S.K. Mal Lodha, J. - (1.) THIS reference raises an important question of law with respect to interpretation of the words " every month" used in Section 18(1)(i) of the Wealth-tax Act, 1957 (No. XXVII of 1957), (for short "the Act")'. We may also state that the same words have been used in Section 271(t)(i)(b) of the Income-tax Act, 1961. The provisions of Sections 18(1)(i) are in pari materia with Section 271(1)(i)(b) of the Income-tax Act, 1961.
(2.) THE petitioner-assessee is a Hindu undivided family. THE assessment year involved is 1973-74. THE assessee was required to file a return of wealth by August 15, 1973. THE return was despatched by the assessee by registered post on September 12, 1973. It was received by the Wealth-tax Officer on September 15, 1973. THE Wealth-tax Officer was of the view that there was a delay of 31 days (one month) in filing the return. He issued a show-cause notice to the assessee regarding penalty. He held in his order dated December 5, 1975, that the assessee was a defaulter within the meaning of Section 18(1)(a) of the Act and so imposed a penalty of Rs. 1,577. THE assessee filed an appeal. THE Appellate Assistant Commissioner opined that the default in filing the return was to be computed on the basis of completed months. According to him, as the return was due to be filed on August 15, 1973, and as it was received on September 15, 1973, a complete month has passed and, therefore, the penalty imposed by the Wealth-tax Officer is justified. A second appeal was lodged by the assessee and the Income-tax Appellate Tribunal concurred with the view taken by the Appellate Assistant Commissioner in regard to the very same contention that was reiterated before it on behalf of the assessee : "In our opinion, a return of wealth is filed on the date on which it is received in the concerned office. THE date of despatch of the return by post is not relevant for determining the date of filing of the return because post office is the agent of the assessee. In the present case, the return of wealth was admittedly received by the Wealth-tax Officer on September 15, 1973. THErefore, there was clearly a completed month of delay for which the penalty was rightly levied by the Wealth-tax Officer." THE assessee submitted an application to refer the question of law arising out of its order dated June 16, 1977, passed in WTA No. 114/JP/ 1976-77 (assessment year 1973-74). THE Tribunal was of the opinion that a question of law arose out of its order and, therefore, it has referred the following questions for our decision : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was delay of one month in filing the return under Section 14(1) of the Wealth-tax Act, 1957 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the penalty levied by the Wealth-tax Officer ?" We have heard Mr. R. Balia for Mr. B.R. Arora, for the assessee and Mr. C.R. Mehta, for the Revenue. It is not in dispute that in accordance with Section 14(1) of the Act, the assessee should have filed return of his wealth by August 15, 1973. For the present purpose, the parties are further in agreement that the return despatched by registered post was received by the Wealth-tax Officer on September 15, 1973. It was vehemently argued by the learned counsel appearing for the assessee that as there was no default of a completed month when the return was received by the Wealth-tax Officer on September 15, 1973, no penalty could be levied under Section 18(1)(i) of the Act. In support of his contention, Mr. R. Balia placed strong reliance on CIT v. Khadri Mills (Coimbatore) Ltd. [1977] 106 ITR 846 (Mad) and CIT v. Brijlal Lohia [1980] 124 ITR 485 (Cal). On the other hand, Mr. C.R. Mehta, appearing for the Revenue, submitted that when the return was received on September 15, 1973, which should have been filed by August 15, 1973, there was a default of a complete month within the meaning of Section 18(1)(i) of the Act and, therefore, on the admitted facts of the case, the imposition of penalty was justified. Reliance was placed on CIT v. Laxmi Rattan Cotton Mills [1974] 97 ITR 285 (All). We have given our most anxious and thoughtful consideration to the rival contentions raised by the learned counsel for the assessee and the Revenue. It is the admitted position that neither in the Act of 1957 nor in the Income-tax Act, 1961, the word "month" has been defined. The word "month" has been defined in Section 3(35) of the General Clauses Act, 1897 (No. X of 1897), as under: "(35) 'month' shall mean a month reckoned according to the British calendar." According to Section 4 of the General Clauses Act, 1897, the definition of "month" as given in Section 3(35) shall apply unless there is anything repugnant in the subject or context to all Central Acts made after January 3, 1868, and to all Regulations made on or after January 14, 1887. The Wealth-tax Act is of 1957, and, thus, the definition given in Section 3(35) shall be applicable for interpreting the word "month" used in various sections of the Act, unless there is anything repugnant in the subject or context. According to Section 3(35) of the General Clauses Act, 1897, the month does not necessarily mean 30 days and it is according to the Gregorian calendar unless the context otherwise requires. The words used in Section 18(1)(i) are "for every month during which the default continued", as stated hereinabove. In Section 271(1)(i)(b), the very same words have been used, namely, "for every month during which the default continued ". The question for consideration in these circumstances is, whether the words "every month" used in Section 18(1)(i) or for that matter in Section 271(1)(b) mean a month according to the Gregorian calendar or thirty days or a lunar month.
(3.) THE question that arose before the Madras High Court in CIT v. Kadri Mills (Coimbatore) Ltd, [1977] 106 1TR 846 (Mad), was whether the word "month" occurring in Section 271(1)(a) of the Income-tax Act, 1961, has to be reckoned according to the British calendar according to Section 3(35) of the General Clauses Act, 1897. It was held that the word "month" occurring in Section 271(1)(a) of the Income-tax Act has to be reckoned according to the British calendar as defined in Section 3(35) of the General Clauses Act, 1897. CIT v. Laxmi Rattan Cotton Mills Co. Ltd. [1974] 97 ITR 285 (All), was dissented from. The question that arose in Brijlal's case [1980] 124 ITR 485 (Cal), was whether the words "every month during which the default continued" occurring in Section 271(1)(a)(i)(a) of the Income-tax Act, 1961, refer only to a month during the whole of which the default continued and not also to a month during only a part of which the default continued. Sabyasachi Mukharji J., as he then was, speaking for the Division Bench, held that where month is not denned, we should go to the expression used under Section 3(35) of the General Clauses Act, 1897, and "month" should be the English calendar month. The Division Bench of the Calcutta High Court expressed its agreement with the view taken by the Division Bench of the Madras High Court in Kadri Mills' case [1977] 106 ITR 846. We have considered the reasoning given in Kadri Mills' case [1977] 106 ITR 846 (Mad) and Brijlal's case [1980] 124 ITR 485 (Cal). There is absolutely nothing in the context of Section 18(1)(i) of the Act to exclude the application of the definition of the word " month " occurring in Section 3(35) of the General Clauses Act, 1897. There is nothing in the context to exclude the invocation of the definition in Section 3(35) of the General Clauses Act, 1897, to construe the words used in Section 18(1)(i) of the Act. The view taken in Laxmi Rattan Cotton Mills' case [1974] 97 ITR 285 (All), is that the word "month" occurring in Section 271(1)(a) must be taken to mean a period of thirty days. The reasons for this view are that Section 271(1)(a) was enacted for the purpose of imposing a penalty on an assessee who has not filed his return within the prescribed time and its object was to serve as a deterrent for such lapses. According to the learned judges, it may, in some cases, lead to a defaulting assessee escaping penalty altogether. This has been illustrated by stating that if the time given to an assessee to file his return is up to January 31, of a particular year and he files it on February 27, he would not be liable to pay any penalty and that such a result is not contemplated by the sub-section. In our opinion, the escape or non-escape of penalty to such a limited extent, cannot constitute a proper and sound basis for holding that there is something in the subject or context of Section 271(1)(b) of the Income-tax Act repugnant to the definition of the word "month" occurring in Section 3(35) of the General Clauses Act, 1897. Having considered the reasons given in the aforesaid three authorities, we prefer to adopt the view taken in CIT v. Kadri Mills Ltd. [1977] 106 ITR 846 (Mad) and CIT v. Brijlal Lohia [1980] 124 ITR 485 (Cal) and express our respectful dissent from the view taken in CIT v. Laxmi Rattan Cotton Mills [1974] 97 ITR 285 (All). ;