ORDER
SATISH CHANDRA, A.M. :
Since common issue is involved in all these appeals, these are disposed of by this common order.
2. All these appeals filed by the above assessees are directed against the orders dt. 16th February, 1990 passed by the learned Dy. CWT(A), Indore Range, Indore, and pertain to the asst. yrs. 1978-79 to 1981-82 except in the case of Shri Ramkishan Baheti (HUF) which pertains to the asst. yr. 1978-79 only. The assessees have taken the following common grounds :
(i) The order of learned Dy. CWT(A) confirming validity and the levy of penalty under s. 18(1)(a) vide order dt. 28th March, 1989 for the past default found in assessment order dt. 3rd October, 1984 on wealth assessed therein on the basis of reinitiation of penalty proceedings under s. 18(1)(a) on 24th March, 1987 is erroneous and bad in law as the levy of penalty has already become barred by time limitation.
(ii) The direction of learned Dy. CWT(A) to recalculate levy of penalty under s. 18(1)(a) on past default upto 19th October, 1983 found in order dt. 3rd October, 1984 on wealth assessed therein now is invalid in law.
(iii) The learned Dy. CWT(A) has erred in directing to levy penalty under s. 18(1)(a) without approving the reasonable cause for delay in filing the return of wealth within statutory time.”
3. The facts in brief are that the returns of wealth were due on 30th June, 1978, 30th June, 1979, 30th June, 1980 and 30th June, 1981 for the asst. yrs. 1978-79, 1979-80, 1980-81 and 1981-82, respectively. The returns were filed on 19th October, 1983. The returns were late within the meaning of s. 14(1) of the WT Act, 1957. The assessments for all the assessment years were completed on 3rd October, 1984 and the Assessing Officer initiated penalty proceedings under s. 18(1)(a) of the Act for all these years.
4. After the completion of the original assessments the assessees filed revised returns of wealth for all the assessment years involved on 30th September, 1986 under the amnesty scheme. The Assessing Officer issued notices under a. 17(1)(a) for all the assessment years and completed the reassessments on 24th March, 1987 and initiated penalty proceedings under s. 18(1)(a) for original default upto the date of filing the original returns. Vide order sheet entry dt. 30th March, 1987 the Assessing Officer dropped the penalty proceeding initiated under s. 18(1)(a) originally on the ground that the assessment in all the years involved had been reopened under s. 17 of the Act.
5. In response to show cause notices dt. 22nd February, 1989 it was submitted before the Assessing Officer that since the original assessments in all the assessment years were completed on 3rd October, 1984, penalty proceedings ought to have been finalised by 31st March, 1987. Mere reinitiation of penalty proceedings in supplementary assessment order dt. 24th March, 1987 will not give fresh limitation to the penalty proceedings for the original default. It was also submitted that as soon as the assessees came to know of their liabilities to wealth-tax they filed returns voluntarily on 19th October, 1983 and as such they were prevented by sufficient cause for not filing the returns in time. The Assessing Officer rejected the contentions of the assessees. The Assessing Officer observed that the assessees had revised the returns of wealth on 30th September, 1986, i.e., before the date of expiry of limitation for disposal of penalties. The notices under s. 17 were issued and served and reassessments were completed on 24th March, 1987. The reassessment was not supplementary assessment as contended by the assessees. He further observed that the penalty proceedings were initiated afresh for the default committed in late filing the return of wealth correctly since the assessee had filed revised returns under the amnesty scheme. According to the Assessing Officer ignorance of knowing tax liability is not sufficient cause which prevented them for filing the returns. With these observations, he held that they had failed to furnish the returns of wealth in time without reasonable cause. He accordingly imposed the penalties under appeal.
6. The assessees challenged the imposition of penalties before the Dy. CWT(A). On consideration of the submissions made before him, the Dy. CWT(A) held as under –
“9. I have carefully gone through the facts and circumstances of the case and also the written submissions filed by the learned authorised representative. The contention of the authorised representative is not accepted. Once notices under s. 17 were served for these years on the appellant, the assessments already completed stood reopened and the penalties initiated vide original assessment order automatically became infructuous. The WTO is, therefore, fully justified in initiating and imposing the penalties under s. 18(1)(a) in the reassessment order for the original default.”
The Dy. CWT(A), however, accepted the alternative argument of the assessees and directed the Assessing Officer to recompute the penalties without taking into consideration the additional wealth declared by the assessees under the amnesty scheme. Being dissatisfied, the assessees have come up in second appeal before the Tribunal.
7. The learned counsel for the assessees invited our attention to the reassessment order dt. 24th March, 1987 and submitted that the Assessing Officer initiated penalty proceedings under s. 18(1)(a) for original default upto the date of filing the original returns and thus there was not initiation of penalty in respect of the additional wealth declared in the revised returns. According to him, for original default the penalty was initiated in the assessment orders dt. 3rd October, 1984 and thus the penalty orders should have been passed before 31st March, 1987. Since the Assessing Officer had dropped the penalty proceedings initiated in the course of original assessment proceedings, the limitation provided under sub-s. (5) of s. 18 of the WT Act cannot be stretched. Since the penalties, in question, have been levied after the expiry of limitation, the orders deserve to be quashed. He referred to the following decisions – Mohd. Shafi Khan vs. CWT (1983) 144 ITR 489 (MP) and CIT vs. Bhudhar Singh & Sons (1983) 37 CTR (All) 28 : (1983) 143 ITR 322 (All).
8. The learned Departmental Representative, on the other hand, supported the orders of the authorities below and submitted that admittedly the assessee had filed the returns under the amnesty scheme after the original assessments had already been completed. The Assessing Officer issued and served upon the assessees notices under s. 17 and completed the reassessments on 24th March, 1987. During the course of reassessment proceedings the Assessing Officer initiated penalty proceedings and imposed the penalties within the prescribed time limit and, therefore, there was no substance in the argument advanced on behalf of the assessees that the penalties were barred by limitation. He filed before us photo copies of the order sheet entry dt. 30th March, 1987 whereby the Assessing Officer had dropped the original penalty proceedings the assessments under consideration having been reopened under s. 17 of the Act.
9. We have considered the rival submissions. In our opinion, the assessees will not succeed. It is not in dispute that the returns for all the assessment years filed on 19th October, 1983 were late. The only reason for late submission of the returns given before the Assessing Officer was that the returns were filed voluntarily when the assessees came to know of their wealth-tax liabilities. This explanation has been rejected by the Assessing Officer as in his opinion this did not constitute a reasonable cause. No other reason was advanced either before the first appellate authority or before us. We agree with the stand of the Assessing Officer and hold that there was no reasonable cause for non-submission of the returns in time.
10. It is an admitted position that after the completion of the original assessments in the course of which the penalty proceedings were initiated on 3rd October, 1984, the Assessing Officer started reassessment proceedings by issue of notices under s. 17 of the Act and completed the reassessments on 24th March, 1987. Once an assessment is reopened, the original order of assessment ceases to be operative. The effect of reopening an assessment is to vacate the original assessment order and to substitute in its place the order made on reassessment. In taking this view we derive support from the following decisions –
(i) Saran Engg. Co. Ltd. vs. CIT (1983) 33 CTR (All) 230 : (1983) 143 ITR 765 (All);
(ii) Sharda Trading Co. vs. CIT (1984) 40 CTR (Del) 274 : (1984) 149 ITR 191 (Del)
(iii) CIT vs. Rangnath Bangur (1984) 41 CTR (Raj) 268 : (1984) 149 ITR 487 (Raj)
(iv) CIT vs. Purshottamdas Bengaur (1984) 41 CTR (Raj) 21 : (1984) 149 ITR 487 (Raj)
The action of the Assessing Officer in initiating penalty proceedings for late filing of all the original returns in the reassessment proceedings is held to be valid in law as the original assessments framed by him became inoperative after the same were reopened under s. 17 of the WT Act. While dropping the original penalty proceedings on 30th March, 1987 the Assessing Officer has specifically mentioned the reasons therefor which are stated by him to be reopening of original assessments under s. 17 of the WT Act, 1957. Thus, dropping of originally initiated penalty proceedings is a direct consequence of initiation of reassessment proceedings in which penalty proceedings have again been started. We, therefore, do not find any substance in the argument of the learned counsel for the assessees that the Assessing Officer ought to have finalised the penalty proceedings before 31st March, 1987 because before that date reassessment proceedings had already commenced. It is nobody’s case that the penalty orders are beyond the time limit if reckoned from the initiation of penalty proceedings in reassessments. We have perused the decisions referred to by the learned counsel for the assessees. These decisions do not render any help to them. On the facts already stated and in the given situation, we do not find any infirmity in the orders of the Dy. CWT(A) and accordingly uphold his orders in respect of all the assessees before us.
11. In the result, all the appeals are dismissed.