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TMI Blog1987 (4) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the computation of penalty under section 18(1)(a) of the WT Act were amended by Taxation Laws (Amendment) Act, 1975 with effect from 1-4-1976. Prior to the amendment and since 1-4-1969 the penalty leviable was to be computed @ 1/2% of net wealth (as reduced by the sum specified in the schedule) for every month during which the default continued, but not exceeding in aggregate to the net wealth assessed. Since the amendment with effect from 1-4-1976, on the date of assessment order as also on the date of submission of return i.e. on 27-3-1984, the penalty for default under section 18(1)(a) of the WT Act is now leviable at a sum equal to 2% of the assessed tax for every month during which the default continued. The WTO in this case computed the penalties @ 1/2% of the wealth assessed as reduced by Rs. 2 lacs from 30th June of each year to the date of filing of the returns. He thus levied penalties of Rs. 16,000, Rs. 26,000, Rs. 31,000, Rs. 60,000, Rs. 85,000, Rs. 85,000 and Rs. 1,85,000, respectively, for the seven assessment years under appeals. The AAC, on further appeals, after applying ratio of the decision of the Supreme Court in the case of Maya Rani Punj and that of the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. In the above circumstances, we are inclined to uphold the order of the AAC that the penalty was to be recomputed on the basis of the amended provisions. 4. Shri Verma, during the course of hearing of appeals, also submitted that the view that even in respect of the default prior to 31-3-1976 the penalty is to be levied with reference to amended law would lead to absurd and discriminatory results and, therefore, Such a view should not be followed. Elaborating this argument, he pointed out that for the assessment years prior to the A.Y. 1976-77 for identical defaults of same period under section 18(1)(a) of the WT Act levy of different amounts of penalties would be justified depending upon the dates of submission of return and assessment orders. When computations are based on amended provision in one case and on unamended provision in the other. For Similar default running in same period of time, same penalty should be levied. Shri Verma further submitted that the courts while interpreting statutes and law must avoid absurd and discriminatory results. To meet the above argument we will independently consider the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l was not competent to reduce the penalty levied under section 271(1)(a) of 1961 Act to a figure lower than the sum equal to 2% of the tax for every month during which the default continued. On further appeal, it was argued before the Supreme Court that penalty should have been computed as per the provisions of section 28 of 1922 Act which were applicable when the default occurred on 28th September, 1961 and that the assessee could not be subjected to higher punishment under section 271(1)(a) of the 1961 Act in breach of article 20(1) of the Constitution. Their Lordships of the Supreme Court extensively quoted from their earlier decision in Jain Bros. v. Union of India [1970] 77 ITR 107 and at page 335 observed as under : " It was well settled that in fiscal enactments, the Legislature has a larger discretion in the matter of classification, so long as there was no departure from the rule that persons included in a class are not singled out for special treatment. It was not possible to say that while applying the penalty provisions contained in the Act of 1961 to cases of persons whose assessments were not completed after April 1, 1962, any class has been singled out for special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable. The penalty proceedings were thus required to be quantified as per the law existing on the above crucial date. The revenue's case that only amended procedural provisions are applicable and for quantification the substantial law as it existed from month to month corresponding to month of default is to be applied, cannot be accepted. The computing provisions of the Wealth-tax Act together with provisions laying the procedure, constitute an integrated code and we see no justification for splitting the one from the other. It is not permissible to take the statute at the time of levy of penalty, apply procedural provisions and substitute different provisions relating to computation of penalty from month to month. Such patch work or re-writing of statute is not permissible. This is amply illustrated by the decision in Maya Rani Punj's case. In that case delay of six months in submitting the return up to 31st day of March, 1962 had occurred when provisions of 1922 Act were in force and default under the 1961 Act was only for the month of April, 1962. But their Lordships upheld the levy of penalty under the new Act for the whole period. The repealed provisions of 1922 Act in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e second month and thus up to 31-3-1976, there were several defaults of each month which were distinct in quality from the defaults after 1-4-1976 when provisions of section 18(1)(a) were amended. Though each day of default gave rise to fresh cause of action and the default is ' deemed to be repeated on each day ' as provisions relating to filing of the return remains uncomplied with, there is no warrant for holding that with the end of every mouth default came to an end. The default did commence after 30th June, remained a continuing default and came to an end only on March 27, 1984. As on 1-4-1976 when it was a continuing default and before it was complete, the amended provision brought about a qualitative change and added different colour to it. Before the default became ' continued ', the new provisions had already come into force. In a way, the ' occurrence ' continued right up to 27-3-1984. Thus, the penalty for the whole period during which the default continued is to be levied under the amended provision at 2 per cent of the assessed tax for each month. The provisions of section 18(1)(a) both before and after its amendment do not provide for levy of penalty in respect of ' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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