9911796707
TMI Blog1981 (1) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings under this Act is satisfied that any person (a) has without reasonable cause failed to furnish the return which he is required to furnish under sub-s. (1) of s. 14 or by notice given under sub-s. (2) of s. 14 or s. 17, or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-s. (1) of s. 14 or by such notice, as the case may be . ...... he or it may, by order in writing, direct that such person shall pay by way of penaly (i) in the cases referred to in clause (a) in addition to the amount of wealth-tax, if any, payable by him, a sum equal to two per cent. of the tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the tax ; ........ Clause (i) in s. 18(1) as it stands today is in force since April 1, 1976, but at the time when the order of penalty was passed, the relevant provision as introduced by s. 24 of the Finance Act, 1969, in place of the original cl. (i) and cl. (ii) with the Explanation read as follows: " (i) in the case referred to in clause (a), in addition to the amount of wealth-tax, if any, payable by him, a sum, for every month during which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot clearly bring out " the charge which the assessee was facing " and, therefore, the assessee was not afforded reasonable opportunity of being heard before the penalty was imposed. The Tribunal, however, declined to express any opinion on this contention raised on behalf of the assessee. Aggrieved by the view which the Tribunal took including the applicability of the amended provisions of s. 18(1)(a) of the W.T. Act, the Department and the assessee applied for a reference of the relevant questions and accordingly the following questions have been referred by the Tribunal under s. 27(1) of the W.T. Act: " (1) Whether, on the facts and in the circumstances of the case, the penalty imposable on the assessee for the delay in filing the return is to be determined in accordance with the provisions of s. 18(1)(a)(i) as they stood on the date on which the return of wealth was due to be filed ? (2) Whether, on the facts and in the circumstances of the case, in determining the amount of penalty under s. 18(1)(a)(i), the amendment to the said section which was enacted w.e.f. April 1, 1969, is applicable ? (3) Whether, on the facts and in the circumstances of the case, the delay i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gate 50 per cent. of the tax. The argument of the learned counsel for the Revenue is that when an assessee fails to file a return, though it may be correct that the default takes place on the date on which the return was required to be filed, the default is a continuing default and if such continuing default continues after April 1, 1969, also, the amended provisions of s. 18(1)(a)(i) will fasten themselves on such defaulter. Therefore, according to the learned counsel, after April 1, 1969, the penalty will have to be computed in accordance with the provisions in force as and after April 1, 1969, till the date on which return is filed, or where the return has not been filed, till the assessment has been made. The learned counsel has found support for this argument in a decision of the Kerala High Court in CWT v. Smt. V. Pathummabi [1977] 108 ITR 689 (Ker). In that case the Kerala High Court has taken the view that where there is an omission to file the returns for the years 1964-65 and 1965-66 and the returns were furnished on March 30, 1970, the penalty would be imposed under s. 18(1)(a)(i) is it stood prior to the amendment by the W.T. (Amend.) Act, 1964, for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question as to whether for the purpose of s. 18(1)(a)(i) also such default must be treated as an offence or not as some of the decisions seem to have done. But we would rather adopt the terminology utilised by Parliament itself in s. 18(1)(a) and s. 18(1)(a)(i). Section 18(t)(a) which is reproduced earlier and in which the amendment has not brought about any change along with cls. (b) and (c) of s. 18(1), refers to certain kinds of omissions which would attract penalty. The penalties themselves have, been specified in cls. (i), (ii) and (iii) of the same section. We are concerned in this case only with the penalty which is attracted in the case of failure to furnish the return which the assessee is required to furnish under s. 14(1) or by notices given under sub-s. (2) of s. 14 or s. 17 without reasonable cause. Whether there was a reasonable cause or not is not material for the decision of the question referred. Now, is we come to the penalty provision in cl. (i), the penalty provided is " a sum equal to 2 per cent. of the tax for every month during which the default continued but not exceeding in the aggregate fifty per cent. of the tax ? The provision puts a ceiling on the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1953, he found that the accused had taken no steps to comply with the requisition. A prosecution under the Factories Act has to be instituted within a specific period provided by s. 106 of the Factories Act. In that case, the relevant period was three months. The accused was prosecuted within three months from May 20, 1953, which was obviously beyond three months from March 10, 1952, for having failed to apply for registration in the prescribed form and also for failure to give a written notice of occupation as required by s. 7(1). The contention on behalf of the State there was that the failure of the accused to apply for registration and to give a notice of occupation was a continuing offence and, therefore, the prosecution filed within three months from May 20, 1953, could not be said to be beyond limitation. While holding that the failure of the accused to apply for registration as well as for grant of licence were punishable within the meaning of s. 92 of the Factories Act, the Division Bench held that these omissions did not constitute continuing offence and, therefore, the prosecution in respect thereof filed more than three months was barred by limitation under section 106 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues and, therefore, constitutes a fresh offence everytime or occasion on which it continues. In the case of a continuing offence there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission is committed once and for all." In the light of the above observation of the Supreme Court, the proper test to decide whether the failure to furnish a return as required by s. 14(1) or 14(2) is a continuing default as contended on behalf of the Revenue is to ascertain whether the default occurs once and for all or whether there is a recurring default. There is a clear indication in cl. (a) of s. 18(1) that there is only one failure which occurs by the failure to file a return. There will, therefore, be only one default in the case where the assessee fails to file the return as required by the provisions of s. 14(1) and 14(2). It would not, therefore, be permissible to treat the failure contemplated by s. 18(1)(a) as a continuing failu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in Brij Mohan v. CIT [1979] 120 ITR I (SC). That was no doubt a case which dealt with the question relating to penalty for concealment of income under s. 271 (1)(c) of the I.T. Act, 1961. The return in that case was filed on April 24, 1968, for the assessment year I 964-65. The argument in the matter of penalty for concealment under s. 271(1)(c) read with s. 271(1)(iii) was that the penalty provision as it stood in the assessment year 1964-65 should be applied and not the one as stood in the amended form in 1968, which was of a more onerous character. Repelling the argument, the Supreme Court observed as follows: "We are unable to accept the contention. In our opinion, the assessment of the 'total income' and the computation of tax liability is proceeding which, for the purpose, is governed by entirely different considerations from a proceeding for penalty imposed for concealment of income. And this is so notwithstanding that the income concealed is the income assessed to tax. In the case of assessment of income and the determination of the consequent tax liability, the relevant law is the law which rules during the assessment year in respect of which the total income is ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18(1)(a) must be deemed to have been committed by the assessee on the due date on which he was required to file a return for the relevant assessment year and will be visited with the penalty under the provisions of the Act as it stood on the said crucial date. In T. K. Roy v. CWT [1978] 115 ITR 746 (Gauhati), there was difference of opinion between the two learned judges of the Assam High Court on the question of the applicability of the provisions of s. 18(1)(a)(i) as amended w.e.f. April 1, 1969. Baharul Islam J. (as he then was) had taken the view that, on the facts of the case before that court, the calculation of penalty up to March 31, 1965, had to be made under s. 18(1)(a)(i) of the W.T. Act, as it originally stood, and for the period April 1, 1965, to March 31, 1969, according to s. 18(1)(a)(i) as substituted w.e.f. April 1, 1965, and for the period thereafter under s. 18(1)(a)(i) as substituted w.e.f. April 1, 1969. The other matter, therefore, went to the third judge who did not agree with Baharul Islam J., and the majority opinion was that the omission without reasonable cause to file a return on the due date by the assessee completes his default once and for all as o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
