9911796707
TMI Blog1986 (7) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... a return was originally filed on November 4, 1963. A revised return was subsequently submitted on March 30, 1970. For the other years, the returns were submitted for the first time on March 30, 1970. Because of the inordinate delay in the submission of the returns, the Wealth-tax Officer commenced penalty proceedings under section 18 ( I ) (a) of the Wealth-tax Act. Show cause notices were issued to the assessee to explain why penalties for the delays be not levied. The assessee did not care to reply. Further letters were issued to the assessee providing him another opportunity to explain. There was again no response. The Wealth-tax Officer, therefore, assuming that the assessee had nothing to explain, levied different amounts of penalties for these years. Feeling aggrieved, the assessee moved appeals before the Appellate Assistant Commissioner and pleaded there that the Wealth-tax Officer had not established that the assessee was not prevented by sufficient cause from filing the returns within the prescribed time-limit. It was also claimed that the assessee was entertaining a belief in good faith that his status was that of the Hindu undivided family and, therefore, he was un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years 1965-66 onward." The Tribunal next proceeded to give its decision as under We have given our due consideration to all the circumstances. In our opinion, the reason given by the Appellate Assistant Commissioner for setting aside the penalty orders cannot be sustained. As the narration of facts above shows, the Wealth-tax Officer had in each of these years issued two notices to the assessee requiring him to explain why penalties be not imposed for the delays in the submission of returns. He did not care to reply but instead chose to sit tight on the fence. To still hold that the Wealth-tax Officer had not provided sufficient opportunity to the assessee to explain the delays would be entirely erroneous. The Wealth-tax Officer could not have done anything more. It was at that stage that the assessee should have come out with sufficient cause. He could not have reserved it to be agitated for the first time in the appeals. The Wealthtax Officer was in the circumstances right in assuming that the assessee had nothing to explain, and therefore, proceeded to levy the penalties. We would like to quote here the observations of the Kerala High Court in the case of Dawn Co. v. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been filed. Under the law as it then existed, the maximum penalty that could be imposed was 50% of the tax payable. This was computed at the rate of 2% for each month's default. In other words, the maximum period for which penalty could be attracted was 25 months. Thereafter, though the default in a technical sense continued, it lost the sting of penal consequence. In other words, the offence exhausted itself. This happened long before the amending law was incorporated on April 1, 1969. The offences thus exhausted themselves long before that date. The amended law could not revive offences which were already completed long time earlier. The levy of penalties, therefore, could not exceed 50% of the tax in each year. " Learned counsel for the Commissioner is really aggrieved by the observations in sub-paragraph 10 of para 3 of the statement which reads as under : "In other words, the offence exhausted itself. This happened long before the amending law was incorporated on April 1, 1969. The offences thus exhausted themselves long before that date. The amended law could not revive offences which were already completed long time earlier. The levy of penalties, therefore, could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings and that the proper provision to apply for dealing with the situation relating to penalty is as provided in section 271(1)(a) of the 1961 Act and not one under section 28 of the 1922 Act. The Supreme Court further held that in view of the language used in section 271(1)(a) of the 1961 Act, the position was beyond dispute that the Legislature intended to deem the non-filing of the return to be a continuing default-the wrong for which penalty was to be visited commenced from the date of default and continued month after month until compliance was made and the default came to an end. It was also held that the imposition of penalty not confined to the first default but with reference to the continued default was obviously on the footing that non-compliance with the obligation of making a return was an infraction as long as the default continued. If a default is continued from day to day, the non-filing of the return from day to day would become a continuing default. The legislative scheme under section 271(1)(a) of the 1961 Act, in making provision for a penalty conterminous with the default, provided for a situation of continuing wrong. In the present case, the revised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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