1987 (4) TMI 129 - AT - Wealth-tax

Summary

Issues Involved:
1. Interpretation and application of the Supreme Court decision in Maya Rani Punj vs. CIT.
2. Computation of penalties under Section 18(1)(a) of the Wealth-tax Act.
3. Applicability of amended provisions from 1st April 1976 for computing penalties.
4. Arguments regarding absurd and discriminatory results in penalty computation.

Detailed Analysis:

1. Interpretation and Application of the Supreme Court Decision in Maya Rani Punj vs. CIT:
The Revenue contended that the AAC misinterpreted the Supreme Court's decision in Maya Rani Punj vs. CIT, which held that the default under Section 271(1)(a) of the IT Act or Section 18(1)(a) of the Wealth-tax Act is a "continuing default." According to the Revenue, penalties should be computed monthly based on the law as it existed during each month of default. The AAC, however, applied the amended provisions effective from 1st April 1976 for the entire period of default, reducing the penalties significantly.

2. Computation of Penalties under Section 18(1)(a) of the Wealth-tax Act:
The penalties were initially computed by the WTO at 1/2 percent of the net wealth assessed, leading to substantial amounts for each assessment year. The AAC, applying the amended law, reduced the penalties drastically. The Tribunal upheld the AAC's decision, stating that the penalty should be recomputed based on the amended provisions effective from 1st April 1976.

3. Applicability of Amended Provisions from 1st April 1976 for Computing Penalties:
The Tribunal noted that the default under Section 18(1)(a) is a continuing default, and the amended provisions effective from 1st April 1976 should apply for the entire period of default. The Tribunal emphasized that the penalty proceedings were initiated on 27th March 1984, when the amended provisions were in force. Therefore, the penalties should be computed based on these provisions.

4. Arguments Regarding Absurd and Discriminatory Results in Penalty Computation:
The Revenue argued that applying the amended provisions retroactively would lead to absurd and discriminatory results, as identical defaults for the same period could result in different penalties depending on the dates of return submission and assessment orders. The Tribunal dismissed this argument, stating that the legislature's wisdom in prescribing different penalties for similar defaults from time to time should not be questioned. The Tribunal further clarified that penalty provisions are an integrated code and should not be split into procedural and substantive parts.

Conclusion:
The Tribunal upheld the AAC's order, confirming that the penalties for defaults under Section 18(1)(a) of the Wealth-tax Act should be computed based on the amended provisions effective from 1st April 1976. The appeals by the Revenue were dismissed, reinforcing the principle that penalty provisions should be applied as they exist at the time of assessment and initiation of penalty proceedings.