VAIDYA, J. -
(1.) THE Tribunal, Hyderabad Bench, has referred under S. 27(1) of the WT Act the following question :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the provisions of S. 18(1)(a) of the WT Act, as it stood prior to the amendment effected from 1st April, 1965, were applicable ?"
(2.) THE facts leading to the reference are that the assessee, who is the respondent in this reference, had filed voluntary returns of net wealth on 26th Nov., 1963, for the asst. years 1958 59, 1959 60,
1960 61, 1961 62 and 1962 63. The WTO on 28th July, 1965, issued notices under S. 18(2) of the WT Act as amended by Act No. 46 of 1964, the amending Act having come into force on the 1st
April, 1965, to show cause why the penalty as provided in that section should not be levied for the
delay on the part of the assessee in filing his returns of net wealth. On receipt of the show cause
notice, the assessee furnished an explanation that, on account of his failing health, old age and the
fact that he was a villager, the delay had occurred. The explanation was not accepted by the WTO
who thereafter imposed penalties in respect of each of the assessment year mentioned above
under the amended Act. The penalty that was levied was in accordance with the provisions of S. 18
(1)(a) of the amended section. The assessee carried the matter in appeal before the AAC who by a
common order dt. 26th Sept., 1966, accepted the assessee's contention that on the date on which
the voluntary returns were filed by him, i.e., 26th Nov., 1963, S. 18(1)(a) as amended was not on
the statute book and penalties could be imposed only in terms of S. 18 as it stood prior to its
amendment. The AAC set aside the orders of penalty passed by the WTO and directed him to pass
fresh orders in accordance with the law that prevailed at the time when the default had occurred.
The AAC came to the conclusion that under S. 18, prior to its amendment, no order imposing
penalty can be passed by the WTO without obtaining the prior approval of the IAC. Against the
orders of the AAC, the Department filed appeals for all the five assessment years and they were
disposed of by a common order made by the Tribunal. Cross objections were also filed by the
assessee. The Tribunal also held that the punishment for an offence must be awarded in
accordance with the law that was in force at the time when the offence was committed, the proper
provision to be applied in the case was the provision of S. 18(1)(a) of the WT Act as it stood prior
to its amendment. This reference has come before us on an application made by the CWT, Andhra
The main question for consideration in this reference is whether the provisions of S. 18 of the WT Act, as amended by Act No. 46 of 1964, are applicable to the proceedings for levy of penalty.
Shri P. Rama Rao, the learned counsel for the Department, contended that :
(1) the law applicable for levy of penalty is as prevailing on the date on which the assessment in the course of which penalty proceedings are initiated is completed. In the instant case, the assessments for all the years in dispute were completed on 28th July, 1965, and on the same date , notices under S. 18(2) were issued. The law applicable, therefore, is the amended S. 18 and not the unamended S. 18(2) ; (2) the provisions of S. 18(4) prior to its amendment in regard to obtaining the previous approval of the IAC is only procedural. The assessee has no right in a procedural matter an cannot say that the penalty should be levied by a particular forum. By deleting the provision for obtaining the previous approval of the IAC, only the forum has been changed. The amended section, therefore, would govern the proceedings for levy of penalty ; (3) even assuming that the assessee had any vested right, such a right arose only on the date when the proceedings for levy of penalty were started. Sec.18 as amended was in force on the date on which the notices for levy of penalty were issued. The proceedings are therefore governed by the amended section.
(3.) THE learned counsel for the assessee argued that the provisions of S. 18(4) are not merely procedural but are substantive. A privilege is created in favour of the assessee by providing for a
safeguard. By virtue of the provisions of S. 6(c) of the Central General Clauses Act, the repeal of
old S. 18(4) will not in any way affect the safeguard granted to an assessee in respect of the
default committed prior to the amendment of the section. Unamended S. 18(4) is, therefore,
attracted to the case in question. The second contention is that when the amended S. 18 provides
for a minimum penalty, S. 6(d) of the General Clauses Act is attracted. By virtue of that provision,
a repeal of a provision cannot affect any penalty incurred in respect of any offence committed
against any enactment so repealed. Penalty is levied because of default in furnishing the returns.
The last day for furnishing the returns in each of the assessment years was the 30th June of that
year. The default, therefore, was committed on the 30th June of the years, 1959, 1960, 1961,
1962 and 1963. The law applicable on the aforesaid dates in regard to the penalty will be applicable and not the amended S. 18.;