Srinivasa Iyengar, J.:— These are references made by the Income-tax Appellate Tribunal, Bangalore Bench, Bangalore, under section 27(1) of the Wealth-tax Act, 1957 (hereinafter referred as “the Act”). The question relates to the quantum of penalty imposable for the failure to file the return of wealth-tax within the time prescribed or within the time extended in accordance with law. Though the actual question referred in these several cases is somewhat different, the substance of the matter is one and the same. The question referred in T.R.C No. 195 of 1977 is as follows:
“Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the quantum of penalty should be calculated with reference to the law as on the date on which the return was due to be filed for the assessment year to which the penalty order pertained?”
2. Section 14(1) of the Act provides:
“14. (1) Every person, if his net wealth or the net wealth of any other person in respect of which he is assessable under this Act on the valuation date was of such an amount as to render him liable to wealth-tax under this Act, shall, before the 30th day of June of the corresponding assessment year, furnish to the Wealth-tax Officer a return in the prescribed form and verified in the prescribed manner setting forth the net wealth as on that valuation date:
Provided that in the case of a person whose net wealth or the net wealth of any other person in respect of which he is assessable under this Act includes the value of any assets held in a business or profession and the time (whether fixed originally or on extension) for furnishing the return of his total income or, as the case may be, of the total income of the other person aforesaid for the said assessment year under sub-section (1) or subsection (2) or sub-section (3) of section 139 of the Income-tax Act, expires on or after the 30th day of June aforesaid, the return in respect of such net wealth for the assessment year may be furnished before the expiry of the time for furnishing such return of income.”
3. Section 18(1) of the Act provides:
“18. (1) If the Wealth-tax Officer, Appellate Assistant Commissioner, Commissioner or Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person—
(a) has without reasonable cause failed to furnish the return which he is required to furnish under sub-section (1) of section 14 or by notice given under sub-section (2) of section 14 or section 17, or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-section (1) of section 14 or by such notice, as the case may be; or…….
he or it may, by order in writing, direct that such person shall pay by way of penalty—
(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 tax for every month during which the default continued but not exceeding in the aggregate 50 per cent. of the tax……”
4. The above provision was operative with effect from April 1, 1965, by virtue of the amendment in the Wealth-tax (Amendment) Act, 1964 (46 of 1964). Subsequently, by section 24 of the Finance Act, 1969 (Act 14 of 1969), sub-section (1), clauses (i) and (ii), were substituted with effect from April 1, 1969, by two sub-clauses along with an Explanation. In the cases before us, the return of wealth-tax was due to be filed before April 1, 1969, either by requirement of notice under section 14(1) or by virtue of notice under section 14(2) or by virtue of time being extended by the Wealth-tax Officer to file that return.
5. Before the Tribunal, the contention raised in all these cases was whether the penalty imposable should be calculated in accordance with the provision in force on the several dates up to which the default continued having regard to the amendments made from time to time, or whether the penalty imposable should be calculated on the basis of law as it stood on the last date on which the return was due to be filed. The Tribunal has taken the view that the relevant date would be the last date on which the return was due to be filed in respect of the assessment year.
6. The penalty under the Act is imposable for a contravention or failure to fulfil the requirements of the law in regard to the filing of the return. The penalty, as the section itself speaks, is in respect of the failure to furnish the return without reasonable cause. The failure refers to the last date on which the return was due to, be filed which would normally be 30th of June or such other date specified in the notice under section 14(2) or the last date of the period up to which time may have been extended by the Wealth-tax Officer. The penalty gets crystallised as on the expiry of the last date of the period within which the return was due to be filed and the default occurred. Therefore, the penalty imposable is on the basis of the provision as is in operation as on the expiry of the last day of the period within which the return was due to be filed, unless it is provided otherwise by an express provision of the law. Merely because the provision in regard to the quantum of penalty was altered from time to time, the date of default and, therefore, the date of incurring the liability, does not get changed nor does the quantum of penalty get varied. The amendment made in 1969 is not with retrospective effect and cannot in any way effect the liability which got crystallised earlier to its coming in to force. This view of ours gets support from the decision of the High Court of Madras in Commissioner Of Gift-Tax v. C. Muthukumaraswamy Mudauar., [1975] 98 ITR 540 (Mad), under the Gift-tax Act, in relation to an identical provision, in Commissioner Of Wealth-Tax, Lucknow v. Ram Narain Agrawal., [1977] 106 ITR 965 of the High Court of Allahabad and in Commissioner of Wealth-tax v. R.D Chand, [1977] 108 ITR 787 of the Andhra Pradesh High Court and in Suresh Seth v. Commissioner of Wealth-tax, [1977] 108 ITR 86 of the Punjab and Haryana High Court.
7. Accordingly, we answer the question referred to us as follows: The quantum of penalty should be calculated in accordance with the law in force as on the expiry of the last date of the period within which the return was due to be filed for the relevant assessment year.
8. Parties shall bear their own costs.