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TMI Blog1984 (5) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... ereunder: 1. On the facts and in the circumstances and as per the law, the learned AAC, Akola Range, Akola erred in bifurcating the penalties in two parts when the penalties are actually to be computed according to the unamended provisions of law before 1-4-1976. 2. That the learned AAC has accepted in principle that the provisions before 1-4-1976 would be applicable for computing the quantum of penalty, but only because of issue of notice under section 148 and filing of return late, he made the computation of penalty for two periods, i.e., prior to 1-4-1976 and after 1-4-1976 and onwards, which is wrong and bad in law. 3. It is, therefore, prayed that the penalty amount be kindly reduced as per the unamended provisions of law, prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad committed a serious legal mistake in this behalf. The provisions of section 271(1)(a)(i) prior to amendment with effect from 1-4-1976 restricted the penalty leviable under the section to 50 per cent of the tax. In the present case, the ITO had calculated the penalty at 2 per cent for every month of default for the whole period of default without restricting the same to 50 per cent of the assessed tax. 50 per cent of the assessed tax for both the years is only Rs. 4,887, whereas the ITO had levied penalties of Rs. 17,780 for 1972-73 and Rs. 15,444 for 1973-74. Obviously, he had calculated the penalty with reference to the amended provisions in this behalf which removed the ceiling on the penalty of 50 per cent of the assessed tax with eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to him, when the second default was committed, the amended provisions of section 271(1)(a)(i) had already come into force and, therefore, the ceiling of 50 per cent of the assessed tax on the penalty was no longer in existence. In this manner, he ascertained the penalty at Rs. 11,729 for each of the years under appeal as against the penalties actually levied by the ITO. As a result thereof, he allowed a relief of Rs. 6,061 in the first year and Rs. 3,715 in the second year. 5. Aggrieved with this order, the assessee has filed these appeals before us. The appellant's representative made the following submissions before us. The returns of income for both the years being due on 31-7-1972 and 31-7-1973, the provisions relating to levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mended provisions and in respect of the latter period, under the amended provisions. He submitted, in fine, that the view taken by the ITO in this behalf is diametrically opposed to the law laid down in this behalf by the Supreme Court in the cases of Brij Mohan v. CIT [1979] 120 ITR 1 and CWT v. Suresh Seth [1981] 129 ITR 328. The first case deals with penalty leviable under section 271(1)(c) for concealment of income. The Hon'ble Supreme Court observed that since penalty was imposed on account of the commission of a wrongful act, it was the law operating on the date on which, the wrongful act was committed, which determined the levy of penalty, and, therefore, the provisions in force on the date of the commission of the wrongful act were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following head-note from this decision very relevant in this context is reproduced hereunder: "Where the default complained of is one falling under section 18(1)(a) of the W.T. Act, 1957 (e.g., failure to file the return of wealth before the due date without reasonable cause), the penalty has to be computed in accordance with the law in force on the last day on which the return in question had to be filed. Neither the amendment made in 1964 not the one made in 1969 to clause (i) of section 18(1) has retrospective effect. Non-performance of any of the acts mentioned in section 18(1)(a) gives rise to a single default and to a single penalty, the measure of which, however, is geared up to the time lag between the last date on which the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be filed and the amendment to the provisions in question after that date being of no relevance. Second important aspect is, that the default, if any, is committed on the last date allowed to file the return and the default once committed, cannot be committed every month thereafter. In other words, the Supreme Court held, that the words 'for every month during which the default continued' indicate only the multiplier adopted in determining the quantum of penalty and do not have the effect of making the default a continuing one. In the present case as well, the defaults for both the years were committed on 31-7-1972 and 31-7-1973 when the restriction on the quantum of penalty up to 50 per cent of the assessed tax was in force. The removal of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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