1992 (8) TMI 42 - HC - Wealth-tax

Penalties for non-filing of returns are ongoing, with differing rates pre and post April 1, 1969.

The court held that the failure to file returns is a continuing offence, with penalties imposed for each month of non-compliance, as established in Maya ... Penalty, Precedents, Wealth Tax Issues Involved:1. Whether the omission to file the return or submitting a belated return is a continuing offence.2. The correct scale for quantifying the penalty for delayed submission of returns.Detailed Analysis:1. Whether the omission to file the return or submitting a belated return is a continuing offence:The court addressed whether the failure to file a return on time constitutes a continuing offence under section 18(1)(a) of the Wealth-tax Act, 1957. The judgment highlighted that the measure of penalty under section 18(1)(a) for non-submission or delayed submission of returns without reasonable cause was two percent of the tax for every month of default, not exceeding 50 percent of the tax, until March 31, 1969. From April 1, 1969, the penalty was amended to half a percent of the net wealth per month of default.The court noted that the authoritative pronouncement of the Supreme Court in Maya Rani Punj v. CIT [1986] 157 ITR 330 established that the default in filing returns is a continuing offence. The Supreme Court ruled that the non-filing of the return is a continuing default, commencing from the date of default and continuing month after month until compliance is made. The court emphasized, 'The rule of de die in diem was applicable not on daily but on monthly basis.'The court also referenced the decision in CWT v. Ram Narain Agrawal [1977] 106 ITR 965 (All), where it was held that non-filing or filing a belated return was not a continuing wrong. However, this view was overruled in light of the Supreme Court's decision, which clarified that the default is continuous and penalties are imposed for each month of non-compliance.2. The correct scale for quantifying the penalty for delayed submission of returns:The court examined the appropriate scale for calculating the penalty for delayed submission of returns, considering the amendment effective from April 1, 1969. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal had directed that penalties should be computed based on the law prevailing when the returns were due, not the amended rates.The court discussed various judgments, including the Full Bench decision of the Patna High Court in CWT v. Dalip Kumar Worah [1987] 167 ITR 811, which supported the view that the law applicable at the time of the authority's decision to initiate penalty proceedings governs the penalty quantification. However, the Supreme Court's decision in CWT v. P. N. Banerjee [1991] 192 ITR 399 resolved the controversy by holding that penalties should be quantified based on the law prevailing before and after the amendment, respectively.The court concluded that the penalties for delay prior to April 1, 1969, should be calculated at the rates under the unamended section 18, and for delay after April 1, 1969, at the rates under the amended section 18. The judgment stated, 'The penalties under section 18(1)(a)(i) of the Wealth-tax Act for delay in filing the returns are to be levied for the period of delay prior to April 1, 1969, in terms of the prescribed rates with reference to the unamended section 18, and for the period of delay subsequent to April 1, 1969, at the prescribed rates in terms of the amended section 18(1)(a)(i).'In conclusion, the court provided a detailed analysis of the issues, affirming that the failure to file returns is a continuing offence and clarifying the appropriate scale for penalty quantification based on the law before and after the amendment.