1976 (3) TMI 43 - HC - Wealth-tax

Summary

Issues involved: Assessment of wealth-tax, penalty proceedings under section 18(1)(a) of the Wealth-tax Act, applicability of Finance Act, 1969, retrospective effect of penalties for assessment years 1964-65 to 1967-68.

Assessment of wealth-tax: The assessee, assessed for wealth-tax as an individual for the years 1964-65 to 1967-68, failed to file voluntary returns of wealth as required by section 14(1) of the Act. Notice under section 17 was issued by the Wealth-tax Officer, and returns were filed belatedly. Penalty proceedings were initiated for the delay in filing the returns, leading to the imposition of penalty under section 18(1)(a) due to non-compliance with the Act's provisions.

Penalty proceedings under section 18(1)(a): The Wealth-tax Officer levied penalty under section 18(1)(a) as the assessee did not comply with section 14 and failed to file returns in response to the notice under section 17. Appeals were made, with the Tribunal directing the imposition of penalty based on the scale in force prior to the Finance Act, 1969. The Commissioner of Wealth-tax filed an application under section 27(1) to draw up a statement of case, questioning the retrospective effect of the Finance Act, 1969, on penalties.

Applicability of Finance Act, 1969: The Tribunal considered whether penalties should be calculated under the Finance Act, 1969, or the unamended law. The department argued for the amended law's application, citing continuous default and the need for strict construction of penalty provisions. However, the court held that penalties should be calculated based on the law as it stood when the default occurred, rejecting the retrospective application of the amended law.

Retrospective effect of penalties: The court emphasized that fiscal statutes cannot be retrospective by implication, especially in penal provisions. The default date determines the applicable law for penalty proceedings, and the amended law does not apply retrospectively unless explicitly stated. The court's decision favored the assessee, affirming that penalties should be calculated based on the law in effect at the time of default, not the amended law.

This judgment clarifies the application of penalty provisions under the Wealth-tax Act, highlighting the importance of interpreting fiscal statutes strictly and considering the timing of defaults for penalty calculations.