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Issues: Interpretation of penalty provisions under the Wealth-tax Act based on the date of filing the return and the effect of subsequent amendments.
The judgment by the High Court of Allahabad involved a dispute regarding the imposition of penalty under section 18(1)(a) of the Wealth-tax Act, 1957. The issue arose from a case where the wealth-tax return for the assessment year 1964-65 was due on June 30, 1964, but was filed on November 23, 1972. The Wealth-tax Officer imposed penalties under both the unamended and amended law due to the delayed filing. The Appellate Tribunal upheld the Wealth-tax Officer's decision, considering the default as continuous. However, the Tribunal failed to consider whether the penalty should be imposed based on the rates before and after the amendment. The Tribunal's decision was challenged, leading to the reference of the question to the High Court. In analyzing the case, the High Court referred to previous Supreme Court judgments, particularly the case of Maya Rani Punj v. CIT and CWT v. Banerjee, which emphasized that the imposition of penalty should consider the continuing default until the return is filed. The Supreme Court held that penalties should be quantified based on the provisions in force at the time of the default and after any subsequent amendments. The High Court applied this principle to the present case, concluding that the penalty should be levied based on the rates before and after the amendment under section 18(1)(a) due to the continuous default of not filing the return promptly. Ultimately, the High Court ruled in favor of the Revenue and against the assessee, stating that the penalty should be computed based on the rates prevailing before and after the amendment in section 18(1)(a) of the Wealth-tax Act. The decision was influenced by the interpretation of penalty provisions in light of the date of filing the return and the impact of subsequent legislative changes, as established by previous judicial precedents.
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