JUDGMENT
Sabyasachi Mukharji, J.
1. The assessment years involved are 1964-65 to 1969-70. In all these years, the net wealth returned by the assessee was less than 75 per cent. of the net wealth assessed by the WTO. The WTO initiated penalty proceedings and referred the same to the IAC of Wealth-tax as the minimum penalty imposable exceeded Rs. 1,000 in each of these years under consideration. In response to the show-cause notice, it was pleaded that there was no concealment of any assets on the part of tbe assessee and that the provisions of Section 18(1)(c) of the W.T. Act, 1957, were not applicable. Reliance was placed on the decision of the Supreme Court in the case of CIT v. Anwar Ali and on some other cases in support of the assessee’s contention. It was urged that, in the facts and circumstances of the case, no penalty could be imposed. The IAC observed that the assessee had valued the immovable property at their cost price and not on the market price on the valuation dates. She, therefore, invoked the provisions of Expln. (1) appended to Section 18(1)(c) as the net wealth returned fell short of 75 per cent. of the net wealth assessed and held that the assessee had failed to show that there was absence of any fraud or gross or wilful neglect in not returning the wealth. She, therefore, held that the assessee committed the default in each of the years under Section 18(1)(c). In respect of the quantum of penalty to be imposed, she pointed out that the assessee had applied to the Commissioner of Wealth-tax under Section 18(2A) for a waiver of penalty and the Commissioner of Wealth-tax had reduced the penalty to 5 per cent. of the minimum amount leviable or otherwise. The IAC, therefore, imposed the penalties at 5 per cent. of the minimum penalty imposable respectively in those years.
2. Being aggrieved by the order of the IAC, the assessee went up in appeal before the Tribunal. At the time of hearing of the appeal, the Tribunal was of the view that in view of Section 18(2A) read with Section 18(2B), no appeal, in the facts and circumstances of the case, lay. In the premises, the appeal was dismissed. The Tribunal, therefore, held that the assessee’s appeals were not maintainable and the same were accordingly dismissed. Out of the aforesaid order of the Tribunal, under Section 27(1) of the W.T. Act, 1957, the following question has been referred to this court :
“Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the appeal filed by the assessee under Section 24 of the Wealth-tax Act, 1957, against the order of penalty passed by the Inspecting Assistant Commissioner of Wealth-tax under Section 18(1)(c) read with Section 18(3) of the Wealth-tax Act, 1957, was not maintainable on the ground that the Inspecting Assistant Commissioner of Wealth-tax had quantified the penalty at 5% of the minimum penalty imposable in pursuance of the order passed by the learned Commissioner of Wealth-tax under Section 18(2A) of the Wealth-tax Act, 1957 ?”
3. We are, therefore, concerned in this case with the situation, where the assessee had gone before the Commissioner of Wealth-tax by virtue of Section 18(2A) of the Act, and in such a case, whether the appeal would lie or not. Section 18 of the W.T. Act deals with penalty for failure to furnish a return, to comply with notices and concealment of assets, etc., but Sub-section (1) of Section 18, so far as it is material and relevant for our purpose, provides as follows :
“18. (1) If the Wealth-tax Officer, Appellate Assistant Commissioner, Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person-
(a) has without reasonable cause failed to furnish the return which he is required to furnish under Sub-section (1) of Section 14 or by notice given under Sub-section (2) of Section 14 or Section 17, or has without reasonable cause failed to furnish it within the time allowed and in the manner required by Sub-section (1) of Section 14 or by such notice, as the case may be ; or
(b) has without reasonable cause failed to comply with a notice under Sub-section (2) or Sub-section (4) of Section 16 ; or
(c) has concealed the particulars of any assets or furnished inaccurate particulars of any assets or debts,
he or it may, by order in writing, direct that such person shall pay by way of penalty–…..”
4. Thereafter, the said section authorises the authorities mentioned in Sub-section (1) to impose the penalty in a certain manner. In the case of Clause (i) certain amount is fixed and in the case of Clause (ii) and (iii) certain other amounts are fixed. We are not concerned with the details of the other provisions. Sub-section (2A) along with Sub-section (2B) was introduced by the Finance (No. 2) Bill of 1965 and Sub-sections (2A) and (2B) were incorporated. The said sub-sections after the incorporation of Sub-sections (2A) and (2B) read as follows :
“(2A) Notwithstanding anything contained in Clause (i) or Clause (iii) of Sub-section (1), the Commissioner may, in his discretion,–
(i) reduce or waive the amount of minimum penalty imposable on a person under Clause (i) of Sub-section (1) for failure, without reasonable cause, to furnish the return of net wealth which such person was required to furnish under Sub-section (1) of Section 14, or
(ii) reduce or waive the amount of minimum penalty imposable on a person under Clause (iii) of Sub-section (1), if he is satisfied that such person-
(a) in the case referred to in Clause (i) of this Sub-section has, prior to the issue of notice to him under Sub-section (2) of Section 14, voluntarity and in good faith, made full disclosure of his net wealth ; and in the case referred to in Clause (ii) of this sub-section has, prior to the detection by the Wealth-tax Officer of the concealment of particulars of assets or of the inaccuracy of particulars furnished in respect of the assets or debts in respect of which the penalty is imposable, voluntarily and in good faith, made full and true disclosure of such particulars ;
(b) has co-operated in any enquiry relating to the assessment of the wealth represented by such assets ; and
(c) has either paid or made satisfactory arrangements for payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year.
(2B) An order under Sub-section (2A) shall be final and shall not be called in question before any court of law or any other authority.”
5. While we are on this provision, it may not be inappropriate to refer to the statement of objects and reasons. It appears that there was an introduction of voluntary disclosure of income and wealth and in this Disclosure Scheme certain provisions had been made for assessment or reduction of certain penalties and other consequences as also immunities from certain prosecutions in respect of those assessees who voluntarily disclosed their income or wealth which were not earlier disclosed. That disclosure petition was no longer there and the statement of object for the introduction of this clause stated that the object of the clause was “to facilitate the voluntary disclosure of wealth, by enabling, in such cases, the reduction or waiver of the statutory minimum penalty imposable in certain cases”. The Finance Minister in his speech had observed, inter alia, as follows (see 57 ITR (St.) at p. 64) :
“35. In regard to the voluntary disclosure scheme under the Finance Act, 1965, which was in operation for three months up to 31st May, 1965, it had been suggested in this House that the period allowed for payment of the tax should be extended. Under the structure of that scheme, it was not possible to meet this suggestion except to a very limited extent. I now propose to introduce a fresh scheme for voluntary disclosure of un-accounted income which will be in operation from today until the 31st March, 1966. One of the distinctive features of this scheme is that tax will be charged on the whole of the disclosed income taken as a single block, at the rates prescribed for personal income or corporate income by the Finance Act, 1965, and not at an ad hoc concessional rate. Further, facilities will be allowed for the payment of tax in appropriate instalments extending over a period not exceeding four years, subject to a down payment of not less than 10 per cent. of the tax due and furnishing of st curity in respect of the balance. Income which has already been detected on materials available prior to the date of the disclosure will, however, be assessed under the regular provisions of the Income-tax Act and not under this scheme. Any admissions made by a person in the declaration filed by him under the scheme in respect of such income will not be used against him in assessing that income under the Income-tax Act. Under this scheme also, the disclosed income will not be subject to any further proceedings of assessment. The identity of the declarant will not be revealed and he will also be immune from penalty and prosecution for the past concealment of the disclosed income.”
6. In the Memorandum explaining the provisions of the Bill, it has been stated that a certain amendment of the W.T. Act, 1957, was proposed on account of default in furnishing a return or concealment of assets in the cases of voluntary disclosures. The Memorandum states as follows (see [1965] 57 ITR (St.) at p. 74):
“The Wealth-tax Act provides for the imposition of a penalty of not less than a specified amount on an assessee who has failed without reasonable cause to furnish the return of his net wealth within the time allowed, or has concealed the particulars of his assets or furnished inaccurate particulars of any asset or debt. Such minimum penalty in the case of default in furnishing the return in time is 2 per cent. of the amount of the tax payable for every month during which the default continued, and in a case of concealment of any asset or furnishing inaccurate particulars of any assets or debts, it is 20 per cent. of the amount of the wealth-tax which would have been avoided if the net wealth declared in the return had been accepted as correct. The Act also provides for the prosecution of a person who makes a false statement in the return of net wealth.
The Income-tax Act, 1961, also contains similar provisions for the imposition of a minimum statutory, penalty for failure to file the return of income or concealment of income or the furnishing of inaccurate particulars thereof. It also provides for the prosecution of persons who make a false statement in their return of income. The Commissioner of Income-tax is, however, empowered, under a new provision introduced in that Act by the Income-tax (Amendment) Act, 1965, to reduce or waive the amount of the minimum penalty, subject to certain conditions, in a case where an assessee voluntarily makes a full disclosure of his income before it was detected by the Income-tax Officer, Such a person is also granted an immunity from prosecution in respect of the offence of making a false statement in the relevant return in regard to such income.
With a view to facilitating voluntary disclosures of wealth by assessees, it is proposed to make similar provisions in the Wealth-tax Act. Under the proposed provision, a Commissioner of Wealth-tax will be enabled, in his discretion, to waive or reduce the statutory minimum penalty referred to above in cases where he is satisfied that the assessee had voluntarily made a full and true disclosure of his net wealth before its concealment was detected by the Wealth-tax Officer and that he had cooperated in the investigation of the disclosure, and had paid or made satisfactory arrangements for the payment of wealth-tax due for the relevant year. Such a person will also be granted immunity from prosecution in respect of any false statement in the relevant return in regard to the voluntarily disclosed net wealth.”
7. We have already referred to Section 18(1), (2A) and (2B). It is now necessary to refer to Section 24 which deals with an appeal. Section 24 provides for an appeal and Sub-section (1)of Section 24 is as follows:
“24. (1) An assessee objecting to an order passed by the Appellate Assistant Commissioner under Section 18 or Section 23 or Sub-section (2) of Section 37 or to an order passed by the Inspecting Assistant Commissioner under Sub-section (3) of Section 18, may appeal to the Appellate Tribunal within sixty days of the date on which the order is communicated to him.”
8. Sub-section (5) of s, 24 is as follows :
“24. (5) The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and any such orders may include an order enhancing the assessment or penalty…..”
9. We are not concerned with the proviso. Section 25 deals with the powers of the Commissioner to revise an order of assessment and, inasmuch as certain submissions were made relating to that, it would be appropriate for us to refer to it. Section 25(1) provides that the Commissioner either of his own motion or on an application made by an assessee in this behalf, shall call for the record of any proceeding under the Act in which an order has been passed by any authority subordinate to him and make such an enquiry or cause such enquiry to be made, and subject to the provision of the Act, pass such order thereon, riot being an order prejudicial to the assessee, as the Commissioner thinks fit. The proviso (a) to Sub-section (1) of Section 25 deals with cases where an appeal against the order lies to the AAC or to the Appeallate Tribunal (when) the revision petition shall not be entertained unless the time has expired or the assessee has waived his right of appeal.
10. Learned advocate for the assessee has stressed before us that an appeal is a substantial right. Therefore, any provision of a statute intending to curtail that right of an assessee to appeal must be strictly construed and should normally not be so construed (as to take that right away). He further laid stress on Section 25 of the Act which has specifically dealt with the revisional power in a case where the time (for filing an appeal) has expired or the right to appeal has been specifically waived. He has stressed the point that there is no such specific provision in Section 25 in the cases of applications under Section 18(2A) of the Act. It is true, as the learned advocate for the assessee contends, that the provision for an appeal should be liberally construed in favour of the right since these are remedial rights and accordingly the right should not be restricted or denied unless such a construction is unavoidable and in this connection he drew our attention to the observation in Construction of Statutes by Crawford, 1949 Edn., p. 693. He also relied on the observation of the Supreme Court in the case of Garikapati Veeraya v. N. Subbiah Choudhry, , where the court observed that the right of appeal is a vested right and such a right to enter the superior court accrued to the litigant and existed as on and from the date the lis commenced and although it might be actually exercised when the adverse judgment was pronounced such right was to be governed by the law prevailing at the date of institution of the suit or proceeding and not by the law that prevailed at the date of its decision or at the date of filing of the appeal. The Supreme Court further reiterated that the vested right of an appeal could be taken away by a subsequent enactment if it so expressly provided or by necessary intendment and not otherwise. This proposition again cannot be disputed but we are not concerned with this controversy. To the similar effect reliance was placed on the observation of the Supreme Court in the case of Custodian of Evacuee Property v. Khan Saheb Abdul Shukoor, . Reliance was also placed on the observation of the Supreme Court in the case of CIT v. Bhikaji Dadabhai 6- Co. . In so far as learned advocate for the assessee contended that a right of appeal was a substantial right and should not be so construed as to be taken away unless it was so expressly provided or it follows as a necessary implication of the statute, it cannot be disputed. It is also indisputable that such a provision for appeal or a remedial provision should be construed favourably in favour of the right if such a right existed and if it is so possible to construe.
11. But the question here is giving a harmonious construction to Sub-sections (2A) and (2B) of Section 18 of the W.T. Act, In our opinion, the penalty is leviable under Sub-section (1) of Section 18 by the WTO, AAC, Commissioner or Appellate Tribunal if in the course of the proceedings he (or it) was satisfied that there was cause for the imposition of the penalty as stipulated in Sub-clause (a), (b) and (c) and then the right of imposition of penaltyiwas given by Clause (i), (ii) and (iii). Sub-section (2A), which was introduced in the manner we have indicated before, provides that notwithstanding anything contained in Clause (i) or Clause (iii) of the Sub-section the Commissioner may, in his discretion, waive or reduce the minimum penalty imposable. In order to merit a waiver or reduction in penalty it implies that penalty must be imposable. Therefore, the moment the assessee chooses to go to the Commissioner for a waiver of penalty, in our opinion, he admits the position that conditions under Clause (a), Clause (b) & Clause (c) of Sub-section (1) of Section 18 have been fulfilled. If on that basis any order is passed, then he cannot feel aggrieved by such an order on the quantum of the waiver. Of course, it is well settled that in exercising his power under Sub-section (2A) of Section 18 and Sub-section (2B) of Section 18 the Commissioner must act quasi-judicially and if there is an improper exercise of the power, then such an exercise would be liable to be challenged in an appropriate proceeding. In order to impose a penalty, it must first be found that an assessee was guilty of reasonable cause for the failure or omission to do certain things as contemplated under Clause (a), (b) and (c) of Sub-section (1) of Section 18. Now, normally, an appeal would lie questioning the imposition on the ground of satisfaction that the conditions were not fulfilled which attracted the imposition of penalty or that the imposition of penalty was improper or heavy. Now, if it be irapliedly accepted that in order to merit consideration under Sub-section (2A) of Section 18 of the Act, then, in our opinion, in view of Sub-section (2B), it cannot be said either that the condition that the penalty was not imposable, because the conditions required to be fulfilled under Clause (a), (b), (c) of Sub-s. (1) of Section 18 were not complied with, or that the imposition was improper could not be challenged before any court of law or authority as contemplated under Section 18 (sic). Of course, it can be challenged in an appropriate proceeding, if in the exercise of the power the discretion was not property or validly exercised.
12. Learned advocate for the assessee contended that an assessee could make an application before the Commissioner even after preferring an appeal. If that was so, he further submitted that, in such a case an assessee who prefers an appeal and an assessee who prefers to go to the Commissioner would be treated in different manner and that would be discriminatory. It is not quite correct to read the provision in such a a manner. The position is that if an order is passed by the Commissioner, it must be that the penalty was imposable, but the quantum of the penalty would be dealt with by the Commissioner in his order. But if subsequent to the appellate order an assessee goes before the Commissioner, then he can certainly ask, if he fulfils the conditions required for the discretion of the Commissioner as stipulated in Section 18(2A), for a waiver of the penalty. The appellate authority normally would not be concerned with it. This, in our opinion, would be a harmonious construction of the different provisions of Section 18(2B) read with Section 18(2A). Otherwise, the exercise of the power by the Commissioner under Sub-section (2A) of Section 18 would be futile and an empty exercise of the power.
13. This view which we are taking is corroborated by the observations of M. B. Farooqi J., in the case of Fairdeal Motors v. CIT , where his Lordship could not agree with the views expressed by the learned Chief Justice of the Jammu and Kashmir High Court. In that case, on a difference of opinion, the matter was referred to a learned third judge. Dealing with this aspect, Mr. Justice Farooqi observed at p. 163 of the report as follows :
“As was held by this court in Fairdeal Motors v. CIT , the words ‘reduce or waive the amount of minimum penalty imposable’ clearly connote the penalty which is liable to be imposed on the assessee and not the penalty which has been imposed on the assessee. Therefore, the fact that the penalty has been imposed may be a factor to be taken into consideration by the Commissioner but it will not bind him. He must come to his own independent conclusion in the matter. In case he finds that the penalty is imposable he will be entitled to make an order reducing or waiving the penalty, of course, if the case also satisfies other requirements of this sub-section. Conversely, if the Commissioner has made an order under this sub-section, he must be deemed to have found that the penalty is imposable. By virtue of Sub-section (4BJ, every such order made by the Commissioner is final and cannot be called in question before any court or other authority. Accordingly, on the point that penalty is imposable, the order must be held to be final and conclusive between the parties and even binding on the High Court in any matter referred to it by the Tribunal.”
14. Though the learned third judge did not express any specific opinion on this aspect, he held against the revenue on this questions We are in respectful agreement with the views expressed by Farooqi J. quoted above.
15. Our attention was drawn to a decision of the Madras High Court in the case of CWT v. M. K. S, Vanavarayar , where the Division Bench of the Madras High Court held that as the appeals to the AAC were against the order of the WTO passed in pursuance of the order of the Commissioner under Section 18(2A), the appeals to the AAC were competent and accordingly, the Tribunal was in error in holding that there was no order at all of the Commissioner under Section 18(2A) of the Act. There, however, the court observed at p. 189 of the report that* if there was no valid order of the Commissioner, the next question that would arise was, what was the status of the order of the WTO dated 28th September, 1971. So, in such a case, an appeal would lie. So the observations that were made in that decision would not be really applicable in the facts and circumstances of this case because those observations were on the basis that there was no order of the Commissioner under Section 18(2A). But, in the instant case, there is an order of the Commissioner under Section 18(2A) and that is not in dispute here.
16. Reliance was also placed on the observations of the Rajasthan High Court in the case of Indra & Co. v. CIT . There, the court held that an application for a waiver or reduction of penalty could be made even after the confirmation of the penalty order by the appellate authorities. With this observation we are not in disagreement but this observation does not really help us in resolving the present controversy.
17. Similarly, our attention was drawn to the observations of the. learned single judge of the Karnataka High Court in the case of B. Anjanappa v. CWT [1980] 124 ITR 433, where at p. 437, referring to the decision in the case of Shankara Apaya Swami v. WTO [1976] 103 ITR 649 (Kar), the scope for an exercise of the power by the Commissioner under Section 18(2A) was explained, the learned judge observed as follows :
” ‘The question whether there was reasonable cause for filing the return beyond time arises for consideration under Section 18(1)(a) itself and if the authority concerned is satisfied that there was reasonable cause for the delay then there would be no occasion to levy penalty and for invoking Section 18(2A). It has, therefore, to be held that the words in question relate to the return which is filed beyond time without reasonable cause. If in that return the assessee has ‘ voluntarily and in good faith made full disclosure of his net wealth’ the condition mentioned in Clause (a) stands satisfied. The expression ‘ voluntarily’ means ‘without compulsion’ and ‘good faith’ means ‘with due care and caution’. Hence, if the return filed by the assessee does not show that he has deliberately furnished wrong particulars about his wealth or deliberately omitted to include all the items of taxable wealth then he should be considered as having satisfied the above conditions.’
Further on, it was observed :
‘ It is needless to mention that the Commissioner while exercising his discretion under Section 18(2A) has to bear in mind several factors such as the gravity of the default, the loss occasioned to the revenue by the assessee not filing the return in time, and the extent of tax withheld.
These factors are only illustrative but not exhaustive. Just like in criminal cases a judge while imposing a sentence on the accused who is found guilty of an offence takes into consideration several factors apart from the fact that he has committed the offence in question, the Commissioner should take into consideration all other relevant factors while reducing or waiving the penalty imposed or imposable under Section 18(1)(a) of the Act.’ ”
18. If that is the scope, then, in our opinion, in the scheme of the sections, specially in the background of the purpose of the introduction of Sub-section (2A) as mentioned in the object clause, these two cannot operate simultanously.
19. Reliance, however, was placed on the observations of the Karnataka High Court in the case of CWT v. Kempanna [1980] 126 ITR 825, where it was held, inter alia, that the power conferred on the Commissioner under Section 18(2A) of the W.T. Act, 1957, was only to reduce or waive the amount of minimum penalty imposable on a person under Clause (i) or Clause (iii) of Sub-section (1) of Section 18. The power could be exercised by the Commissioner notwithstanding the default and there being no reasonable cause for the failure to furnish the return within the time prescribed. The question, the court observed, of the existence of a reasonable cause was not within the ambit of Section 18(2A); that inheres in the WTO. The opening words of “the section also indicated that it was only notwithstanding anything contained in Clause (i) or Clause (iii) of Sub-section (1) of Section 18 and notwithstanding any other provision in the Act that the Commissioner could act. The provision did not override or obliterate the jurisdiction conferred on the other authorities under the Act. The court further observed that, under Section 18(2B), what was made final was the order made under Section 18(2A), i. e., in regard to the quantum of minimum penalty that was directed to be waived or reduced and nothing more. There was no provision that once the assessee filed an application under Section 18(2A) before the Commissioner he waived his other rights. With great respect, we are, however, unable to agree with this conclusion. The expression “notwithstanding” makes it quite clear, in our opinion, that only on the fulfilment of the conditions where penalty was imposable, i.e., under Clause (a), (b) or (c) of Sub-section (1) of Section 18, that the power of the Commissioner becomes exercisable. If on that basis the Commissioner exercises his power and an order has been passed, then a person cannot be aggrieved by the exercise of that power. In that view of the matter, in view of the language used in Section 18(2B) read with Section 18 (sic), in our opinion, these two powers cannot co-exist, in the facts and circumstances of the case.
20. Our attention was drawn to Sections 241, 242, 252, 254 and 375 of the Cr. PC. In view of the specific language used in those provisions, it is not appropriate to draw any analogy with the provisions with which we are concerned. In the scheme, by a necessary implication, after the introduction of Sub-section (2B) in Section 18, in our opinion, in the facts and circum-, stances of the case, no appeal lay and the Tribunal was correct in its conclusion, and the question must be answered in the affirmative and in favour of the revenue.
21. Parties will pay and bear their own costs.
Sudhindea Mohan Guha, J.
22. I agree.
