JUDGMENT K.C. Agrawal, Actg. C.J.
1. This reference application has been filed by the Commissioner of Wealth-tax against the judgment of the Income-tax Appellate Tribunal deciding the reference against the Department and in favour of the assessee. The question which had been referred by the Tribunal is :
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in deleting the penalties of Rs. 11,125 for the assessment year 1970-71 and Rs. 5,370 for the assessment year 1971-72 imposed under Section 18(1)(a) of the Wealth-tax Act ?"
2. It is evident from the aforesaid question that the dispute was in respect of two assessment years. Hence, two assessment orders were passed by the Wealth-tax Officer followed by two judgments in the appeal.
3. On reference having been made, the Bench which heard the same reframed the questions which are as under :
"(1)(a) Whether, on the facts and in the circumstances of the case, the successor officer was under an obligation to give notice under Section 39 of the Act to the assessee before continuing and concluding the proceedings concerned ?
(b) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in deleting the penalties of Rs. 11,125 for the assessment year 1970-71 and of Rs. 5,370 for the assessment year 1971-72 imposed under Section 18(1)(a) of the Wealth-tax Act ?"
4. We have heard counsel for the parties.
5. The sole question is whether the assessee, Umrao Lal, had notice of the hearing of the case on the date on which penalty orders for both the years were made, i.e., on September 14, 1973. Umrao Lal should have filed the returns of his net wealth by June 30, 1970, and June 30, 1971, respectively, for the two years mentioned above. He filed them only on April 17, 1971, and December 7, 1972, respectively, for these two years. The Wealth-tax Officer made the assessment and for the delay that had occurred in the filing of the returns, took action under Section 18(1)(a) of the Wealth-tax Act. The notices for showing cause as to why penalties be not imposed were served on Umrao Lal on September 2, 1972. He neither appeared nor filed any written explanation on that date. He absented himself. Some time thereafter, the Wealth-tax Officer who was previously seized of the cases was transferred. He was succeeded by a new officer who passed penalty orders for both the years on September 14, 1973. He took the view that in spite of the service of notice for showing cause as to why penalty be not imposed for late filing of the returns, the assessee had neither appeared nor filed any written explanation, and, therefore, there was no need to issue a fresh notice. In the result, he imposed penalties in the sums of Rs. 11,125 and Rs. 5,370 for the two years.
6. The assessee filed an appeal before the Appellate Assistant Commissioner who allowed the same on the finding that since he was not given an opportunity to which he was entitled, the order imposing penalty passed by the Wealth-tax Officer was bad in law.
7. Aggrieved, the Department took the matter before the Income-tax Appellate Tribunal in appeal which was rejected and the orders of the Wealth-tax Officer were set aside. Consequently, upon the setting aside of the orders by the Tribunal, the Department preferred an application for referring the question mentioned above, which was allowed and thereafter, the question mentioned above was referred to this court.
8. On the date of hearing of the reference, the High Court reframed two questions, in place of the one referred for opinion.
9. The moot question that arises for decision is whether the assessee was entitled to fresh notice after the proceedings were started by the successor-Wealth-tax Officer and whether, in the absence of the notice, the imposition of penalties was illegal and void. It is not necessary to lay emphasis on the fact that if an officer was transferred, the succeeding officer is required to issue fresh notice before imposing any penalty. It is not our purpose to say that In the present case, we are only concerned with whether the principles of natural justice had been complied with and, if they had not been, the orders imposing penalty for the two years 1970-71 and 1971-72 would be liable to be quashed.
10. It is settled that there are no rigid and fixed rules of natural justice. It differs from case to case. Which particular procedure should be followed is a question of fact. In the instant case, the Wealth-tax Officer did not give any notice to the assessee on account of which he had no information of the date on which the penalty proceedings were going to be decided. The order passed on that date was behind his back and, as such, in doing so, the Wealth-tax Officer committed a breach of the principles of natural justice.
11. Sri Markandey Katju, appearing for the Department, stressed that as the applicant had earlier defaulted and had not appeared in pursuance of the notice which had been served on him, he was, neither in law nor in equity, entitled to a second notice. We are unable to uphold this contention. It is not default on the part of the assessee which is conclusive or determinative of the controversy. The question is whether the assessee should have been served with a second notice in view of the fact that there has been a long gap in between the first and the second dates of hearing. The assessee could not be expected to go to the office every day and find out the date of hearing of the penalty proceedings. It was for the Department to have served the assessee with the notice when the next date had been fixed. This is a rule of natural justice which had been flouted and not followed.
12. Consequently, we answer the question in favour of the assessee and against the Department. The assessee will be entitled to get Rs. 500 as costs.