Wealth-tax penalty must be recomputed after fresh quantum assessment where net wealth is finally redetermined.

Penalty under section 18(1)(a) of the Wealth-tax Act must follow the net wealth as finally determined in the fresh quantum assessment. Where the assessment was restored for re-determination of the value of unquoted equity shares on the yield method, the penalty could not remain fixed independently of that reassessment. Recalculation of the penalty in line with the fresh assessment was therefore correct in law and was upheld in favour of the assessee.

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Issues: Whether the penalty leviable under section 18(1)(a) of the Wealth-tax Act, 1957 was liable to be recomputed on the basis of the fresh assessment directed in the quantum proceedings.

Analysis: The assessee's assessment for the relevant year had been restored for fresh determination of the value of unquoted equity shares on the yield method, and the quantum assessment order had been upheld. Since the penalty was linked to the net wealth as finally determined in the fresh assessment, the quantum of penalty could not remain fixed independently of that reassessment.

Conclusion: The direction to recalculate the penalty under section 18(1)(a) was correct in law and is upheld in favour of the assessee.

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