TMI Blog1976 (7) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ears 1964-65-to 1968-69 notwithstanding the fact that the Wealth-tax Officer granted time for filing the wealth-tax returns till March 20, 1970, pursuant to the application made by the assessee for such extension on March 10, 1970 ? " It would be relevant at this stage to state the facts in each reference. In R. C. No. 51/74, for the assessment year 1961-62, the assessee had to file the return before June 30, 1961, as per the provisions of the Act. She, however, filed the return on June 27, 1966, admitting a net wealth of Rs. 6,62,543. The assessment was completed on July 22, 1966, on a net wealth of Rs. 11,30,232. There was a delay of about 60 months in filing the return. The explanation given by the legal representative of the deceased assessee was that the deceased, died on May 13, 1961, and his affairs were in a confused state, and hence the delay. This explanation was not accepted by the Wealth-tax Officer, and he levied a penalty of Rs. 4,650 under section 18(1)(a) of the Act as it stood on April 1, 1965. The legal representative appealed to the Appellate Assistant Commissioner who did not accept the plea put forth on behalf of the assessee with regard to the delay in fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that the matter was referred to the approved valuer from whom the reports were expected and, as such, time might be granted till March 20, 1970, for filing the relevant returns. On this application, the Wealth-tax Officer granted time as prayed for. The assessee filed returns for all the five years on March 21, 1970. The assessments were completed on March 27, 1970, accepting the return of wealth. However, the Wealth-tax Officer initiated proceedings for levy of penalty and issued notices to the assessee under section 18(1)(a) of the Act. The assessee tried to explain the delay in filing the return by stating that he was not in a position to know whether the wealth belonging to him exceeded the limit for tax liability and also there was delay in getting the valuer's report. This explanation was not accepted by the Wealth-tax Officer. He, therefore, levied by way of penalty under section 18(1)(a) of the Act as it stood on April 1, 1969, a sum of Rs. 10,635 for 1964-65, Rs. 13,200 for 1965-66, Rs. 15,695 for 1966-67, Rs. 20,864 for 1967-68 and. Rs. 21,756 for 1968-69. The assessee preferred appeals against the levy of penalties to the Appellate Assistant Commissioner who h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .C. No. 51/74 adopted the arguments advanced by Mr. Y. V. Anjaneyulu, the learned advocate appearing on behalf of the assessee in R.C. No. 14/75. Mr. Y. V. Anjaneyulu contends that according to the provisions of section 14(1) of the Act, the assessee is bound to submit his return before 30th June of the corresponding assessment year, and this liability is absolute. Section 14(2) operates when section 14(1) has not been complied with. Section 18(1) should be examined in the light of section 14(1) to find out whether section 18(1) specifies the completion of the default once and for all or whether it provides for a continuing offence. He submits that if section 18(1)(a) as amended on April 1, 1965, is read with section 14, it could safely be concluded that the default was completed when the return was not filed on the due date, i.e., by the 30th of June, of the corresponding assessment year. Clause (i) of section 18(1) of the Act as it stood on April 1, 1965, provides for the scale of penalty that should be levied for every month of the delay. From this, he submits that it cannot be gathered that the legislature intended that the default should be a continuing default. So far as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1967, the omission to disclose the income from the cinema theatre could be said to have been from the time of the filing of the returns if not earlier; therefore, the law with regard to the quantum of penalty as it stood prior to April 1, 1968, was applicable. In that reference, Mr. Rama Rao had advanced the same argument, namely, that since the reassessment proceedings were completed on October 22, 1970, it was only then that the Income-tax Officer was satisfied that concealment of income had taken place and, therefore, the law with respect to the quantum of penalty as it stood on that date would be relevant and not the law as it stood prior to the amendment on April 1, 1969. In support of that contention he had cited Commissioner of Income-tax v. T. Raja and Satyanarayana Murthy [1974] 96 ITR 175 (AP) and Jain Brothers v. Union of India [1970] 77 ITR 107 (SC). This court distinguished these two rulings on the ground that in these two cases section 297(2)(g) of the Income-tax Act, 1961, was under consideration in which section it was specifically provided that the date of completion of assessment should be the date for the levy of penalty. Since the provisions of section 271 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (1) unless the person concerned has been given a reasonable opportunity of being heard. (3) No prosecution for an offence under this Act shall be instituted in respect of the same facts, in relation to which a penalty has been imposed under this section. (4) The Wealth-tax Officer shall not impose any penalty under this section without the previous approval of the Inspecting Assistant Commissioner of Wealth-tax." This section was substituted with effect from April 1, 1965, by section 18 of the Wealth-tax (Amendment) Act, 1964. By that amendment, section 18(1)(a), (b) and (c) were maintained with minor amendments which are not relevant for purposes of this case. However, clauses (i), (ii) and (iii) were amended in the following terms: " (i) in the cases referred to in clause (a), in addition to the amount of wealth-tax, if any, payable by him, a sum equal to two per cent. of the tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the tax ; (ii) in the cases referred to in clause (b), in addition to the amount of wealth-tax payable by him, a sum which shall not be less then ten per cent. but which shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed under section 17, as reduced, in either case in the manner aforesaid ; (ii) in the cases referred to in clause (b), in addition to the amount of wealth-tax payable by him, a sum which shall not be less than one per cent. of the assessed net wealth but which shall not exceed the amount of the assessed net wealth. Explanation.--For the purposes of clause (ii), ' assessed net wealth ' shall be taken to be the net wealth assessed under section 16 as reduced by the net wealth declared in the return, if any, furnished by such person, or, as the case may be, the net wealth assessed under section 17 as reduced by-- (i) the net wealth, if any, assessed previously under section 16 or section 17, or (ii) the net wealth declared in the return, if any, furnished by such person under section 17, whichever is greater ". Since we are not concerned with section 18(1)(b) or (c) or clauses (ii) and (iii) in this case, we are purposely avoiding any discussion thereof. Thus it would be seen that, under section 18(1)(a) of the Act as it stood originally, the quantum of penalty that was prescribed in a case falling under clause (a) of section 18(1) of the Act was that, in addition to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8(1)(i) as it stood on that date. Mr. Rama Rao fortifies his contention by submitting that the conception of continuing offence is now fairly well settled in criminal jurisprudence as under the Factories Act or the Mines Act where the owner does not obtain a licence to run the factory or does not construct a creche for the safety of miners, the courts have held that until the licence is obtained or the creche constructed, the offence would be a continuing offence. He, therefore, submits that there is no reason why the same principle should not be applied to the case of continuing default under section 18(1)(a) of the Wealth-tax Act. In support of this contention, he has cited State v. A. H. Bhiwandiwalla AIR 1955 Bom 161 and State v. Kunja Behari Chandra AIR 1954 Pat 371 [FB]. It is true that the conception of continuing offence is now well settled in criminal jurisprudence, but, in order to treat an offence as a continuing offence, the words employed in the concerned section have to be so used as for the courts to come to the conclusion that the legislature intended a particular offence to be a continuing offence. In State v. A. H. Bhiwandiwalla AIR 1955 Bom 161, two charges wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a completed default as on that date, and what is provided in clause (i) to that section is the scale of penalty that should be levied in cases of contravention of section 18(1)(a). By no stretch of imagination, it could be concluded that by providing clause (i) of section 18(1) by the Wealth-tax (Amendment) Act, 1964, the legislature had intended that infraction of section 18(1)(a) would be a continuing default until the returns are filed. In State v. Bhiwandiwalla AIR 1955 Bom 161, 163, it was observed : " Even so, this expression has acquired a well-recognised meaning in criminal law. If an act committed by an accused person constitutes an offence and if that act continues from day to day, then from day to day a fresh offence is committed by the accused so long as the act continues. Normally and in the ordinary course an offence is committed,only once. But we may have offences which can be committed from day to day and it is offences falling in this latter category that are described as continuing offences." In the light of this observation, a question could be asked, viz., would the words " continued default " mean that every month the assessee does not file the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Officer v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. [1975] 101 ITR 457 (SC) were cases dealing with the levy of interest under the Income-tax Act. According to sub-section (8) of section 139, the legislature itself had provided for the levy of interest at a particular rate. "........ reckoned from the 1st day of October of the assessment year to the date of the furnishing of the return or, where no return has been furnished, the date of completion of the assessment under section 144, on the amount of the tax payable on the total income as determined on regular assessment, as reduced by the advance tax, if any, paid and any tax deducted at source : ........" It was in the light of this provision that the courts have held that infraction of section 139 of the Income-tax Act was a continuing offence. It is now well settled that proceedings for levy of interest and proceedings for levy of penalty are totally different proceedings. In Commissioner of Income-tax v. Anwar Ali [1970] 76 ITR 696, 700 (SC), the Supreme Court observed as follows : " The first point which falls for determination is whether the imposition of penalty is in the nature of a penal provision. The dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the writ petition filed by the company, the High Court quashed the order of the Commissioner. The revenue filed an appeal to the Supreme Court. It was allowed and the order of the Commissioner refusing exemption was maintained. As a result of the cancellation of the exemption, the company had to pay the amount of Rs. 6.60 crores. After some correspondence between the company and the income-tax authority, the assessee paid the sum of Rs. 3 crores and wanted to pay the balance of Rs. 3.60 crores in instalments and undertook to pay interest at 5% per annum although section 220(2) provided for 4% interest. The Income-tax Officer accepted the offer. Thereafter, section 220(2) of the Income-tax Act was amended providing for 6% interest. The Income-tax Officer then informed the assessee of the amended provision and called upon the assessee to pay interest at the rate of 6%. Eventually, the case came up before the Supreme Court, and it was observed as follows : " Furthermore, it is the Finance Act which fixes the rate of interest payable under sub-section (2) of section 220 and it is common knowledge that every year the Finance Act makes important amendments in the rates payable und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 554 (Mad) has to be taken note of. In that case, the Madras High Court held : " Where the infringement is said to be the failure to furnish the return in time, the offence is complete when the return is not filed on the due date. Therefore, in such cases, the offence having taken place on the date fixed for furnishing the return, the law as on that date has to govern the levy of penalty." We are in respectful agreement with the above conclusion. It is to be noted that the Kerala High Court in Commissioner of Wealth-tax v. Smt. V. Pathummabi [1977] 108 ITR 689 (Ker) has affirmed this view of the Madras High Court in spite of the fact that it held that having regard to the provisions of section 18(1)(i) as amended on April 1, 1964, the non-filing of the return on the due date was a continuing default. In the ultimate analysis, we hold that the non-filing of the return on 30th June of the corresponding assessment year is a completed default and not a continuing default ; and what all clause (i) of section 18(1) as amended by the Wealth-tax (Amendment) Act, 1964, and by section 24 of the Finance Act, 1969, provides is for the scale of penalty that should be levied for every mon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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