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TMI Blog1987 (4) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act were amended by Taxation Laws (Amendment) Act, 1975 w.e.f. 1st April, 1976. Prior to the amendment and since 1st April, 1969 the penalty leviable was to be computed @1/2 Percent of net wealth (as reduced by the some 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 w.e.f. 1st April, 1976, on the date of assessment order as also on the date of submission of return, i.e., on 27th March, 1984, the penalty for default under s. 18(1)(a) of the Wealth-tax Act is now leviable at a sum equal to 2 percent of the assessed tax for every month during which the default continued. The WTO in this case computed the penalties @ 1/2 Percent 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 Delhi High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vegetable Products Ltd, 1973 CTR (SC) 177 : (1973) 88 ITR 192 (SC). 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 31st March, 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 asst. yr. 1976-77 for identical defaults of same period under s, 18(1)(a) of the Wealth-tax Act levy of different amounts of penalties be justified depending upon the dates of submission of return and assessment orders. When computations are based on amended provision in one case ands 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 consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1)(a) of 1961 Act to a figure lower than the sun equal to 2 per cent 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 s. 28 of 1922 Act which were applicable when the default occurred on 28th Sept., 1961 and that the assessee could not be subjected to higher punishment under s. 27(1)(a) of the 1961 Act in breach of art. 20(1) of the Constitution. Their Lordships of the Supreme Court extensively quoted from their earlier decision in Jain Bros. vs. Union of India (1970) 77 ITR 107 (SC) and 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 treatment. It was obvious that for the imposition of penalty, it was not the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 rewriting of statute is not permissible. This is amply illustrated by the decision in Maya Rani Puni"s case. In that case delay of six months in submitting the return upto 31st 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 respect of default upto March, 1962 were not substituted for computing the penalty imposed under the 1961 Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quality from the defaults after 1st April, 1976 when provisions of sex. 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 month default come to an end. The default did commence after 30th June, remained a continuing default and cama to an end only on 27th March, 1984. As on 1st April, 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 become continued , the new provisions had already come into force. In a way, the occurrence continued right upto 27th March, 1984. Thus, 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 provision of sec. 18(1)(a) both before and after its amendment do not provide for levy of penalty in respect of half-backed defaults. It is not permissible to cut and split the default on monthly basis. Anyway, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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