COMMISSIONER OF WEALTH-TAX Vs. BRIJ RANI

JUDGEMENT

(1.) This is a reference under Section 27(1) of the Wealth-tax Act, 1957, at the instance of the Commissioner of Wealth-tax, Lucknow. The reference arises out of the proceedings relating to levy of penalty under Section 18(1)(a) of the Wealth-tax Act ( for short "the Act ") in respect of the assessment years 1967-68 and 1968-69. The following common question of law has been referred by the Income-tax Appellate Tribunal, Delhi Bench, Delhi, for the opinion of this court :

(2.) We may at once notice that the measure of penalty imposable under Section 18(l)(a) of the Act for non-submission or delayed submission of returns without reasonable cause between April 1, 1965, and March 31, 1969, was equivalent to two per cent. of the tax for every month during which the default continued but not exceeding in the aggregate 50 per cent. of the tax. Thereafter with effect from April 1, 1969, an amendment was effected by Section 24(c) of the Finance Act, 1969, in the scale of penalty imposable inasmuch as the rate of penalty provided was a sum for every month equivalent to half a per cent. of net wealth calculated in accordance with the amended provisions of Section 18 of the Act. The scale of penalty provided therein is more drastic than that prevailing earlier.

(3.) We may set out the background of the facts giving rise to the question of law set out earlier. In each of the two assessment years, the assessee's wealth was assessable to wealth-tax. The returns for the assessment years 1967-68 and 1968-69 under the Act were due by June 30, 1967, and August 31, 1968, respectively. However, the returns for both the years were filed on June 12, 1972. The return for the assessment year 1967-68 was late by more than fifty-nine months and that for the assessment year 1968-69 by more than forty-five months. Because of the inordinate delay in the submission of the returns, the Wealth-tax Officer commenced penalty proceedings under Section 18(1)(a) of the Act. Show-cause notices were issued to the assessee to explain why penalty for the delay in furnishing the returns for the years in question be not levied. The assessee did not reply in spite of several reminders. The Wealth-tax Officer, therefore, assumed that the assessee had nothing to explain and subjected the assessee to a penalty for each of the two years calculating the same in terms of the amended provision of Section 18 of the Act, at the rate of half per cent. of the net wealth, for each month of default during which the default continued.