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TMI Blog1989 (8) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the WTO and he levied the aforesaid amounts as penalty. 4. For assessment years 1967-68 and 1968-69 the WTO has calculated the penalty in three ways. For the period1-8-1967to31-3-1969the penalty has been calculated @ 2% of tax assessed. For the period1-4-1969to31-3-1976the penalty has been calculated at 1/2% of the wealth assessed and for the period1-4-1976onwards the penalty has been again calculated @ 2% of the assessed tax. The three amounts arrived at in the aforesaid manner form the total amount of penalty levied for these years. For assessment years 1970-71 and 1971-72 the penalty has been calculated for two periods, i.e., at the rate of 1/2% of wealth assessed for the period up to31-3-1976and @ 2% of tax assessed from1-4-1976onwards. 5. The assessee appealed to the AAC who dismissed the appeals. The order passed by the learned AAC shows that the assessee raised the following contentions : (i) That his wealth was below the taxable limit and therefore, he was under no legal obligation to file the return of wealth; (ii) That the assessee was a politician and remained busy in various political matters; (iii) There was criminal prosecution against the assessee for o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been rectified under sec. 35 of the Wealth-tax Act, 1957. Copies of orders dated19-6-1989have been filed, which show that for assessment year 1967-68 the assessed wealth has been reduced from Rs. 1,72,600 to Rs. 1,13,800 and for assessment year 1968-69 the assessed wealth has been reduced from Rs. 1,78,100 to Rs. 1,19,300. The learned counsel for the assessee pointed out that rectification applications for assessment years 1970-71 and 1971-72 are pending before the Asstt. Commissioner of Wealth-tax. The aforesaid revision in the wealth would certainly affect the calculation of penalty, which the WTO would automatically do, but this does not show that the assessee was under a bona fide belief that his wealth was below the taxable limit. We find that even for assessment years 1964-65, 1965-66 and 1966-67 the assessee filed his returns even though in those years his wealth was sufficiently below the taxable limits. The assessee thus knew his obligation to file the return under the Wealth-tax Act, as also the value of his properties and he cannot now say that he was under a bona fide impression that his wealth was below the taxable limit. 7. The next contention raised by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention observing that non-filing of the return was a continuous default and penalty was leviable not only for the first default but as long as the default continued. 9. Maya Rani Punjs case was a case of the levy of penalty under sec. 271(1)(a) of the Income-tax Act, 1961. The provisions of sec. 18 of the Wealth-tax Act are identical in material respects. In that case the proceedings related to assessment year 1961-62 and the return of income was due to be filed by28-9-1961, on which date the 1922 Act was operative. The return was, however, filed on3-5-1962after the commencement of the 1961 Act. Under the old Act no minimum penalty was provided for the levy of penalty for delay in the filing of the return. The maximum was, however, restricted to 1 1/2 times of the tax assessed. Under the new Act, however penalty was leviable @ 2% per month of the assessed tax. At that rate the ITO levied a penalty of Rs. 4,060, which was confirmed by the learned AAC. On further appeal, the Tribunal held that penalty had to be quantified according to sec. 28 of the Indian Income-tax Act, 1922 and, therefore, it reduced the penalty to Rs. 400. On a reference to the High Court it was held that pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be calculated only @ 2% per month of the tax assessed. 10. We, however, find that in this case no penalty whatsoever could be legally levied because the assessments have not been validly made. From1-1-1976section 17-A was introduced in the Wealth-tax Act, 1957 providing for time limits for completion of the assessments. Prior thereto there was no limit for the completion of an assessment and under sec.15 an assessee could furnish a return or a revised return at any time before the assessment is made. Thus, prior to the introduction of sec.17-A a return could be filed at any time and so an assessment could also be made at any time. All these returns were, however, filed after the introduction of sec.17-A. Under sec.17-A(1)(a) no order of assessment could be made at any time after the expiration of a period of four years commencing on and from the first day of April, 1975 or one year from the date of filing of the return or a revised return under sec. 15, whichever is later. Thus, for assessment years 1967-68 and 1968-69 an assessment could be made up to31-3-1979only. While the assessments have been made on31-3-1984. The assessments were, therefore, time barred and no penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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