1977 (2) TMI 6 - HC - Wealth-tax

Summary

Issues:
1. Interpretation of section 18(1)(a) of the Wealth-tax Act of 1957 regarding the levy of penalty.
2. Determining the applicable law for penalty proceedings - date of default or date of penalty imposition.
3. Calculation of penalty based on the tax remaining unpaid on the date of penalty imposition.

Analysis:

The judgment addressed three main issues arising under section 27(1) of the Wealth-tax Act of 1957. The primary dispute revolved around the interpretation of section 18(1)(a) concerning the calculation of penalties. The central question was whether the law to be applied for penalty proceedings should be the one in force on the date of default or the date of penalty imposition.

The court noted that the Tribunal had correctly held that the law applicable is the one in force on the date of the default. This interpretation was supported by previous decisions, including one by the Allahabad High Court, emphasizing that the law at the time of default governs penalty proceedings. Consequently, the court answered affirmatively to the questions raised in the references, supporting the Tribunal's view.

Regarding the calculation of penalty based on the tax remaining unpaid on the date of penalty imposition, the Tribunal's decision was initially in line with the judgment of the Calcutta High Court. However, a subsequent retrospective amendment under Section 23 of the Direct Taxes (Amendment) Act, 1974 altered this position. The amendment clarified that the tax mentioned in section 18(1)(a) of the Wealth-tax Act refers to the wealth-tax chargeable under the Act. As a result, the court answered the third question in Tax Case No. 259/74 negatively, overturning the Tribunal's decision due to the statutory amendment.

In conclusion, the judgment reaffirmed the principle that the law applicable in penalty proceedings is that in force at the time of default. It also highlighted the impact of statutory amendments on the calculation of penalties based on the tax remaining unpaid. The court's decision provided clarity on these issues, settling the disputes raised in the references before it.