1987 (5) TMI 30 - HC - Wealth-tax

Summary

Issues:
1. Assessment of penalty for late filing of wealth tax returns under section 18(1) of the Wealth-tax Act, 1957.
2. Determination of whether the omission to file the return of wealth constitutes a continuing default.
3. Application of the law for the levy of penalty post the amendment by the Finance Act, 1969.

Analysis:

The case involved a reference under section 27(1) of the Wealth-tax Act, 1957, concerning the assessment years 1965-66 to 1968-69. The Wealth-tax Officer imposed penalties on the assessee for late filing of returns without reasonable cause under section 18(1) of the Act. The Appellate Assistant Commissioner directed the imposition of penalties under the pre-amendment section 18(1)(a) of the Act. The Tribunal overturned this decision, leading to the assessee's reference to the High Court.

The first issue revolved around whether the failure to file the wealth tax return constituted a continuing default. The High Court relied on the Supreme Court's decision in Maya Rani Punj v. CIT, establishing that failure to file the return on the due date indeed constituted a continuing default. Therefore, the first question was answered in favor of the Revenue.

The second issue addressed the application of the law post the amendment by the Finance Act, 1969, for the levy of penalties. The High Court, following a Full Bench decision and the Supreme Court's ruling in Jain Brothers v. Union of India, held that the law applicable for penalty imposition would be the one in effect when the taxing officer decided to initiate penalty proceedings. As the proceedings were initiated in 1971, the penalty was to be levied in accordance with the Finance Act, 1969. Consequently, the second question was also answered in favor of the Revenue.

In conclusion, the High Court upheld the Tribunal's decision, ruling in favor of the Revenue on both issues. The judgment was transmitted to the Assistant Registrar, Income-tax Appellate Tribunal, "A" Bench, Patna, in compliance with section 27(6) of the Wealth-tax Act.