ORDER
T.J. Joice, Accountant Member
1. As identical grounds of appeal are involved, all these ten appeals are disposed of by a common order for the sake of convenience. All these appeals arise out of the consolidated order dated 8-2-1999 by the CWT(A)-I, Bangalore, in respect of the ten assessees, for the assessment year 1991-92.
2. The following are the grounds of appeal which are common in these cases:
1. The orders of the authorities below insofar as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The authorities below are not justified in levying interest under Section 17B of the Act, especially by an order under Section 35 of the Act, in respect of an assessment concluded under Section 16(3) by issuance of a notice under Section 17 of the Act, while the levy of interest under Section 17B is debatable in nature and cannot be levied under Section 35 of the Act.
3. Without prejudice to the above, the authorities below have erred in law in levying interest under Section 17B in respect of an assessment processed by the issue of notice under Section 17 of the Act and therefore, no interest under Section 17B can be levied since the assessment has not been completed under Section 16(5) and further that the return which was filed is non est in law which was regularized by notice under Section 17 of the Act and there was no delay in filing the return in response to notice under Section 17 of the Act.
4. Without prejudice to the above since the return is filed in response to notice under Section 17 of the Act. Under Section 17B of the Act as this section does not make reference to the delay in filing the return of wealth in response to notice under Section 17 of the Act and only makes reference to Section 14(1), 15 or in response to notice under Section 16(4) of the Act.
5. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and the Hon’ble Tribunal may be pleased to grant refund of institution fee and make such order as to costs and legal fee as the Hon’ble Tribunal may think fit and proper in its discretion to serve the ends of justice as the authorities below have committed grave judicial impropriety of not following the order of the Hon’ble Tribunal.
3. We have heard Shri S. Venkatesan, the learned counsel for the assessees and Shri U. Anjaneyalu, the learned DR. Both of them submitted written arguments in support of the plea raised by them. After carefully considering the detailed oral and written arguments and submissions, we proceed to dispose of the appeals as per the ensuing discussion.
4. The central issue involved in this case is whether the assessees are liable to interest under Section 17B of the WT Act, 1957, for the delay in filing the return of net wealth. According to Shri Venkatesan, the provisions of Section 17B are not applicable to the facts of the case. On the other hand, according to Shri Anjaneyalu, there is admittedly, a delay in filing the return of net wealth and, therefore, interest under Section 17B has been rightly levied.
5. The assessment year involved in all these cases is 1991 -92, for which the due date for filing of net wealth under Section 14 was 30th June, 1991. According to Shri Venkatesan, in terms of notice under Section 16(4) issued to the assessees, the due date for filing was 31st March, 1993. The assessees actually filed the returns in pursuance of the notice under Section 17 issued on 13-12-1994. The assessees had actually filed the returns on 15-2-1994, but these returns were treated as non est in law as filed beyond time. However, on receipt of notices under Section 17, the assessees requested the Assessing Officer by a letter dated 26-12-1994 to treat the returns already filed as pursuant to the notices under Section 17. In the assessment orders passed on 28-2-1997, the Assessing Officer adopted the net wealth as per returns filed and as reduced further in accordance with the request contained in the assessee’s letters filed subsequently. In the orders passed on 28-2-1997, the Assessing Officer did not levy any interest under Section 17B for delayed filing of the returns. However, realising the omission to charge interest, the Assessing Officer issued notice under Section 35 for rectification of the assessment orders and in the proceedings dated 2-9-1998, he levied interest under Section 17B. The details of the net wealth assessed, tax thereon, prepaid taxes, interest levied under Section 17B, are as under:
Net wealth Tax Prepaid Interest Total
as per thereon taxes under Section 17B payable by
asst. order the assessee
dated as on date
28-2-1997 of order
Rs. Rs. Rs. Rs. Rs.
M.R. Jayaram (HUF) 4,213,254 104,899 Nil 70,272 179,171
M.R. Prabhavathy 5,949,888 92,748 Nil 59,328 152,076
M.R. Padmavathy Trust 6,658,331 106,917 Nil 68,416 175,333
M.R. Anandaram (HUF) 7,534,346 124,445 Nil 79,616 204,061
M.R. Pattabhiram (HUF) 4,792,400 127,272 Nil 81,472 208,744
M.R. Seetharam (HUF) 5,161,029 138,330 Nil 88,512 226,842
M.R. Kodandaram (HUF) 6,477,955 103,310 Nil 66,112 169,422
M.R. Sampangiramiah (HUF) 4,637,549 122,625 Nil 78,464 201,089
M.R.Janakiram(HUF) 40,611,160 108,336 Nil 67,392 172,728
M.R. Raghuram (HUF) 5,02,685 134,271 Nil 85,952 220,223
6. Aggrieved by the orders of rectification levying interest, the assessees approached the CWT(A), who in the impugned order dismissed the appeal in limine under Section 23(2A) on the ground that the admitted tax on the returned net wealth has not been paid by the assessees. However, he also considered the merits of the issue regarding leviability of interest under Section 17B and upheld the order of the Assessing Officer in levying the interest because, according to him, levy of interest under Section 17B was mandatory in the circumstances of the case.
7. In the written submission given by the learned counsel for the assessee very ingenious arguments have been advanced in order to establish that Section 17B is not attracted to the facts of the case. Therefore, the learned counsel states that there is no leviability of interest, nor is there any scope for rectification as the matter involves debate and argument. A reference in this connection has been made to certain observations of their Lordships in the case of CIT v. Banshidhar Man & Sons [1994] 207 ITR 488 at page 493 (Cal.), wherein the words “so far as may be applied accordingly” have been interpreted. Reference has also been made to the decision of the Karnataka High Court in the case of Kwality Biscuits Ltd. v. CIT[2000] 243 ITR 519 relating to levy of interest under Sections 234B and 234C in the context of Section 115J. After carefully considering the entire text of the above judgments, we are of the view that the ratio of those decisions have no applicability to the facts of the present case and the reliance placed by the learned counsel on these case laws is clearly far-fetched and does not have any proximate connection with the legal issue raised on the facts of the present case. On the other hand, according to the learned DR, the provisions of the section are crystal clear and do not admit of any ambiguity. Hence, the DR vigorously supported the order of the Assessing Officer passed under Section 35 and the appellate order of the CWT(A) in upholding the same.
8. We have given serious thought and careful consideration to the rival submissions with respect to the legal provisions. The question involves interpretation of Section 17B of the WT Act, 1957 which is entitled “Interest for defaults in furnishing return of net wealth”. The relevant provisions of this section read as under :
Section 17B.(1) Where the return of net wealth for any assessment year under Sub-section (1) of Section 14 or Section 15, or in response to a notice under Clause (I) of Sub-section (4) of Section 16, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of two per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,-
(a) where the return is furnished after the due date, ending on the date of furnishing of the return, or
(b) where no return has been furnished, ending on the date of completion of the assessment under Sub-section (5) of Section 16, on the amount of tax payable on the net wealth as determined under Sub-section (1) of Section 16 or on regular assessment.
Explanation 1: In this section, “due date” means the date specified in Sub-section (1) of Section 14 as applicable in the case of the assessee.
Explanation 2: In this sub-section, “tax payable on the net wealth as determined under Sub-section (1) of Section 16” shall not include the additional wealth-tax, if any, payable under Section 16.
Explanation 3: Where, in relation to an assessment year, an assessment is made for the first time under Section 17, the assessment so made shall be regarded as a regular assessment for the purposes of this section.
Explanation 4: In this sub-section, “tax payable on the net wealth as determined under Sub-section (1) of Section 16 or on regular assessment” shall, for the purposes of computing the interest payable under Section 15B, be deemed to be tax payable on the net wealth as declared in the return.
(2) The interest payable under Sub-section (1) shall be reduced by the interest, if any, paid under Section 15B towards the interest chargeable under this section.
(3) Where the return of net wealth for any assessment year, required by a notice under Sub-section (1) of Section 17, issued after the determination of net wealth under Sub-section (1) of Section 16 or after the completion of an assessment under Sub-section (3) or Sub-section (5) of Section 16 or Section 17, is furnished after the expiry of the time allowed under such notice, or is not furnished, the assessee shall be liable to pay interest at the rate of two per cent for every month of part of a month comprised in the period commencing on the date immediately following the expiry of the time allowed as aforesaid, and,-
(a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or
(b) where no return has been furnished, ending on the date of completion of the reassessment under Section 17, on the amount by which the tax on the net wealth determined under Sub-section (1) of Section 16 or on the basis of such reassessment exceeds the tax on the net wealth as determined on the basis of the earlier assessment aforesaid.
(4) Where, as a result of an order under Section 23 or Section 24 or Section 25 or Section 27 or Section 29 or Section 35 or any order of the Wealth-tax Settlement Commission under Sub-section (4) of Section 22D, the amount of tax on which interest was payable under this section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and,-
(i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under Section 30 and the provisions of this Act shall apply accordingly, and
(ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded.
(5) The provision of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.
9. From the above, it is clear that interest under Section 17B is attracted in a case where the return of net wealth is furnished after the due date or where no such return is filed before the completion of the assessment. In the present case, the assessees did file the return of net wealth on 15-2-1994 as against the due date of 30th June, 1991. Thus, apparently, there is a delay in filing the returns. The argument of the learned counsel for the assessee that since the returns were considered non est in law, they do not come within the purview of Section 17B(1) does not hold water. Sub-section (3) of Section 17B is attracted only in a case where assessment has been done originally and return is filed subsequently in pursuance of notice under Section 17. No doubt Sub-section (3) does not apply to the facts of the case as in the present cases assessments have been done for the first time and, therefore, we have to see the applicability of Sub-section (1) of Section 17B which envisages the following situations :
(i) Return is furnished after the due date under Sub-section (1) of Section 14;
(ii) Return is furnished after the due date under Section 15;
(iii) Return is furnished after the due date in response to notice under Section 16(4)(i);
(iv) Where no return is filed before completion of assessment.
Section 14(1) deals with voluntary filing of the return on the part of the assessee, for which a due date has been prescribed. Section 15 deals with a case where the assessee wants to file a return where he has not furnished a return under Section 14(1) or 16(4) or where he wants to file a revised return when the earlier return is found to have any omission or mistake. Section 16(4)(i) comes into play when the Assessing Officer calls upon the person to file a return of wealth when there is an omission to file the return under Section 14(1). Section 17 deals with a case of reopening of assessment in case of escapement of net wealth for assessment or a fresh assessment for an assessment year for which the normal time for assessment has elapsed. Section 17 inter alia provides that the provisions of the WT Act, 1957 shall, so far as may be, apply as if the return filed under the section were a return required to be furnished under Section 14. Explanation 3 under Section 17B(1) makes it clear that where in relation to an assessment year an assessment is made for the first time under Section 17, the assessment so made shall be regarded as a regular assessment for the purpose of this section.
10. When the assessees were served with notices under Section 17, they requested, by a letter dated 26-12-1994 to treat the returns originally filed on 15-2-1994 as filed in pursuance to notice under Section 17. This means that the returns filed on 15-2-1994 have been regularized and treated as the returns for the purpose of the assessment under Section 17. Since these assessments were made for the first time, they are regular assessments made under the Act. Therefore, we have to proceed to the assumption that a regular assessment has been completed under the Act and all natural consequences of such assessment will have to follow under the different sections of the Act. No doubt, assessment implies not only the determination of net wealth liable to be taxed under the Act, but also the wealth-tax payable by the assessee on the net wealth assessed including liability to interest under Section 17B, if chargeable. The intention of the Legislature in enacting the provisions of Section 17B is crystal clear. It is to levy interest which is compensatory in nature for withholding the revenue due to the Government on account of delay in filing the return of net wealth. In the present case, such a delay has occurred on the part of the assessees in not filing the returns of net wealth on or before the due date, i.e., 30th June, 1991. The assessees chose to do so only on 15-2-1994. The returns disclosed substantial net wealth assessable to tax. Consequently, there is a delay in the filing of the return during the period between the aforesaid dates. Hence, interest is clearly chargeable under Section 17B. In the circumstances, we conclude that the Assessing Officer has rightly invoked his jurisdiction under Section 35 in levying the interest under Section 17B which is mandatory under the provisions of the Act. The CWT(A) is justified in dismissing the appeal not only in limine for non-payment of admitted tax under the provisions of Section 23(2A) (which is also mandatory and does not admit of any discretion on his part to waive this condition), but also on merits of the case with regard to the leviability of interest under Section 17B. We fully endorse the reliance placed by the learned CWT(A) on the following case laws in buttressing his conclusions:
Union Home Products Ltd. v. Union of India [1995] 215 ITR 758 : [1996] 84 Taxman 303 (Kar.)
Dr. S. Reddappa v. Union of India [1998] 232 ITR 62 (Kar.)
Sant Lal v. Union of India [1996] 222 ITR 375 : 89 Taxman 272 (Punj. & Har.)
Ranchi Club Ltd. v. CIT[1996] 217 ITR 72 : 85 Taxman 201 (Pat.)
Nemi Chand Jain v. Union of India [1998] 100 Taxman 549 (MP)
M.K. Venkatachalam, ITO v. Bombay Dyeing & Mfg. Co. Ltd. [1958] 34 ITR 143 (SC)
ITO v. Asok Textiles Ltd. [1961] 41 ITR 732 (SC)
CIT v. Quilon Marine Produce Co. [1986] 157 ITR 448 : [1987] 33 Taxman 263 (Ker.)
Addl CIT v. India Tin Industries (P.) Ltd. [1987] 166 ITR 454 : [1986] 29 Taxman 128 (Kar.)
11. For the reasons mentioned above, we uphold the impugned order of the learned CWT(A). In the result, the appeals are dismissed.
