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TMI Blog1987 (3) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal, following the ratio of this court in CWT v. V. R. Desai [1977] 108 ITR 787, the Tribunal by order dated July 11, 1977, held that the default committed is not a continuing offence and the default arises on the last due date to file the return. Therefore, the law prevailing as on the last day for filing the return should be applied to compute the penalty. At the instance of the Revenue, the following question has been referred : " Whether, on the facts and in the circumstances of the case, the provisions as obtained after April 1, 1969, were applicable in computing the penalty for the assessment year 1960-61 ? " Sri Suryanarayana Murthy, learned standing counsel for the Revenue, has stated that the failure to file the return is a continuing offence. Under section 18(1)(a), the penalty shall be payable in a sum not exceeding l1/2 times the amount of such tax in a case covered under section 18(1)(a). Subsequently, the law was amended. Following the amended law, the Wealth-tax Officer is justified in law in computing the penalty in terms thereof. In support thereof, he placed reliance on Maya Rani Punj v. CIT [1986] 157 ITR 330 (SC). Sri Ratnakar, learned counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the Act reads: " 15. Return after due date and amendment of return.-If any person has not furnished a return within the time allowed under section 14, or having furnished a return under that section discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made. " The relevant parts of section 18 of the Act as they stood during the three periods referred to above read as follows Prior to April 1, 1965 "18. (1) If the Wealth-tax Officer, Appellate Assistant Commissioner, Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person (a) has without reasonable cause failed to, furnish the return of his net wealth which he is required to furnish under sub-section (1) or subsection (2) of section 14 or section 17 or has without reasonable cause failed to furnish it within the time allowed and in the manner required; or (b) and (c) - (not relevant. Hence omitted)... he or it may, by order in writing, direct that such person shall pay by way of penalty (i) in the case referred to in clause (a), in addition to the amount of we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 17, where assessment has been made under that section, as reduced by (1) the net wealth, if any, assessed previously under section 16 or section 17, or (2) the amount of net wealth on which, in accordance with the rates of wealth-tax specified in Paragraph A of Part I of the Schedule or Part II of the Schedule, the wealth-tax chargeable is nil, whichever is greater, but not exceeding, in the aggregate, an amount equal to the net wealth assessed under section 16, or, as the case may be, the net wealth assessed under section 17, as reduced in either case in the manner aforesaid ; ...... .. In this case, admittedly the assessee did not file the return on or before June 30 of the relevant assessment year till 1971. A reading of the above provisions would indicate that they have undergone, in regard to levy of penalty, a sea change. The liability to pay penalty arises when the default is committed in filing the return of net wealth as on the valuation date in the prescribed manner before the Wealth-tax Officer on or before June 30 of the relevant assessment year. In a case where notice is given by the Wealth-tax Officer or he has extended the time to file the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fresh period of limitation began to run at every moment of time during which the said wrong continued. Gajendragadkar J. (as he then was), speaking for the court, while construing the scope of the term " continuing wrong ", held thus (p. 807): " It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes a continuing wrong. In this connection, it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury; It is only in regard to acts which can be properly characterised as continuing wrongs that section 23 can be invoked. " In State of Bihar v. Deokaran Nenshi, AIR 1973 SC 908, the question was whether the failure to furnish a return is a continuing offence under the Mines Act, 1952. Shelat J., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion or an act of omission. When a person does an act which law prohibits him from doing it and attaches a penalty for doing it, he is stated to have committed an act of commission which amounts to a wrong in the eye of law. Similarly, when a person omits to do an act which is required by law to be performed by him and attaches a penalty for such omission, he is said to have committed an act or omission which is also a wrong in the eye of law. Ordinarily, a wrongful act or failure to perform an act required by law to be done becomes a completed act of commission or of omission, as the case may be, as soon as the wrongful act is committed in the former case and when the time prescribed by law to perform an act expires in the latter case and the liability arising therefrom gets fastened as soon as the act of commission or of omission is completed. The extent of that liability is ordinarily measured according to the law in force at the time of such completion. In the case of acts amounting to crimes, the punishment to be imposed cannot be enhanced at all under our Constitution by any subsequent legislation by reason of article 20(1) of the Constitution which declares that no person s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due date but after a delay of seven months odd. Reliance was placed by the assessee on CWT v. Suresh Seth [1981] 129 ITR 328 (SC). Sabyasachi Mukharji J., speaking for the court, held that failure to submit the return is a continuing offence. It was held (p. 335) thus : " It was obvious that for the imposition of penalty, it was not the assessment year or the date of the filing of the return that was important but it was the satisfaction of the income-tax authorities that a default had been committed by the assessee which attracted the provisions relating to penalty. Whatever be the stage at which the satisfaction was reached, the scheme of sections 274(1) and 275 of the Act of 1961 was that the order imposing penalty must be made after the completion of the assessment. The crucial date, therefore, for the purpose of penalty is the date of such completion and the satisfaction of the authority that proceedings for levy of penalty be initiated." It was further held (at p. 341) " The imposition of penalty not confined to the first default but with reference to the continued default is obviously on the footing that non-compliance with the obligation of making a return is an infract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is committed every time when the positive act is repeated. In the latter case, it makes no difference so long as the law expects the doer of the act to fulfil an obligation cast under the Act. Consequently, every day, if that omission is not rectified or is perpetrated by the performance of the negative duty, an offence is committed. No doubt, technically every moment's omission is punishable as a separate offence. To continue means to remain in existence, not to cease. Therefore, if the omission continues de die in diem, then a fresh offence is committed on every day on which the omission to obtain licence and continuing to purchase or sale of the notified agricultural produce, etc., within the notified market area is continued. Thus, the continued contravention of transacting the sale or purchase without a valid licence issued under rule 50 is a continuing offence de die in diem." The same question arose before a Division Bench of this court in K. Ch. Panduranga Rao v. Secretary, Agrl. Market Committee [1984] 2 APLJ 27, to which one of as (K. Ramaswamy J.) is a member. Therein, the question was whether the failure to pay market fee on demand, under section 12(1) of the A.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was also held that law which provides for a minimum sentence of fine on conviction cannot be read as one which imposes greater penalty than that which might have been inflicted under the law at the time of the commission of the offence where for such an offence there was no limit as to the extent of fine which might be imposed. This principle was followed by another Constitution Bench in Jain Brothers v. Union of India [1970] 77 ITR 107 (SC). It was held in p. 116 that: " There can be no manner of doubt that penalty has to be calculated and imposed according to the tax assessed. It follows that imposition of penalty can take place only after assessment has been completed." It was further held that in fiscal enactments, the Legislature has larger discretion in the matter of classification so long as there is no departure from the rule that persons included in a class are not singled out for special treatment. It was further held thus (p. II 6): " It is obvious that for the imposition of penalty it is not the assessment year or the date of the filing of the return which is important but it is the satisfaction of the income-tax authorities that a default has been committed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above ratio no longer holds the field. It stands overruled by the decision in Maya Rant Punj's case [1986] 157 ITR 330 (SC) and, therefore, we hold that the Tribunal has committed an error of law in holding that the provisions obtaining on or after April 1, 1969, were not applicable in computing penalty for the assessment year 1960-61. The penalty is to be computed with reference to each succeeding month during which the default continues as per the law prevailing on the date of assessment and initiation of penalty proceedings. No doubt, as rightly contended by Sri Ratnakar, learned counsel for the assessee, in view of the decision of this court, the assessee was precluded from agitating before the Appellate Tribunal regarding the reasonableness of the explanation offered by the assessee for his failure to submit the return within the prescribed time and the Tribunal did not have occasion to go into that question. Sri Murthy, learned standing counsel for the Revenue, states that that is not the reference and, therefore, this court cannot give any such direction. As held by the Supreme Court in CIT v. Bansi Dhar and Sons [1986] 157 ITR 665, this court merely exercises advisory ..... X X X X Extracts X X X X X X X X Extracts X X X X
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