissed. The Commissioner of Wealth -tax, Rajasthan, filed applications before the Tribunal for referring two questions of law arising out of their order dated January 20, 1972, to the High Court under Section 27(1) of the Act. The learned members allowed the request and drew up a statement of the case referring the two questions as mentioned above to this court. ;