1996 (1) TMI 66 - HC - Wealth-tax

Summary

Issues:
1. Interpretation of penalty provisions under section 18(1)(a) of the Wealth-tax Act, 1957.
2. Application of amended law for computation of penalty.
3. Continuation of default for non-submission of return on a monthly basis.
4. Permissibility of cutting and splitting the default under section 18(1)(a) on a monthly basis.

Analysis:

The judgment by the High Court of Madhya Pradesh involved eight reference applications filed by the Commissioner of Wealth-tax, Bhopal, under section 27(3) of the Wealth-tax Act, 1957. The common questions of law raised in these applications pertained to the computation of penalty under section 18(1)(a) of the Act. The primary issue was whether the Tribunal was justified in applying the amended law for calculating penalties even for defaults occurring before the amendment on April 1, 1976. The Tribunal had to consider the continuation of default on a monthly basis and the permissibility of splitting the default under section 18(1)(a) (i.e., imposing penalties monthly).

In the cases of various taxpayers, including Smt. Premlata C. Lunkad, Smt. H. H. Pushpamala Raje Puar, and Madanlal Haveliram, penalties had been imposed by the Wealth-tax Officer based on the unamended provisions of law. However, the Appellate Assistant Commissioner and the Tribunal applied the amended law following the Supreme Court decision in Maya Rani Punj v. CIT [1986] 157 ITR 330, leading to a reduction in penalties. The Commissioner filed reference applications under section 27(3) of the Act after rejections under section 27(1).

The Tribunal declined to make references under section 27(1) as it found no referable questions of law. It held that the penalties were imposed in accordance with the law prevailing at the time of filing returns and completion of assessments. The Tribunal's decision was based on the procedural nature of the computation of default and the applicability of amended provisions as per the Supreme Court decision in Maya Rani Punj case.

The High Court upheld the Tribunal's decision, citing the procedural nature of the law and the precedent set by the Supreme Court. It noted that the proposed questions were not required to be referred for opinion since the matter was settled based on existing legal interpretations. The validity of section 18(1) of the Wealth-tax Act had been upheld by the Supreme Court in a previous case. Consequently, the reference applications were rejected without costs, with the counsel fees fixed at Rs. 750 for each side in each case.