1971 (10) TMI 27 - HC - Wealth-tax

Summary

Issues Involved:
1. Applicability of section 18(1)(a) of the Wealth-tax Act before and after the amendment.
2. Procedural versus substantive nature of section 18(4).
3. Vested rights and privileges under section 6(c) of the General Clauses Act.
4. Determination of the quantum of penalty under old and new section 18(1)(a).
5. Applicability of section 6(d) of the General Clauses Act regarding penalties.

Issue-wise Detailed Analysis:

1. Applicability of section 18(1)(a) of the Wealth-tax Act before and after the amendment:
The primary issue was whether the amended provisions of section 18(1)(a) of the Wealth-tax Act, effective from April 1, 1965, applied to the proceedings for the levy of penalty. The Tribunal held that penalties should be imposed based on the law in force at the time the default occurred, i.e., the unamended section 18(1)(a). However, the department contended that the law applicable is the one prevailing on the date the assessment is completed and penalty proceedings are initiated, which in this case was the amended section 18.

2. Procedural versus substantive nature of section 18(4):
The department argued that the requirement for prior approval from the Inspecting Assistant Commissioner under the old section 18(4) was procedural. The assessee contended it was substantive, providing a safeguard. The court determined that the provision for obtaining prior approval was procedural, as it merely changed the forum and did not confer any substantive right or privilege on the assessee.

3. Vested rights and privileges under section 6(c) of the General Clauses Act:
The assessee argued that under section 6(c) of the General Clauses Act, the old section 18(4) should apply as it provided a safeguard. The court rejected this argument, stating that the old section 18(4) did not create any enforceable right or privilege. The court emphasized that a person accused of an offence has no vested right to be tried by a particular court or procedure.

4. Determination of the quantum of penalty under old and new section 18(1)(a):
The court compared the penalty provisions under the old and new sections. The old section allowed a maximum penalty of one and a half times the tax without a minimum, while the new section prescribed a minimum of two percent per month and a maximum of fifty percent. The court concluded that the new provisions were not more onerous because the maximum penalty was reduced, and a limitation period was introduced, which benefited the assessee.

5. Applicability of section 6(d) of the General Clauses Act regarding penalties:
Section 6(d) of the General Clauses Act was discussed to determine if the new penalty provisions were more onerous. The court concluded that section 6(d) was not applicable since the new penalty provisions were not more onerous than the old ones. The court cited the Supreme Court's observations in related cases to support this conclusion.

Conclusion:
The court held that the provisions of section 18(1)(a) of the Wealth-tax Act, as amended on April 1, 1965, were applicable to the case. The Tribunal's decision that the unamended section 18(1)(a) applied was incorrect. The reference was answered in the negative and against the assessee.