TMI Blog1971 (10) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the assessee in filing his returns of net wealth. On receipt of the show-cause notice, the assessee furnished an explanation that, on account of his failing health, old age and the fact that he was a villager, the delay had occurred. The explanation was not accepted by the Wealth-tax Officer who thereafter imposed penalties in respect of each of the assessment years mentioned above under the amended Act. The penalty that was levied was in accordance with the provisions of section 18(1)(a) of the amended section. The assessee carried the matter in appeal before the Appellate Assistant Commissioner who by a common order dated 26th September, 1966, accepted the assessee's contention that on the date on which the voluntary returns were filled by him, i.e., 26th November, 1963, section 18(1)(a) as amended was not on the statute book and penalties could be imposed only in terms of section 18 as it stood prior to its amendment. The Appellate Assistant Commissioner set aside the orders of penalty passed by the Wealth-tax Officer and directed him to pass fresh orders in accordance with the law that prevailed at the time when the default had occurred. The Appellate Assistant Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings are therefore governed by the amended section. The learned counsel for the assessee argued that the provisions of section 18(4) are not merely procedural but are substantive. A privilege is created in favour of the assessee by providing for a safeguard. By virtue of the provisions of section 6(c) of the Central General Clauses Act, the repeal of old section 18(4) will not in any way affect the safeguard granted to an assessee in respect of the default committed prior to the amendment of the section. Unamended section 18(4) is, therefore, attracted to the case in question. The second contention is that when the amended section 18 provides for a minimum penalty, section 6(d) of the General Clauses Act is attracted. By virtue of that provision, a repeal of a provision cannot affect any penalty incurred in respect of any offence committed against any enactment so repealed. Penalty is levied because of default in furnishing the returns. The last day for furnishing the returns in each of the assessment years was the 30th June of that year. The default, therefore, was committed on the 30th June of the years, 1959, 1960, 1961, 1962 and 1963. The law applicable on the aforesaid date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd ...... (5) No order imposing a penalty under this section shall be passed after the expiration of two years from the date of the completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced. Explanation.--In computing the period of limitation for the purposes of this section, the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 39 and any period during which a proceeding under this section for the levy of penalty is stayed by an order or injunction of any court shall be excluded." A comparison of the aforesaid two provisions shows that, in the new section, there has been a departure in regard to the penalty that may be imposed on the assessee. Under the old section 18, the maximum penalty was fixed at one and a half times of the amount of tax, there being no minimum stipulated whereas, in the new section 18, a minimum penalty has been stipulated which is two per cent. of the tax for every month during which the default continued and the maximum penalty has been reduced to 50 per cent. of the amount of tax. Thus, it can be seen that the maximum penalty has been conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no provision in the Act which shows that an assessee can make a representation to the Inspecting Assistant Commissioner before he grants his approval to the Wealth-tax Officer to levy the penalty on an assessee. Under the old section, the jurisdiction to levy the penalty was vested in the Wealth-tax Officer with a superimposed condition that he cannot make an order unless the previous approval of the Inspecting Assistant Commissioner was obtained. The result of this provision was that instead of the order of penalty being considered by the Wealth-tax Officer alone, it was considered also by the Inspecting Assistant Commissioner. In other words, the forum for the imposition of penalty was the Wealth-tax Officer and also the Inspecting Assistant Commissioner. In the new section 18, a provision similar to the old section 18(4) does not find a place. The result, therefore, is that in cases governed by the new section 18, it is no longer necessary for the Wealth-tax Officer to obtain the prior approval of the Inspecting Assistant Commissioner. The forum under the new section is restricted only to the Wealth-tax Officer. By virtue of the repeal of section 18(4), the change effected i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word " privilege " used in the section does not merely mean an advantage or boon which by virtue of an existing procedure a party may deem to have. In the context in which it appears, it has to be defined as a right, advantage or immunity in law enjoyed by a person or class of persons beyond the common advantages of others. The word has to be construed in a strict sense as having a legal meaning when it is employed in a statute and not as having a loose or figurative meaning. The construction of the word " privilege " came up for consideration before a Full Bench of the Rangoon High Court in Arunachalam Chettiar v. R. M. K. A. R. Valliappa Chettiar AIR 1938 Rang 130 [FB]. An argument was advanced before the learned judges by reference to section 10 of the Civil Procedure Code as amended by the Adaptation of Laws Order, 1937, when the territory of Burma was separated from British India. Section 10, Civil Procedure Code, before its adaptation by the aforesaid order, enabled the court to stay the proceedings before it in case the matter in issue directly and substantially was in issue in a previously instituted suit between the same parties in British India. By the Adaptation of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase before us. We hold that it is not necessary for the Wealth-tax Officer to obtain the prior approval of the Inspecting Assistant Commissioner for levy of penalty against the assessee. It was alternatively argued by the learned counsel for the department that assuming there was a vested right in the assessee, that penalty should be levied by a particular forum, that right will arise only from the date on which the penalty proceedings commenced and not on the date on which the default was committed. The Supreme Court in Garikapati Veeraya v. Subbiah Choudhury AIR 1957 SC 540, 553 has held that : " The right of appeal is a vested right and such a right to enter the superior court accrues to the litigant and exists as on and from the date the his commences and although it may be actually exercised when the adverse judgment is pronounced such right is to be governed by the law prevailing at the date of the institution of the suit or proceeding and not by the law that prevails at the date of its decision or at the date of the filing of the appeal." It is well settled that penalty proceedings commence after the completion of the assessment proceedings. The Supreme Court in Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken into consideration and not the provisions of old section 18 as the new provisions are not more onerous than the old provisions. He also contends that section 6(d) of the General Clauses Act, is therefore, not applicable. On the contrary, it is the contention of the learned counsel for the assessee that, under the old provision, no minimum amount of penalty had been stipulated and the authorities concerned were competent to levy penalty which would in some cases be entirely nominal. Now, by stipulating the minimum penalty the discretion which vested in the authorities concerned has been taken away and as far is the amount of minimum penalty is concerned, the new provisions are more onerous than the old section, and, therefore, section 6(d) of the General Clauces Act is attracted. We will first determine whether the provisions of the new section 18 in regard to the amount of penalty are more onerous. In order to determine this question, we will have to consider the overall effect of the penalty provisions in the new section and cannot confine ourselves only to the minimum prescribed in the new section. Further, when a minimum penalty is not prescribed in a provision, it is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same facts. The second change is that under the Act of 1922, the Income-tax Officer could not impose any penalty without the previous approval of the Inspecting Assistant Commissioner. Under the 1961 Act, no such previous approval is necessary. Thirdly, the Act of 1922 did not prescribe any minimum amount of penalty. According to the Act of 1961, the penalty cannot be less than the minimum prescribed. This is, of course, subject to the Commissioner's power of reduction. Fourthly, the maximum penalty imposable in a case where there has been a failure to file a return in compliance with a notice issued by the Income-tax Officer has been reduced under the Act of 1961. Lastly, there was no time limit in the Act of 1922 for passing of a penalty order but under the Act of 1961, a period of two years has been prescribed by section 275 as stated above. Thus, whereas under the Act of 1922, a defaulting assessee had certain protection in the matter of prosecution no such protection has been afforded under the Act of 1961; but the maximum amount of penalty which can be imposed has been reduced and a period of limitation has been prescribed for passing a penalty order which is of distinct adva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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