1983 (9) TMI 26 - HC - Wealth-tax

Summary

Issues:
- Interpretation of penalty provisions under section 18(1) of the Wealth Tax Act, 1957.
- Applicability of penalty laws based on the date of default or the date of penalty imposition.
- Comparison with similar judgments under other tax laws.
- Determination of penalty based on the law in force at the time of default.

Analysis:
The case involved a reference to the High Court under section 27 of the Wealth Tax Act, 1957, regarding the imposition of penalties under section 18(1) for late filing of wealth tax returns. The assessee had filed returns after the due dates for multiple assessment years. The WTO initiated penalty proceedings, contending that the returns were not filed voluntarily and without reasonable cause. The AAC and the Tribunal upheld the defaults but differed on the computation of penalties based on the law applicable at the time of default. The Revenue argued that the penalty law in force at the time of penalty imposition should apply, contrary to the Tribunal's view.

The High Court referred to similar judgments under the Gift Tax Act and Income Tax Act to analyze the issue of penalty imposition based on the date of default. It cited cases where penalties were held to be governed by the law in force at the time of default, not at the time of penalty imposition. The court also referred to the Supreme Court's decision in Brij Mohan v. CIT, emphasizing the distinction between tax assessment and penalty proceedings, with penalties linked to the law prevailing at the time of the wrongful act.

Further, the court referenced the Supreme Court's ruling in CWT v. Suresh Seth, which clarified that a single default gives rise to a single penalty, with the measure tied to the time lag between the due date and the actual filing date. The court held that penalties under section 18(1) should be computed based on the law in force at the last date for filing the return, not affected by subsequent amendments.

In conclusion, the High Court upheld the Tribunal's decision that penalties should be levied according to section 18(1) prior to its 1969 amendment for the assessment years in question. The judgment favored the assessee, emphasizing that penalties are determined based on the law applicable at the time of default. The reference was answered in favor of the assessee, and no costs were awarded due to the respondent's absence.