1. Heard learned counsel for the parties.
2. Following question of law has been referred by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, for being answered by this court:
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the law, under which penalty is to be computed in the present case for the default, under Section 18(1)(a) is the one which prevailed on the date when the assessment order was completed, i.e., on October 10, 1972, and not as per law prevailing on July 1, 1968, when the default of not furnishing the return had commenced ?'
3. We need not dwell in detail and note down the facts of this case as the question referred to this court, according to the learned counsel appearing on behalf of the assessee as well as the revenue, stands answered by a decision of the Supreme Court in CWT v. Suresh Seth : 129ITR328(SC) .
4. In similar circumstances, the hon'ble Supreme Court has observed as under (p. 335):
'When a person does an act which law prohibits him from doing it and attaches a penalty for doing it, he is stated to have committed an act of commission which amounts to a wrong in the eye of law. Similarly when a person omits to do an act which is required by law to be performed by him and attaches a penalty for such omission, he is said to have committed an act of omission which is also a wrong in the eye of law. Ordinarily, a wrongful act or failure to perform an act required by law to be done becomes a completed act of commission or of omission, as the case may be, as soon as the wrongful act is committed in the former case and when the time prescribed by law to perform an act expires in the latter case and the liability arising therefrom gets fastened as soon as the act of commission or of omission is completed. The extent of that liability is ordinarily measured according to the law in force at the time of such completion. In the case of acts amounting to crimes the punishment to be imposed cannot be enhanced at all under our Constitution by any subsequent legislation by reason of Article 20(1) of the Constitution which declares that no person shall be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. In other cases, however, even though the liability may be enhanced it can only be done by a subsequent law (of course subject to the Constitution) which either by express words or by necessary implication provides for such enhancement. In the instant case, the contention is that the wrong or the default in question has been altered into a continuing wrong or default giving rise to a liability de die in diem, that is, from day to day. The distinctive nature of a continuing wrong is that the law that is violated makes the wrongdoer continuously liable for penalty. A wrong or default which is complete but whose effect may continue to be felt even after its completion is, however, not a continuing wrong or default. It is reasonable to take the view that the court should not be eager to hold that an act or omission is a continuing wrong or default unless there are words in the statute concerned which make out that such was the intention of the Legislature. In the instant case, whenever the question of levying penalty arises what has to be first considered is whether the assessee had failed without reasonable cause to file the return as required by law and if it is held that he has failed to do so then penalty has to be levied in accordance with the measure provided in the Act. When the default is the filing of a delayed return, the penalty may be correlated to the time lag between the last day for filing it without penalty and the day on which it is filed and the quantum of tax or wealth involved in the case for purposes of determining the quantum of penalty but the default, however, is only one which takes place on the expiry of the last day for filing the return withoutpenalty and not a continuing one. The default in question does not, however, give rise to a fresh cause of action every day.'
5. Following the above decision of the Supreme Court, we answer the question that the penalty shall be imposed upon the assessee according to law which was in force on the date when the default was committed.
6.Reference is disposed of as indicated above. Parties are directed to bear their own costs.