COMMISSIONER OF WEALTH TAX Vs. ZAVERBHAI BAPUJI

JUDGEMENT

(1.) THE following question has been referred to this Court under S. 27 of the WT Act, 1957 (hereafter referred to as "the Act") :

(2.) FOR the asst. yrs. 1964 65 to 1967 68, the assessee filed returns of his wealth on 3rd Oct., 1969, and for the asst. yrs. 1968 69 and 1969 70, he filed them on 20th Jan., 1970. Really, he should have filed them on or before 30th June of each of those assessment years. The WTO noticed these defaults during the assessment proceedings, and after they were over, he initiated penalty proceedings under S. 18(1) of the Act. The contention raised on behalf of the assessee was that the returns were filed voluntarily; and, therefore, no penalty should be levied. The WTO held that the returns were not filed voluntarily, but were filed only after enquiries regarding his total wealth were made during the income tax assessment proceedings. He also held that the assessee had without any reasonable cause, failed to file the returns within the prescribed time. He, therefore, passed orders on 30th Nov., 1972, imposing penalty for each of those assessment years. Penalties were computed in accordance with the provisions of S. 18(1)(a) as they stood then. The assessee filed appeals before the AAC (hereafter referred to as "the AAC"). It was urged before the AAC that the total wealth, though returned and assessed in the hands of the assessee in his "individual" capacity, in fact, belonged to the HUF of which the assessee was the Karta, and that the assessee in his individual capacity did not have any taxable wealth at all. This contention was raised for the first time before the AAC. For that reason and also because he did not find any merit in it, he rejected the same. He also agreed with the finding that the assessee had committed the defaults without a reasonable cause. He, therefore, confirmed the orders passed by the WTO. The assessee then preferred appeals to the Tribunal (hereafter referred to as "the Tribunal"). The Tribunal also confirmed the finding regarding the defaults committed by the assessee. However, it upheld the contention that so far as the asst. yrs. 1964 65 to 1968 69 are concerned, penalty should have been computed in accordance with S. 18(1) as it stood before its amendment which came into force from 1st April, 1969, and directed the WTO to recompute the penalty accordingly. Dissatisfied with this decision, the Department moved the Tribunal for making a reference to this Court. In all, five applications were filed before the Tribunal. The question of law involved in all those applications being common, a common reference has been made by the Tribunal.

(3.) IN Brij Mohan vs. CIT (1979) 120 ITR 1 (SC), the contention of the assessee was that an assessment proceeding for the determination of the total income and the computation of the tax liability must ordinarily be made on the basis of the law prevailing during the assessment year, and inasmuch as concealment of income was concerned with the income relevant for assessment during the assessment year, any penalty imposed in respect of concealment of such income should also be governed by the law pertaining to that assessment year. The Supreme Court rejected that contention, with the following observations (p. 4) :