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1985 DIGILAW 162 (PAT)

Commissioner Of Wealth Tax v. Laljee Ram Bhagat

1985-05-02

NAZIR AHMAD, UDAY SINHA

body1985
Judgment 1. This reference under Sec.27(1) of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act"), made at the instance of the Commissioner of Wealth-tax, Bihar, must be answered on the authority of the decision of the Supreme Court in Brij Mohan V/s. CIT [1979] 120 ITR 1. 2. The assessment year in question is 1967-68. The return for that year under the Act was filed on July 24, 1968. The assets shown in the return were valued at Rs. 1,20,430. The Wealth-tax Officer assessed the immovable properties at Rs. 3,37,000. The assessment was completed on October 25, 1968. On the very same date, the Wealth-tax Officer initiated proceedings under Sec.18(1)(c) of the Act. Since the case was likely to involve penalty exceeding Rs. 1,000, the Wealth-tax Officer referred the matter to the Inspecting Assistant Commissioner of Wealth-tax (hereinafter referred to as "the I.A.C."). The Inspecting Assistant Commissioner issued a notice under Sec.18(3) of the Act on October 17, 1970. By this notice, the assessee was required to show cause by October 22, 1970. The service return in respect of that notice not having been received and since the case was likely to become time-barred, the Inspecting Assistant Commissioner issued a fresh notice on October 22, 1970. This notice was served on the assessee. By this notice, the assessee was required to show cause by October 24, 1970. The assessee sent a telegram for extension of time for complying with the notice. The prayer for adjournment was, however, rejected. The Inspecting Assistant Commissioner thereafter imposed penalty upon the assessee. 3. The assessee being aggrieved filed an appeal to the Tribunal. The Tribunal conceded that this was pre-eminently a case where the penal provisions were attracted. The Tribunal, however, allowed the appeal in part imposing a penalty of only 50 per cent. of the tax avoided. The Tribunal was of the view that the Inspecting Assistant Commissioner had erred in law in imposing penalty in accordance with the law as it existed on July 24, 1968. According to the Tribunal, the assessment year being 1967-68, the law as it stood in that assessment year should have been applied and the penalty should have been imposed accordingly. 4. The Commissioner of Wealth-tax, being aggrieved by the order of the Tribunal in its view of the law, prayed for a reference to this court. According to the Tribunal, the assessment year being 1967-68, the law as it stood in that assessment year should have been applied and the penalty should have been imposed accordingly. 4. The Commissioner of Wealth-tax, being aggrieved by the order of the Tribunal in its view of the law, prayed for a reference to this court. That is how the present reference is before us. 5. The question referred to us is as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the quantum of penalty imposable in this case was to be governed by the law which was in force on the first day of the assessment year and not the amended law which came into effect from April 1, 1968 ?" The sum and substance of the question referred for the opinion of this court is whether the Tribunal was justified in holding that the quantum of penalty imposable in this case was to be governed by the law which was in force on the first day of the assessment year and not the amended law which came into effect from April 1, 1968. The matter is now beyond controversy in view of the decision of the Supreme Court in the case of Brij Mohan [1979] 120 ITR 1, where it has been held in unmistakable terms that penalty is imposed on account of the commission of a wrongful act and, therefore, the law prevailing on the date on which the wrongful act was committed would be the law which was to be applied and in accordance with which the penalty was to be imposed. The case before the Supreme Court was in relation to a case under Sec.271(1)(c), Clause (iii) of the Income-tax Act, which is in pari materia with Sec.18(1)(c), Clause (iii) of the Wealth-tax Act. The provisions in regard to the penalty under the Wealth-tax Act being the same as under the Income-tax Act, the exposition of law by the Supreme Court in regard to the case under the Income-tax Act must apply to a case under the Wealth-tax Act as well. In that view of the matter, the return of wealth having been filed on July 24, 1968, the law applicable on that date was the law which was in force on that date. In that view of the matter, the return of wealth having been filed on July 24, 1968, the law applicable on that date was the law which was in force on that date. It may be stated that the law underwent a change from April 1, 1968. The law, therefore, which was in force on July 24, 1968, would govern the case. The Inspecting Assistant Commissioner was thus absolutely justified in the order that he had passed and the Tribunal erred in applying the law which existed prior to April 1, 1968. 6 In my view, therefore, the Tribunal was not justified in holding that the quantum of penalty imposable in this case was to be governed by the law which was in force on the first day of the assessment year 1967-68 and not by the amended law which came into force with effect from April 1, 1968. 7. The reference is thus answered in favour of the Revenue and against the assessee. There shall be no order as to costs.