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TMI Blog1987 (4) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... may be noticed from Taxation Case No. 269 of 1976. The assessee, Dalip Kumar Worah, Dhanbad, therein was required to submit his return under the Wealth-tax Act by June 30, 1968, for the assessment year 1968-69. Admittedly, he filed the return much later on February 20, 1970. Meanwhile before the filing of the return, the Finance Act, 1969 (Act 68 of 1969), came into force on April 1, 1969. By virtue of the amendments made thereby in section 18 of the Wealth-tax Act, 1957 (hereinafter called "the Act"), steeply enhanced rates of penalty different from that which applied prior to such amendment were brought on the statute book. Patently enough, the return had been filed far beyond the time prescribed by law. The Wealth-tax Officer, therefore, initially levied penalty for the late filing of the returns in terms of the law prevailing prior to the 1st of April, 1969, and imposed a penalty of Rs. 573 only. Admittedly, the assessee virtually accepted the said penalty and no appeal was preferred against its imposition. However, later, the Wealth-tax Officer found that in the matter of the quantum of penalty, an error of law apparent on the record had been committed inasmuch as the law and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of my learned brothers, Uday Sinha J. and B. N. Agrawal J. In their lucid order of reference dated January 14, 1987, it was noticed that whilst the matter relating to the assessment year 1970-71 raised no problem, the basic difficulty arose in cases concerned with the assessment year 1968-69 in which the period of default could be dissected in two parts, namely, from July 1, 1968, to March 31, 1969, and April 1, 1969, to February 20, 1970. On these premises, it was urged before the Division Bench, on behalf of the assessee, that different rates of penalty would be applicable for the two periods. As already noticed, basic reliance of the counsel for the assessee was on the Division Bench judgment in CIT/ CWT v. Jagjit Kaur [1986] 162 ITR 844 (Pat), wherein it was laid down that differential rates of penalty would be applicable. Raising a frontal doubt about the correctness of that view and observing that this seemed to be directly contrary to the ratio in Maya Rani Punj v. CIT[1986] 157 ITR 330 (SC), which had laid down that the relevant date for ascertaining the rate of penalty will be the date on which the satisfaction of the assessing officer is arrived at, namely, the date when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty had to be quantified according to section 28 of the Indian Income-tax Act, 1922, and reduced the penalty to Rs. 400. On a reference, the High Court held that the Tribunal was not competent to reduce the penalty levied under section 271(1)(a) of the 1961 Act to a figure lower than the sum equal to two per cent. of the tax for every month during which the default continued but not exceeding in the aggregate 50 per cent. of the tax. On appeal to the Supreme Court, their Lordships affirmed the decision of the High Court and repelled pointed challenge to that view in particular. On a consideration of principle and precedent and particularly the case of Jain Brothers v. Union of India [1970] 77 ITR 107 (SC), it was held as under (p. 337): " On the ratio of Jain Brothers' case [1970] 77 ITR 107 (SC), the following conclusions are reached: (a) Though the default occurred in September, 1961, the date relevant for the purpose of initiating proceedings for imposition of penalty is when, following the assessment made, the Income-tax Officer decided to initiate penalty proceedings. (b) The proper provision to apply for dealing with the situation relating to penalty is as provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervations made therein were in the context of section 297(2)(g) of the Income-tax Act, 1961, and were, therefore, not attracted in the present case. Though learned counsel may be complimented for his ingenuity, patently the submission made is nevertheless fallacious. The ratio in Jain Brothers' case [1970] 77 ITR 107 (SC), quoted above, is generic in its application and cannot be wriggled out by any finical distinction sought to be drawn on the basis of section 297(2)(g) of the Income-tax Act, 1961. This apart, as has been already noticed above, their Lordships of the Supreme Court themselves in Maya Rani Punj's case [1986] 157 ITR 330 rested on the ratio of Jain Brothers' case [1970] 77 ITR 107 (SC) for the conclusion quoted above. Once their Lordships of the Supreme Court have thus considered and culled the ratio of Jain Brothers' case in the terms specified in Maya Rani Punj's case, it is, to my mind, not open for this High Court to take a contrary view. The veiled suggestion of Mr. K. N. Jain that the Bench in Maya Rani Punj v. CIT [1986] 157 ITR 330 (SC) misread the true import of the observations in Jain Brothers' case is equally without merit. I am inclined to hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s income or furnished inaccurate particulars of any assets inaccurate particulars of such or debts ; income, he or it may, by order in writing, he may direct that such person direct that such person shall shall pay by way of penalty-pay by way of penalty- (i) in the cases referred to (i) in the cases referred to in in clause (a), in addition to the clause (a),-amount of wealth-tax, if any, payable by him, a sum equal to two (a) in the case of a person per cent. of the assessed tax for referred to in sub-section (4A) of every month during which the section 139, where the total income default continued in respect of which he is assessable as a representative assessee does not exceed the maximum amount which is not chargeable to income tax, a sum not exceeding one per cent. of the total income computed under this Act without giving effect to the provisions of sections 11 and 12, for each year or part thereof during which the default continued. " Explanation.-In this clause, ' assessed tax ' means the wealth-tax chargeable under the provisions of this Act. The close similarity and the virtual identity of the aforesaid provisions are somewhat too patent to call for further ela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said case was fair enough to admit that the issue was not projected in its full ramifications and perhaps his stand and submission were not lucidly presented and consequently not correctly appreciated by the Division Bench. A close analysis of the judgment would indicate that apart from delineation of the relevant facts, the issue was not examined in depth on principle or on all precedents and it seems to have been said as a dictum as follows (p. 846): " It was, therefore, rightly submitted that penalty would be computed on different rates applicable during the period of each month in accordance with the rules existing during the said period." With deepest respect, the aforesaid observations appear to me (as observed by the referring Bench itself) to be in the teeth of the ratio in Maya Rani Punj's case [1986] 157 ITR 330 (SC) as also of Jain Brothers' case [1970] 77 ITR 107 (SC) which was not even referred to. With great deference, I am constrained to overrule the decision in CIT/CWT v. Jagjit Kaur [1986] 162 ITR 844 (Pat). To finally conclude, the issue posed at the outset is rendered in the affirmative and it is held that the date of the decision of the authority to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the High Court and dismissed the appeal. The Bombay High Court's view consistent with the one taken in Ramanand Singh and Co. v. CIT[1987] 164 ITR 78 (Pat) has thus the seal of approval of the final court itself. Mr. K. N. Jain, with inimitable fairness, had conceded that Ramanand Singh and Co.'s case [1987] 164 ITR 78 (Pat) concludes the matter against him. However, he, somewhat half-heartedly, attempted to assail the correctness of that view before the Full Bench. For doing so, he tenuously relied on an isolated line in International Cotton Corporation (P.) Ltd. v. CTO [1975] 35 STC I (SC). Reading of that judgment would indicate that the question before us was not even remotely raised before that Bench. Mr. Rajgarhia was right in pinpointing that the provisions of the Central Sales Tax and State Sales Tax Acts are far from being in pari materia with the provisions of the Income-tax Act or the Wealth-tax Act which we are called upon to construe. This apart, one is reminded of the salutary rule in Quinn v. Leathem [1901] AC 495, that what is important in a case is the ratio decidendi thereof and not every passing line or observation therein. The case of Quinn v. Leathem [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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