BADSHAH KHAN Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE wealth -tax return for the asst. year 1965 -66 due on 30th June, 1965, was filed by the assessee on 30th June, 1970. The WTO held that there was no reasonable cause for not filing the return by the due date and imposed a penalty under S. 18(1)(a) of the Act at the rate of 2per cent per month on the tax payable subject to the maximum of 50per cent from 1st July, 1965, to 30th March, 1969, and at the rate of 1/2per cent of the net wealth reduced by the basic exemption, from 1st April, 1969, to 31st March, 1970. On appeal, the AAC turned down the claim of the assessee that he had reasonable cause for not filing the return by the due date. However the AAC held that the amended provisions of the Act brought in by the Finance Act, 1969, would not apply and the penalty should be on the basis of the law that existed in the assessment year and accordingly directed that the penalty should be calculated at the rate of 2per cent of the net assessed tax from the date of the default. The revenue took the matter to the Tribunal, Gauhati, for short "the Tribunal" and the asseseee also filed cross objection. The learned Tribunal followed its earlier decision in W.T.A. 96 (Gau) and 97 (Gau) of 1973 -74 dt. 12th Nov., 1974, WTO vs. T. K. Roy and T. K. Roy vs. WTO, respectively, and held that the AAC was incorrect in directing that the penalty under S. 18(1)(a) should be calculated at the rate of 2per cent of the assessed wealth -tax even for the period after 1st April, 1969. The Tribunal held :

(2.) IN the instant case, the return was due on 30th June, 1965, and the assessee had defaulted and continued to default until he filed his return on 30th June, 1970. The AAC held that the petitioner would be governed by the then existing law prevalent on 30th June, 1969, and the provision of the amendment brought by the Finance Act from 1st April, 1965, could not be applied. The learned Tribunal held that "the wrong" or "the offence" was a continuing wrong and the assessee should be liable to penalty up to 31st March, 1969, according to the Act as amended by the W.T. (Amend.) Act, 1964, but the penalty leviable on the assessee from 1st April, 1969, should be at the enhanced rate imposed by the Finance Act, 1969. The very question came up before the Supreme Court in CWT vs. Suresh Seth (1981) 129 ITR 328 and their Lordships have held: (1) that the penalty for default in not filing a return under S. 18(1)(a) of the Act is not a continuing wrong or offence and the penalty is to be determined in accordance with the provisions prevailing on the last day on which the return is required to be filed; (2) that the amendments brought in S. 18(1)(a) made in 1964 as well as 1969 do not operate retrospectively; and (3) that where the default complained of is one falling under S. 18(1)(a), the penalty has to be computed in accordance with the law in force on the last date on which the return had to be filed. In view of the fact that the question has been answered by their Lordships, in our opinion, the question is no longer res integra. Accordingly, we hold that where the default complained of is one falling under S. 18(1)(a) of the Act, the penalty has to be computed in accordance with the law in force on the last date on which the return in question had to be filed, and, in the instant case, the last date was 30th June, 1965.

(3.) ACCORDINGLY , we answer the question partly against the Revenue and in favour of the assessee. The learned Tribunal was correct in holding that the calculation of penalty up to 31st March, 1969, was to be made under S. 18(1)(i) of the WT Act, 1957, as it originally stood but it went wrong in holding that the calculation of penalty from 1st April, 1969, should be under S. 18(1)(i) as substituted by the Finance Act, 1969. The calculation of penalty should be made under S. 18(1)(i) as amended by the W.T. (Amend.) Act, 1964. There is no order as to costs.