H P AGARWALLA AND SONS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under S. 27(1) of the WT Act, 1957, in relation to the asst. yrs. 1965 -66 to 1968. -69. A consolidt. statement of facts has been submitted to this Court by the Tribunal. At the time of assessment, the WTO finding that the assessee had filed returns beyond time without any reasonable cause levied penalty for the relevant assessment years in terms of S. 18(1) of the said Act. The penalties levied for the respective years were as follows: Due dates for filing the return for the respective years were as follows : The returns were in fact filed for all the four years on 28th Feb., 1970. Obviously, the returns were filed beyond the time prescribed by law. The assessee appealed against the orders levying penalty. The AAC held that the assessee had no reasonable cause for filing the returns beyond the due date. He, however, directed the WTO to impose penalty on the assessee under S. 18(1)(a) of the WT Act as it stood before its amendment w.e.f. 1st April, 1969, by the Finance Act, 1969. The Department went up in appeal against the order of the AAC in so far as the AAC had directed the imposition of penalty under S. 18(1)(a) as it stood prior to its amendment w.e.f. 1st April, 1969. The Tribunal set aside the order of the AAC and restored the order of the WTO. The assessee, being aggrieved by the order of the Tribunal, claimed reference under S. 27(1) of the WT Act. Hence, the present references before us. The questions referred to us for our opinion are the following: "1. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the omission to file the return of wealth under S. 14(1) of the WT Act, 1957, is a continuing default ?

(2.) WHETHER , on the facts and in the circumstances of the case, the Tribunal has rightly held that that for the period of default after 1st April, 1969, penalty is leviable on the assessee under S. 18 (1)(a) of the WT Act, as amended by the Finance Act, 1969, w.e.f. 1st April, 1969 - The first question is whether the omission to file the return of wealth under S. 14(1) of the WT Act, 1957, was a continuing default. We need not waste time over this proposition as the matter has been settled finally by the Supreme Court in Maya Rani Punj vs. CIT (1986) 157 ITR 330. In CWT vs. Suresh Seth (1981) 129 ITR 328, the Supreme Court had held that failure to file return on due date was not a continuing default. That decision of the Supreme Court was overruled in the case of Maya Rani Punj (supra), where their Lordships held that failure to file return on due date was a continuing default. In that view of the matter, the first question referred to us must be answered in favour of the Revenue and against the assessee. In regard to the second question, the law which will apply to the levy of penalty in this case had been amended by the Finance Act, 1969. The proceeding for levy of penalty had been initiated in 1971. The delinquency. however, had taken place prior to 1969. Therefore, the stand of the assessee was that the law which came into effect on 1st April, 1969, would not govern the measure of penalty to be imposed upon it. This question also now has been answered by a Full Bench of this Court in Taxation Cases Nos. 269, 270, 280 and 281 of 1976 (disposed of on 27 -4 -1987 -CWT vs. Dalip Kumar Worah (1987) 167 ITR 811) to which both of us were parties. The Full Bench of this Court, following the decision of the Supreme Court in Jain Brothers vs. Union of India (1970) 77 ITR 107, held that in the matter of levy of Assessment years Rs.