TMI Blog1979 (2) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal was right in reducing the penalty of Rs. 30,655 imposed under the provisions of section 18(1)(c) of the Wealth-tax Act to Rs. 180 ? " The assessee was served and she is not present either in person or through counsel. The reference at the assessee's instance is not prosecuted and the question is not, therefore, answered, and we return the reference in so far as that question is concerned without answering it. We consider below only the Commissioner's reference. The assessment year under consideration is 1964-65. The assessee filed a return under the W.T. Act on November 9, 1964, showing a net wealth of Rs. 21,266. The assessment was completed on a net wealth of Rs. 2,51,353 on 27th October, 1965. During the course of the assessment proceedings to levy income-tax, the ITO found that the assessee had claimed debts amounting to Rs. 30,655 as being due to two persons and that such a claim was not a proper one. He disallowed it. The assessment to income-tax, including the said sum of Rs. 30,655, became final and the WTO took proceedings under s. 17 of the W.T. Act and reopened the assessment made earlier on October 27, 1965, wherein there was a deduction of Rs. 30,655. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturned by such person had been accepted as correct. It may be seen from the provision, as summarised above, that there was no statutory minimum fixed in regard to the leviability of penalty. This provision was amended by Central Act 46 of 1964 with effect from April 1, 1965. In the case of concealment of particulars of assets or furnishing of inaccurate particulars of assets or debts, the quantum of penalty as fixed under the amended provision was that it should not be less than 25 per cent. but should not exceed 1 1/2 times the amount of tax, if any, which would have been avoided if the net wealth as returned by the assessee had been accepted as the correct net wealth. It may be seen that this provision came into force only from April 1, 1965, so that as on the date on which the original return was submitted, this provision fixing a statutory minimum for the levy of penalty was not in operation. Section 18 was again amended by s. 32 of the Finance Act of 1968 with effect from April 1, 1968. Under the provisions in force after that date, the minimum penalty should not be less than the amount representing the value of any assets in respect of which the particulars had been concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. In the reassessment, a sum of Rs. 52,783 was added, and proceedings for the levy of penalty under s. 271(1)(c) of the I.T. Act were initiated. Section 271(1)(c) had undergone a modification or amendment as made by s. 40 of the Finance Act of 1964 with effect from April 1, 1964. The question before the Allahabad High Court was whether the penalty provision as in force at the time when the original return was submitted, that is, prior to 1st April, 1964, was to be applied, or whether the penalty provision as in force subsequent to its amendment with effect from that date, was to be applied. It was pointed out at page 150 : " This apart, where an assessee has concealed the particulars of his income or furnished inaccurate particulars of such income once, it cannot be said that if he repeats the same act again, there is a fresh concealment or furnishing of inaccurate particulars of the same income. " It was held that the provision as in force prior to 1st April, 1964, would alone apply and that the relevant return for the purpose of levy of penalty was the original return and not the revised return. Though this decision was rendered under the I.T. Act, the scheme for levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and could not stand together. As the earlier order of penalty had been cancelled by the Tribunal, it was held that the second order of penalty was a legal one. The Supreme Court did not have any occasion to deal with the question (a) which is the return in respect of which penalty proceedings could be taken, or (b) which is the law that would govern the leviability of penalty where there is a change in the law after the filng of the first return. It may be seen that in that particular case the assessee had submitted a correct return in the reassessment proceedings. Therefore, the concealment, was in the original proceedings. The real objection of the assessee was that penalty in respect of the original proceedings could not be levied in the reassessment proceedings, and it is this contention which was rejected, and in doing so a decision of this court in C. V. Govindarajulu Iyer v. CIT [1948] 16 ITR 391 (Mad) was approved. We do not, therefore, find that this decision has anything to do with the point which is before us or which was before the Allahabad High Court. The decision of the Allahabad High Court is not inconsistent with that of the Supreme Court. It is now settled, as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at page 380, it was observed : " It is therefore, manifest that once assessment is reopened by issuing a notice under sub-section (2) of section 22, the previous under-assessment is set aside and the whole assessment proceedings start afresh. " In the present case, the question as to whether, by reason of the reassessment proceedings, the original assessment proceedings got completely set aside is not relevant, and the decision cited has no application. The Supreme Court has not also laid down that the original return itself got set aside by reason of the reassessment proceedings. Therefore, any concealment in the original return is not washed off by the reassessment. The offence having been committed at the time of the submission of the original return, it is that offence that has to be punished. No fresh cause of action arose for the levy of penalty when the return was filed in March, 1970, as it was only a continuation of what had happened earlier. A repetition of the same mistake does not give rise to a fresh offence. In the present case, both the IAC and the Tribunal have pointed out that the amount which is now added, namely, Rs. 30,655, was the subject-matter of the f ..... 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