1987 (3) TMI 85 - HC - Wealth-tax

Summary

Issues Involved:
1. Whether the failure to file the wealth-tax return is a continuing offence.
2. Criteria for determining the penalty for delayed filing of the wealth-tax return.
3. Applicability of Article 20(1) of the Constitution regarding the imposition of penalties.

Issue-wise Detailed Analysis:

1. Whether the failure to file the wealth-tax return is a continuing offence:

The court examined whether the omission to file the wealth-tax return within the statutory period constitutes a continuing offence. The court referred to various precedents, including *Balakrishna v. Shree Dhyaneshwar Maharaj Sansthan* and *State of Bihar v. Deokaran Nenshi*, to distinguish between a continuing offence and one that is complete upon the initial act of omission. The court concluded that the failure to file the return is a continuing offence. This conclusion was based on the legislative intention reflected in section 18(1)(a) of the Wealth-tax Act, which indicates that the penalty is to be computed with reference to each succeeding month during which the default continues. Thus, the court held that the law applicable is the law prevailing on the relevant date on which the assessment is made and penalty proceedings are initiated.

2. Criteria for determining the penalty for delayed filing of the wealth-tax return:

The court analyzed the evolution of section 18 of the Wealth-tax Act, which outlines the penalties for failing to file the return. The court noted that before April 1, 1965, the penalty was a sum not exceeding one and a half times the amount of tax payable. Between April 1, 1965, and March 31, 1969, the penalty was two percent of the tax for every month of default, not exceeding 50 percent of the tax. After April 1, 1969, the penalty became more stringent, being calculated at half a percent of the net wealth for every month of default. The court emphasized that the penalty should be calculated based on the law prevailing at the time of the assessment and initiation of penalty proceedings, rather than at the time of the initial default.

3. Applicability of Article 20(1) of the Constitution regarding the imposition of penalties:

The court addressed the contention that the imposition of a penalty greater than that which might have been inflicted under the law at the time of the commission of the offence violates Article 20(1) of the Constitution. The court referred to precedents such as *Satwant Singh v. State of Punjab* and *Jain Brothers v. Union of India*, which held that Article 20(1) applies to criminal proceedings and not to civil penalties under fiscal enactments. The court concluded that the penalty under section 18(1) of the Wealth-tax Act is a civil liability, though penal in character, and thus not violative of Article 20(1).

Conclusion:

The court answered the reference in favor of the Revenue and against the assessee, holding that the provisions obtaining after April 1, 1969, were applicable in computing the penalty for the assessment year 1960-61. The penalty is to be computed with reference to each succeeding month during which the default continues, as per the law prevailing on the date of assessment and initiation of penalty proceedings. The court also allowed the assessee to raise the contention before the Tribunal that there was a reasonable cause for the delay in filing the return.