Law:

Section:

Section 18(1)(a) of the Wealth-tax Act, 1957 – Penalty – For failure to furnish returns – Assessment years 1967-68 and 1968-69 – Whether law applicable for levy of penalty under section 18(1)(a) for entire period of default is law as it stood on date of commission of default – Held, yes – Whether penalty under section 18(1)(a) has to worked out not on basis of tax remaining unpaid by assessee as on date of order imposing penalty, but on basis of wealth-tax chargeable under provisions of Act – Held, yes FACTS The Tribunal held that for levy of penalty under section 18(1)(a ) for delay in filing wealth-tax return, law applicable on the date of default should govern the levy of penalty for the entire period of default, though the default continued even after 1-4-1969 when section 18(1)(a) was amended by clause 24(c) of the Finance Act, 1969. It further held that the penalty had to be worked out on the amount of unpaid tax at the time when the order imposing the penalty was passed. On reference : HELD In view of the decisions of Madras High Court in CGT v. Muthukumaraswamy Mudaliar [1975] 98 ITR 540 (Mad.) and Continental Commercial Corpn. v. ITO [1973] 100 ITR 170 (Mad.) as well as a decision of the Allahabad High Court in CWT v. Ram Narain Agarwal [1977] 106 ITR 965, it was held that the law that is to be applied in penalty proceedings is the law as it stood on the date of the commission of the default. Following the judgment of the Calcutta High Court in CIT v. Vegetable Products Ltd. [1971] 80 ITR 14 , the Tribunal held that the penalty has to be worked out on the basis of the tax remaining unpaid on the date of the order of the officer levying the penalty. However, the conclusion of the Tribunal in this behalf had become erroneous in view of the subsequent amendment of the relevant statutory provisions with retrospective effect which stated that the penalty had to be worked out on the basis of the wealth-tax chargeable under the Act. In view of this amendment, the Tribunal was not right in holding that penalty under section 18(1)(a ) should be computed only with reference to the actual amount due or payable by the assessee on the date of imposition of a…

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