Satish Chandra, C.J. - Sri Durga Prasad, the assessee, died on June 25, 1968. His heirs filed the return for the assessment years 1968-68 and 1968-69 on March 9, 1970 and March 10, 1970, though they were due to be filed upto June 30, 1967 and June 30, 1968. The Wealth Tax Officer commenced penalty proceedings for the late flin of these returns. After hearing the assessee, he found that there was no reasonable cause for the delay. He levied a penalty of Rs. 3,198/- for the first and Rs. 9,803/- for the second year. He computed these amount on the principle that the defaults that were committed prior to April, 1969 would carry a penalty at the rate of 2% of the evaded tax per month subject to the maximum of 50% which was the law prevailing at that time. On April 1, 1969, the relevant provisions of the law were amended and provided for the levy of penalty at the rate of 2% of the wealth which was sought to be evaded. Considering the facts, he levied a penalty at the rate of 1/2% on the assessed wealth. The matter went up to the Appellate Assistant Commissioner who held that for the entire period the penalty was imposable at the rate of 2% of the evaded tax. He reduced the amounts of penalty accordingly.
2. The Income Tax Officer went up in appeal to the Tribunal. The Tribunal maintained the order of the Appellate Assistant Commissioner but on different grounds.
3. At the instance of the Department, the Tribunal has referred the following question of law for our opinion :
'Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Appellate Asstt. Commissioner, reducing the penalties of the wealth tax payable for every month of the default throughout ?'
4. The legal position is that till April 1, 1969, the law provided for penalty for late filing of the return at the rate of 2% per month of tax evaded, subject to a maximum of 50%. The relevant provisions were amended with effect from April 1, 1969. Thereafter the rate was 2% of the assessed wealth per month. The question is which provision of law would apply to the case to this kind. The returns were due on June 30, 1967 and June 30, 1968. They were not filed by the due dates. Hence defaults were committed on these dates. In Commissioner of Wealth Tax, Lucknow vs. Ram Narain Agarwal, a Division Bench of this Court has held that the law applicable is the law which was operative on the date when the default was committed. Consequently, the Appellate Assistant Commissioner was right in holding that the rate of 2% of the tax per month was the measure of penalty. The Tribunal was justified in upholding the order of the Commissioner. The question referred to us is accordingly answered in the affirmative in favour of the assessee and against the department. The assessee will be entitled to costs which are assessed at Rs. 200/-.