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Issues Involved
1. Applicability of Section 17(1)(a) of the Gift-tax Act, 1958, as amended by the Gift-tax (Amendment) Act, 1962, to the levy of penalty for late filing of a gift-tax return. Issue-wise Detailed Analysis 1. Applicability of Amended Section 17(1)(a) for Levy of Penalty The core issue is whether the amended Section 17(1)(a) of the Gift-tax Act, 1958, which came into effect on April 1, 1963, applies to the penalty levied for the late filing of a gift-tax return due on June 30, 1962, but filed on October 22, 1963. Factual Background: - The assessee made a gift of properties on July 14, 1961. - The gift-tax return was due on June 30, 1962, but was filed late on October 22, 1963. - The Gift-tax Officer levied a penalty of Rs. 2,605 on March 31, 1964, under Section 17(1)(a). - The Appellate Assistant Commissioner reduced the penalty to Rs. 1,000. - The Tribunal upheld the reduction, stating the amended provisions did not apply as the default occurred before the amendment. Revenue's Contention: - The revenue argued that the amended provision should apply as it was the law in force at the time of penalty imposition. - They cited English cases and legal principles to support the retrospective application of penalty provisions if the language of the statute is clear and unambiguous. Assessee's Contention: - The assessee argued that the law in force at the time of the default (June 30, 1962) should apply, not the law at the time of penalty imposition. Court's Analysis: - The court noted the distinction between the levy of tax, which follows a statutory charge, and the levy of penalty, which stems from the assessment and is subject to the discretion of the officer. - The court examined English case law, including Director of Public Prosecutions v. Lamb, Buckman v. Button, and R. v. Oliver, which supported the application of the law in force at the time of penalty imposition if the language is clear. - The court also reviewed Indian case law, including Cement Distributors (P.) Ltd. v. Inspecting Assistant Commissioner, S. Sannana Chetty & Sons v. Third Income-tax Officer, and P. Ummali Umma v. Inspecting Assistant Commissioner of Income-tax, which held that Article 20(1) of the Constitution does not apply to penalty proceedings. Interpretation of Statutes: - The court emphasized that if the language of the statute is clear, it should be given full effect. - However, in the absence of clear language indicating retrospective application, the amendment should be interpreted as applying to future offences. Conclusion: - The court held that the amendment effective from April 1, 1963, does not apply to defaults committed before that date. - The law applicable to the levy of penalty is the law as it stood at the time of the default (June 30, 1962). - Therefore, the Tribunal was correct in holding that the amended provision did not apply to the assessee's case. Judgment: - The question referred to the court was answered in the affirmative and against the revenue. - The revenue was directed to pay the costs to the assessee, with counsel's fee set at Rs. 250.
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