Madhya Pradesh High Court
Commissioner Of Wealth-Tax vs Smt. Premlata C. Lunkad, Madanlal ... on 10 January, 1996
Equivalent citations: [1996]220ITR128(MP)
Author: S.B. Sakrikar
Bench: S.B. Sakrikar
JUDGMENT A.R. Tiwari, J.
1. These eight reference applications have been filed by the Commissioner of Wealth-tax, Bhopal, under Section 27(3) of the Wealth-tax Act, 1957, and raise common facts and common questions of law for our consideration. In all these eight applications the undernoted common questions of law have been proposed for our direction to the Tribunal to state the case and to refer the same for our answer :
" (i) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that in view of the decision of the Supreme Court in Maya Rani Punj, the penalty for default under Section 18(1)(a) was required to be computed in accordance with the provisions of amended law even in respect of default for the period prior to the amendment made with effect from April 1, 1976 ?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in not considering that the default of non-submission of return continues from month to month ?
(iii) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that it is not permissible to cut and split the default under Section 18(1)(a) on monthly basis ?"
2. Briefly stated, the facts of the case are that in Miscellaneous Civil Cases Nos. 297 of 1988 and 298 of 1988, the assessee is Smt. Premlata C. Lunkad, Indore. The assessment years are 1974-75 and 1975-76, respectively. The returns under the Wealth-tax Act were required to be filed on July 31, 1974, and July 31, 1975, respectively. These were, however, filed on October 11, 1979. Regular assessments were completed on January 25, 1983, and January 27, 1983. It was held that the delay in the submission of the returns was without any reasonable cause. The Wealth-tax Officer, therefore, ordered levy of penalty under Section 18(1)(a) of the Wealth-tax Act by order dated March 22, 1985. The quantum of penalty for the assessment year 1974-75 was Rs. 52,515 and Rs. 31,428 for the assessment year 1975-76. The provisions relating to the computation of penalty under this provision were, however, amended by the. Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976. Prior to the amendment in 1976 and since April 1, 1969, the penalty was required to be computed at the rate of 1/2 per cent of net wealth for every month for the period during which the default continued subject to the limit of net wealth as assessed. After the amendment, the penalty for default is leviable at the sum equal to 2 per cent. of the assessed tax for every month of default. The Wealth-tax Officer assessed the penalty on the basis of the unamended provisions. The Appellate Assistant Commissioner on appeals on applying the ratio of decision of the Supreme Court in the case of Maya Rani Punj v. CIT [1986] 157 ITR 330 reduced the penalty holding that the amended law was to be applied for computing the quantum of the penalty. The Tribunal agreed with the view taken by the Appellate Assistant Commissioner. Aggrieved by the order, the Commissioner filed the application under Section 27(1) of the Act which was rejected. The Commissioner thereafter filed the application under Section 27(3) of the Act.
3. In Miscellaneous Civil Case No. 296 of 1988, the assessee is Smt. H.H. Pushpamala Raje Puar, Dewas. The assessment year is 1973-74. The return was filed late. In this case also the penalty was imposed by the Wealth-tax Officer on the basis of the unamended provisions of law. The Appellate Assistant Commissioner, however, in appeal reversed the order and applied the amended law following Maya Rani Punj v. CIT [1986] 157 ITR 330. The Tribunal agreed with the view of the Appellate Assistant Commissioner. The application under Section 27(1) of the Act was rejected.
4. The Commissioner, therefore, filed an application under Section 27(3) of the Act.
5. Madanlal Haveliram, Indore, is the assessee in the remaining miscellaneous civil cases which pertain to the assessment years 1971-72 to 1975-76. In these cases also the assessee filed the returns late. The Wealth-tax Officer imposed the penalty according to the unamended provisions. The Appellate Assistant Commissioner, however, reversed the order and applied the amended provisions. The Department filed the appeals. The Tribunal agreed with the view of the Appellate Assistant Commissioner in view of the decision of the Supreme Court in Maya Rani Punj v. CIT [1986] 157 ITR 330. The Department then filed applications under Section 27(1) of the Act which were rejected. Thereafter the Commissioner has filed these reference applications under Section 27(1) of the aforesaid Act.
6. We have heard Shri D.D. Vyas, learned counsel for the applicant/ Department in all these reference applications. We have also heard Shri G.M. Chaphekar, learned senior counsel with Smt. Meena Chaphekar, for the non-applicant/assessee, in Miscellaneous Civil Cases Nos. 297, 298 and 296 of 1988. We have also heard Shri B.K. Joshi, learned counsel for the non-applicant/assessee, in the remaining miscellaneous civil cases.
7. Section 18(1)(a) provides for imposition of penalty in case of failure to furnish the return in time. Clause (i) was substituted by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976, which provides as under :
" (i) in the cases referred to in Clause (a), in addition to the amount of wealth-tax, if any, payable by him, a sum equal to two per cent. of the assessed tax for every month during which the default continued."
8. We noticed that these three questions were sought to be referred by the Tribunal under Section 27(1) of the Wealth-tax Act. The Tribunal, however, declined to make reference and rejected the applications holding as under :
"In our opinion, no referable question of law arises for these reasons. Returns of wealth for the assessment years 1974-75 and 1975-76 due to be filed by July 31, 1974, and July 31, 1975, were filed by the assessee on November 11, 1979. The Wealth-tax Officer imposed penalties under Section 18(1)(a) of the Wealth-tax Act in accordance with the provisions of law prevailing on the due dates of filing the returns for these years. On appeal, the Appellate Assistant Commissioner of Wealth-tax reduced the penalties. He computed the imposable penalties in accordance with law prevalent on the date of completion of the assessments for these years. He thereby followed the judgment of the Supreme Court in the case of Maya Rani Punj v. CIT [1986] 157 ITR 330. Aggrieved by the said order of the Appellate Assistant Commissioner, the Department came in appeal. The Tribunal endorsed the order of the Appellate Assistant Commissioner and as such dismissed the appeals of the Department. Since the order of the Tribunal is based on the judgment of the Hon'ble Supreme Court in the case of Maya Rani Punj [1986] 157 ITR 330, no referable question of law arises. The contention of the learned Departmental representative is that Maya Rani Punj's case [1986] 157 ITR 330 has been spelt out differently by the High Courts. May it be so, but in the instant case the facts are so plain and simple that the penalty is leviable in accordance with law prevalent on the date of initiation of penalty proceedings. We, therefore, decline to make a reference."
9. We find that the method of computation of default is procedural in nature and the orders of the Tribunal are based on the decision rendered by the Supreme Court in Maya Rani Punj v. CIT [1986] 157 ITR 330 (SC). The Tribunal rejected the applications on the conclusion that there were no referable questions. In C. Beepathuma v. Velasari Shankaranarayana Kadambolithaya, AIR 1965 SC 241, 245, it is held that "there is no doubt that the law of limitation is a procedural law and the provisions existing on the date of the suit apply to it. The suit was filed in 1944 and the Act of 1877 governs it". It is thus clear that the procedural law becomes applicable. The Tribunal, therefore, did not commit any error of law in applying the amended provisions for the instant cases.
10. The validity of Section 18(1) of the Wealth-tax Act was sustained by the apex court in Vrindavan Goverdhan Lal Pittie v. Union of India [1986] 160 ITR 318 ; AIR 1986 SC 1668.
11. In view of the orders based on the Supreme Court decision, counsel for the applicant was unable to point out as to how the proposed questions are questions required to be referred for opinion. When the point stands concluded, there is no justification for seeking the direction to state the case and refer the proposed questions. We are satisfied with the correctness of the decision of the Tribunal and hold that the aforesaid questions do not arise from the orders passed by the Tribunal and are thus not referable.
12. In the circumstances we reject these reference applications but without any order as to costs.
13.Counsel fee for each side is, however, fixed at Rs. 750, if certified, in each case.
14. This order shall be retained in Miscellaneous Civil Case No. 297 of 1988 and its copy each shall be placed on the records of the connected miscellaneous civil cases, as noted above, for ready reference.