1976 (9) TMI 87 - AT - Wealth-tax

Summary

Issues:
- Calculation of penalty under section 18(1)(a) of the Wealth Tax Act
- Applicability of amended law on penalty calculation
- Interpretation of law for determining penalty rates
- Continuation of default in filing returns
- Precedents regarding the application of law in penalty cases

Analysis:
The case involved a departmental appeal against a penalty imposed under section 18(1)(a) of the Wealth Tax Act. The Income Tax Officer (ITO) had levied a penalty of Rs. 4,328 based on a calculation of 1/2 per cent of the taxable wealth for every month of default. The Appellate Assistant Commissioner (AAC) upheld the penalty but disagreed with the ITO's calculation method. The AAC ruled that the penalty should be limited to 50 per cent of the wealth tax due for the assessment year 1967-68, as the amended law effective from April 1, 1969, should not apply retroactively.

The Departmental Representative argued that the penalty should be based on the amended law since the return was filed after the amendment came into force. However, the counsel for the assessee contended that the law applicable should be that which was in force during the assessment year and when the return was due. Citing a precedent (CIT vs. R.N. Agrawal), the counsel argued that the law in effect at the time of the default should govern the penalty calculation.

The Tribunal analyzed the case and determined that the penalty calculation by both the ITO and the AAC was incorrect. They emphasized that the default in filing the return was a continuing one, starting from the due date and persisting until the return was filed. The Tribunal referred to a Full Bench decision regarding the application of law in such cases and concluded that the penalty should be calculated based on the law in force during the period of default. Therefore, the penalty for the period before April 1, 1969, should follow the pre-amendment law, while the penalty for the period after that date should adhere to the amended law. The Tribunal directed the WTO to recalculate the penalty accordingly, with the limit being the greater of the two prescribed limits.

In conclusion, the appeal was partially allowed, with the Tribunal clarifying the correct method for calculating the penalty under section 18(1)(a) of the Wealth Tax Act and establishing the applicable law for penalty determination based on the period of default.