Wealth-tax return failure penalty based on law in force when due; retrospective amendments not applicable.

The Supreme Court upheld the High Court's decision that the failure to file wealth-tax returns is not a continuing offense. Penalties must be calculated based on the law in force on the last day the return was due, without retrospective application of subsequent amendments. The penalties imposed for the assessment years 1964-65 and 1965-66 were justified under the provisions of section 18 before the amendments by the Finance Act, 1969. The appeals were dismissed, affirming the High Court's ruling in favor of the assessee.

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Issues Involved:
1. Whether the failure to file wealth-tax returns constitutes a continuing offence.
2. Whether the penalties levied under section 18(1)(a) of the Wealth-tax Act, 1957, for the assessment years 1964-65 and 1965-66 were justified.

Detailed Analysis:

Issue 1: Continuing Offence
The primary issue was whether the omission to file wealth-tax returns is a "continuing offence." The High Court had rejected the department's contention that the default was a continuing offence, which would necessitate calculating penalties for different periods based on amendments to the Wealth-tax Act.

The Supreme Court analyzed the provisions of the Wealth-tax Act, particularly sections 14, 15, and 18, as they stood during the relevant periods. Section 14 imposes a duty on the assessee to file returns by a specified date, while section 15 allows for filing returns before the assessment is made, even after the due date.

The court emphasized that a liability in law arises from an act of commission or omission. Once the prescribed time to perform an act expires, the liability is fixed according to the law in force at that time. The court noted that neither the Wealth-tax (Amendment) Act, 1964, nor the Finance Act, 1969, explicitly stated that the amended penalty provisions would apply to ongoing defaults from preceding years.

The court concluded that the default in filing returns is not a continuing wrong but a single default that occurs on the last day allowed for filing the return. The phrase "for every month during which the default continued" in section 18 merely indicates the multiplier for determining the penalty and does not convert the default into a continuing one. The court held that the penalty must be computed according to the law in force on the last day the return was due, not based on subsequent amendments.

Issue 2: Justification of Penalties
The second issue was whether the penalties levied for the assessment years 1964-65 and 1965-66 were justified. The Wealth-tax Officer had levied penalties for late submission of returns, which were upheld by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal.

For the assessment year 1964-65, the penalty was divided into two periods:
- From July 1, 1964, to March 31, 1969: Penalty at 2% per month, subject to a maximum of 50% of the wealth-tax payable.
- From April 1, 1969, to March 18, 1971: Penalty at 0.5% of the net wealth for each month of default.

For the assessment year 1965-66, the penalty was similarly divided:
- From July 1, 1965, to March 31, 1969: Penalty at 2% per month, subject to a maximum of 50% of the wealth-tax payable.
- From April 1, 1969, to March 18, 1971: Penalty at 0.5% of the net wealth for each month of default.

The court reiterated that the penalty should be computed according to the law in force on the last day the return was due. Therefore, the penalties for the assessment years 1964-65 and 1965-66 should be calculated based on the provisions of section 18 as they stood before the amendments made by the Finance Act, 1969.

Conclusion:
The Supreme Court upheld the High Court's decision that the failure to file wealth-tax returns is not a continuing offence. The penalties must be computed according to the law in force on the last day the return was due, and neither the 1964 nor the 1969 amendments have retrospective effect. The appeals were dismissed with costs, affirming the High Court's ruling in favor of the assessee.

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