Continuing default under wealth-tax penalty law raised referable questions on whether amended law governed late filing cases.

The matter concerned whether penalty for late filing of wealth-tax returns under section 18(1)(a) should be governed by the law in force when the default first occurred or by the amended law applying to a continuing default. The Revenue contended that the default was continuing and that the amended penalty regime from 1 April 1969 applied, while the Tribunal had taken the earlier law as controlling. In light of the Supreme Court authority noted in the order, the Court found that questions of law did arise from the Tribunal's decision and directed it to draw up a consolidated statement and refer the questions.

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Issues: Whether the Tribunal was in refusing to refer the questions of law concerning the basis for levy of penalty under section 18(1)(a) of the Wealth-tax Act, 1957, in the case of late filing of wealth-tax returns and continuing default after amendment of the penalty law.

Analysis: The application under section 27(3) of the Wealth-tax Act, 1957, sought a direction to the Tribunal to state the case and refer two questions arising from its order on penalty for delayed filing of returns. The Tribunal had proceeded on the view that the applicable law was the one in force when the default first occurred, while the Revenue relied on the contention that the default was continuing and that the amended law in force from 1 April 1969 governed the computation of penalty. In view of the Supreme Court's latest pronouncement noticed in the order, the Court held that the questions of law did arise from the Tribunal's order.

Conclusion: The Tribunal was directed to draw up a consolidated statement for all three assessment years and refer the two questions to the Court.

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