1979 (1) TMI 130 - AT - Wealth-tax

Summary

Issues:
- Reduction of penalties imposed by the WTO under section 18(1)(a) of the Wealth Tax Act, 1957 for assessment years 1964-65 to 1966-67.
- Delay in filing returns of wealth by the assessee.
- Applicability of penalty rates based on the law in force at the time of default.

Analysis:

The case involved three appeals by the Revenue against the AAC's order reducing penalties imposed by the WTO under section 18(1)(a) of the Wealth Tax Act, 1957 for the assessment years 1964-65 to 1966-67. The assessee filed returns after the due dates, attributing the delay to a genuine belief that her wealth was below the taxable limit. The WTO imposed penalties based on the amended law effective from April 1, 1969, resulting in higher penalty rates for the delay period. The AAC accepted the alternative submission that penalties should be calculated based on the law in force on the due dates of the returns, citing relevant case law. The Revenue contended that penalties should be levied according to the amended law from April 1, 1969, relying on judicial decisions supporting a continuing default interpretation.

The primary issue for determination was whether penalties should be calculated based on the law in force on the due dates of the returns or according to the amended law applicable after April 1, 1969. The Tribunal analyzed the relevant case law and held that the penalty under section 18(1)(a) crystallizes upon the expiry of the due dates for filing returns. The default accrues after the allowed time for filing expires, as established by the Allahabad High Court's decision. The Tribunal rejected the Revenue's argument for applying increased penalty rates post-April 1, 1969, emphasizing that the amendment was not retrospective. The Tribunal also referenced decisions from other High Courts supporting the assessee's position, concluding that penalties should be computed based on the law in force before April 1, 1969.

In conclusion, the Tribunal dismissed the Revenue's appeals, affirming the AAC's decision to recalculate penalties based on the law in force prior to April 1, 1969. The Tribunal distinguished a Supreme Court decision cited by the Revenue, noting its inapplicability to the penalty issue under consideration. The judgment highlighted the importance of determining penalty rates based on the law prevailing at the time of default, as established by relevant judicial precedents.