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TMI Blog1992 (8) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... le 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. 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 dela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be ascertained if the answer to the other question is in the affirmative. At the outset we may observe that the entire controversy before us now stands concluded on all fours, so far as this court is concerned, by the authoritative pronouncement of the Supreme Court and the position is no more in doubt. We have heard learned counsel for the Commissioner of Wealth-tax. No one appeared before us for the assessee. We were invited to a decision of the Supreme Court in Maya Rani Punj v. CIT [1986] 157 ITR 330. Placing reliance on this decision, learned counsel contended that the view expressed by this court in Ram Narain Agrawal's case [1977] 106 ITR 965 is no longer good law and the default stipulated under clause (a) of sub-section (1) of section 18 of the Act is a continuing offence and not one fixed in point of time. Another contention of learned counsel was that the quantification of the penalties by the Wealth-tax Officer with reference to the amended provisions of section 18(1)(a) with effect from April 1, 1969, was legal and the interference exercised by the Income-tax Appellate Tribunal directing recomputation of the penalties on the basis of the law prevailing on the date wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated. The question whether the failure to submit the return on or before the due date is a continuing wrong or not, has significance for the determination of the quantum of penalty. This question directly and pointedly came up for consideration before the Supreme Court in Maya Rani Punj's case [1986] 157 ITR 330 in connection with the penalty proceedings arising under section 271(1)(a) of the Income-tax Act, 1961. The Supreme Court, while adverting to the scope of the expression 'continuing wrong', reviewed several decisions, English and Indian cited at the Bar. Interpreting that expression, as well as section 271(1)(a) of the Act of 1961, and the scheme underlying them the court held that imposition of penalty under the said section was not confined to the first default but with reference to the continued default on the footing that non-compliance with the obligation of making a return was an infraction as long as the default continued. It was observed " That in view of the language used in section 271(1)(a) of the 1961 Act, the position was beyond dispute that the Legislature intended to deem the non-filing of the return to be a continuing default the wrong for which penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not without significance and is indicative of the legislative intent that the default contemplated therein is a continuing one. It requires no mention that the provisions of section 271(1)(a)(i) of the Income-tax Act, 1961, which were the subject-matter of scrutiny before the Supreme Court in Maya Rani Punj's case [1986] 157 ITR 330 are analogous to section 18(1)(a)(i) of the Act. The close similarity and virtual identity of the aforesaid provisions are somewhat too patent to call for further elaboration. The ratio decidendi of the case of Maya Rani Punj [1986] 157 ITR 330 (SC) squarely applies to the interpretation of section 18(1)(a)(i) of the Act. Without sanction of law, no penalty is imposable with reference to defaulting conduct. The accrual of penalty depends upon the terms of the statute imposing it. On the analogy of the ratio accepted by their Lordships of the Supreme Court, it must be held that in enacting the provisions of section 18(1)(a)(i) of the Wealth-tax Act, the Legislature intended to deem the non-filing of the returns to be a continuing default and penalty was imposable not only for the first default but with reference to the continued default which commence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 399, by which the controversy with which we are concerned has been set at rest. The Supreme Court has taken the same view that is expressed by the Bombay High Court. It has held that the amount of penalty has to be quantified up to March 31, 1969, on the basis of the earlier provisions of the Wealth-tax Act, relating to penalty and, after that date, on the basis of the amended provisions. In this view of the matter, we regret our inability to concur with the contrary view expressed by some of the High Courts referred to earlier.
In view of the above discussion, we answer the question referred to us by saying that the penalties under section 18(1)(a)(i) of the Wealth-tax Act for delay in filing the returns for the assessment years in question are to be levied for the period of delay prior to April 1, 1969, in terms of the prescribed rates with reference to the unamended section 18 of the Act as it stood prior to its amendment by the Finance Act, 1969, and for the period of delay subsequent to April 1, 1969, at the prescribed rates in terms of law under the amended section 18(1)(a)(i) as it stood after its amendment effected thereto by the Finance Act, 1969. X X X X Extracts X X X X X X X X Extracts X X X X
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