1. This is a reference made by the Income-tax Appellate Tribunal under Section 27(1) of the W.T. Act, 1957.
2. The relevant assessment years are 1961-62, 1962-63 and 1963-64. It is stated that the returns for these years fell due on 30th June, of the respective years 1961, 1962 and 1963. The returns were ultimately filed on 18th November, 1969. The proceedings for these three years were disposed of by a common judgment by the Tribunal and at the instance of the CWT, this reference has been made for answering the following questions :
' 1. Whether on the facts and circumstances of the case, the Appellate Tribunal was justified in holding that the provisions under Section 18(1)(a) as they stood prior to the amendment with effect from April 1, 1969, will apply for each of the three years under reference?
2. Whether the Appellate Tribunal was justified in reducing the penalty to 50% of the tax payable by the assessee for her net wealth as finally assessed for each of the three years under reference '
3. As the assessee did not file the returns in time the WTO after completing the assessment for each of these years initiated penalty proceedings for delay in filing the returns and after giving reasonable opportunity to the assessee to show cause why penalty should not be imposed for delay in filing the returns, imposed upon the assessee penalty of Rs. 1,808 for the 1st year 1961-62, Rs. 2,495 for the 2nd year 1962-63 and Rs. 2,240 for the 3rd year 1963-64. The assessee went up in appeal. The AAC of Wealth-tax confirmed the order passed by the WTO. These orders were challenged before the Tribunal. The Tribunal held that the amendment which was made on March 31, 1969, and came into force on April 1, 1969, could not be applied to this case as the rate of penalty under Section 18(1) of the W.T. Act, 1957, was increased by the amendment to Section 18(1)(a)(i); but this came into force on April 1, 1969, whereas the default was committed by theassessee on 30th June, 1961, 30th June, 1962 and 30th June, 1963, and under the Act, before the amendment, maximum penalty which could be imposed was a sum equal to 2 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 and on this basis the Tribunal reduced the penalty. Thereupon, the CWT sought a reference and the Tribunal has made this reference.
4. Learned counsel appearing for the assessee has referred to a number of decisions of the various High Courts and contended that it is more or less settled law now that the law in force on the date of the default alone could be made applicable for the purpose of penalty.
5. In CWT v. Ram Narain Agrawal : 106ITR965(All) a Division Bench of the Allahabad High Court considered this question and held ;
' In our opinion, the law which will apply to penalty proceedings will be the law as it stood on the day on which the default is committed. '
6. In CGT v. C. Muthttkumaraswamy Mudaliar : 98ITR540(Mad) , a Division Bench of the Madras High Court was considering the question of amendment of Section 17(1)(a) of the G.T, (Amend.) Act, 1962, and it was held (p. 554):
' Where the infringement is said to be the failure to furnish the return in time, the offence is complete when the return is not filed on the due date. Therefore, in such cases, the offence having taken place on the date fixed for furnishing the return, the law as on that date has to govern the levy of penalty. In cases of non-compliance with a notice under Section 15(2) or 15(4) the infringment takes place when the notice is not complied with, and, therefore, the law as on the date of the non-compliance will have to govern the levy of penalty. In cases of concealment of particulars or deliberate furnishing of inaccurate particulars in.a return, the infringement is committed when the return is filed and, therefore, the law as on the date of the filing of the return will have to regulate the levy of penalty as has been held by the Madhya Pradesh High Court in Commissioner of Income-tax v. Ramchand Kundanlal Saraf : 98ITR474(MP) and the Punjab High Court in Commissioner of Income-tax v. Bhan Singh Boota Singh .
Thus, on a due consideration of the matter, we hold that the amendment which took effect from first of April, 1963, would not be applicable to cases where the default has been committed before the amended Act came into force, and that the law applicable to the levy of penalty for such defaults is the law as it sood at the time when the default is committed and not as it stood in the financial year for which the assessment is made as urged by the learned counsel for the assessee, nor as it stood on the date when the penalty proceedings were initiated or when the penalty order was imposed as urged by the revenue. '
7. Similar is the view taken in CWT v. P. C. M. Sundarapandian : 114ITR367(Mad) and CWT v. C. S. Manvi : 114ITR417(KAR) .
8. A Division Bench of the Andhra Pradesh High Court in CWT v. V. R. Desai : 108ITR787(AP) :
' In the ultimate analysis, we hold that the non-filing of the return on 30th June of the corresponding assessment year is a completed default and not a continuing default; and what all clause (i) of Section 18(1) as amended by the Wealth-tax (Amendment) Act, 1964, and by Section 24 of the Finance Act, 1969, provides is for the scale of penalty that should be levied for every month during which the return was not Bled. '
9. It is, therefore, clear that when the assessee committed a default in filing the return on the due date, i.e., 30th June of every year 1961, 1962 and 1963, the law for the purpose of penalty that would be applicable will be the law in force on those dates and not one which has been brought into force on 1st April, 1969.
10. Consequently, our answer to the two questions referred to us is in the affirmative. In the circumstances of the case, parties are directed to bear their own costs.