Prospective application of amended penalty law depends on when the default occurred, not the assessment year.

An amended penalty provision that converts a failure to file a return into a continuing default with monthly liability applies prospectively, not to a default already completed before the amendment took effect. For the earlier assessment year, the original omission occurred before the amendment, so penalty had to be imposed only under the unamended provision. For the later assessment year, the default arose after the amendment came into force, so the amended provision governed computation of penalty. The assessment year itself was not decisive; the controlling factor was when the default occurred and the statutory regime then in force.

---

---

Issues: (i) Whether the amended penalty provision in section 18(1)(i) of the Wealth-tax Act, 1957 applied to the default in filing the return for assessment year 1964-65, where the original default occurred before the amendment. (ii) Whether the amended penalty provision applied to the default in filing the return for assessment year 1965-66, where the original default occurred after the amendment took effect.

Issue (i): Whether the amended penalty provision in section 18(1)(i) of the Wealth-tax Act, 1957 applied to the default in filing the return for assessment year 1964-65, where the original default occurred before the amendment.

Analysis: The penalty regime under the original provision and the amended provision was materially different. The original law treated the failure to file the return by the due date as a completed default, while the amendment introduced a continuing default concept with monthly penalty consequences. Penal liability for an act or omission is ordinarily determined by the law in force when the omission occurred. A later amendment creating a new and recurring penal consequence cannot be applied retrospectively to a default that had already become complete before the amendment came into force.

Conclusion: The amended section did not apply to assessment year 1964-65. Penalty was to be imposed only under the unamended provision.

Issue (ii): Whether the amended penalty provision in section 18(1)(i) of the Wealth-tax Act, 1957 applied to the default in filing the return for assessment year 1965-66, where the original default occurred after the amendment took effect.

Analysis: The amendment in force from 1 April 1965 changed the nature of the default into a continuing one and required penalty to be computed month by month for continued non-compliance. Since the original failure to file the return for assessment year 1965-66 occurred after the amendment had come into operation, the amended provision governed the computation of penalty. The assessment year itself was not determinative; the relevant factor was the date on which the default occurred and the statutory regime then in force.

Conclusion: The amended section applied to assessment year 1965-66. Penalty was to be computed under the amended provision.

Final Conclusion: The reference was answered by applying the unamended penalty provision to the earlier default and the amended penalty provision to the later default, thereby granting the assessee relief for one assessment year and sustaining the Revenue's position for the other.

Ratio Decidendi: A penal amendment creating a continuing default and monthly penalty liability operates prospectively and applies only where the original default occurred after the amendment came into force; the assessment year by itself does not govern the applicable penalty provision.

---