COMMISSIONER OF WEALTH TAX Vs. DALIP KUMAR WORAH

JUDGEMENT

(1.) WHETHER the date of the decision of the authority to initiate proceedings for levying penalty would govern the relevant law applicable for the quantification of the amount of such penalty under Section 18 of the Wealth-tax Act, 1957, is, in essence, the core question which has necessitated the reference of this set of four connected taxation cases to the Full Bench. Equally at issue is the correctness of the view in an earlier Division Bench judgment of this court in CIT/CWT v. Jagjit Kaur [1986]-162 ITR 844, holding that penalty would be computed on different rates applicable during the period of each month in accordance with the rules existing during the said period.

(2.) THE facts giving rise to the issues aforesaid which patently enough are pristinely legal deserve recounting with relative brevity. THE representative matrix thereof may be noticed from Taxation Case No. 269 of 1976. THE assessee, Dalip Kumar Worah, Dhanbad, therein was required to submit his return under the Wealth-tax Act by June 30, 1968, for the assessment year 1968-69. Admittedly, he filed the return much later on February 20, 1970. Meanwhile before the filing of the return, the Finance Act, 1969 (Act 68 of 1969), came into force on April 1, 1969. By virtue of the amendments made thereby in Section 18 of the Wealth-tax Act, 1957 (hereinafter called "the Act"), steeply enhanced rates of penalty different from that which applied prior to such amendment were brought on the statute book. Patently enough, the return had been filed far beyond the time prescribed by law. THE Wealth-tax Officer, therefore, initially levied penalty for the late filing of the returns in terms of the law prevailing prior to the 1st of April, 1969, and imposed a penalty of Rs. 573 only. Admittedly, the assessee virtually accepted the said penalty and no appeal was preferred against its imposition. However, later, the Wealth-tax Officer found that in the matter of the quantum of penalty, an error of law apparent on the record had been committed inasmuch as the law and the rate applied were that which prevailed prior to April 1, 1969, though the return had been filed on February 20, 1970, and, therefore, the law applicable was the one in force after the enforcement of the Finance Act, 1969, namely, April 1, 1969. He, therefore, initiated rectification proceedings and after complying with the requirements of Section 35 of the Act passed an order for the levy of penalty in terms of Section 18 of the Wealth-tax Act as amended by the Finance Act, 1969, and enhanced the penalty in accordance with the statute to Rs. 15,358.62. THE assessee then being aggrieved by the ordes of rectification filed an appeal before the Appellate Assistant Commissioner. THE latter not merely adverted to the quantum of penalty but proceeded to examine the issue on merits afresh and came to the conclusion that in fact no penalty at all was leviable and consequently set aside the whole amount thereof. THE Revenue, being aggrieved by the order of the Appellate Assistant Commissioner, filed appeals before the Tribunal which broadly agreed with the Appellate Assistant Commissioner and rejected the same. THE Commissioner of Income-tax then claimed a reference to the High Court in all the four connected cases. THE Tribunal found that common questions of law did arise and referred the following two questions to the High Court in all the four connected cases:

(3.) IT was finally concluded as under (p. 341):