COMMISSIONER OF WEALTH TAX, AMRITSAR vs. SURESH SETH

CIVIL APPEAL No. 768/1978Supreme Court[1981] 3 S.C.R. 41907 April 1981Bench: 2 JudgesAuthor: R.S. PATHAK, E.S. VENKATARAMIAH16 pages
AI SummaryDismissed

What were the facts?

The assessee, Suresh Seth, filed his Wealth Tax returns for assessment years 1964-65 and 1965-66 on March 18, 1971. The statutory due dates for filing these returns were June 30, 1964, and June 30, 1965, respectively. The Wealth Tax Officer initiated penalty proceedings under Section 18(1)(a) of the Wealth Tax Act, 1957, for the delayed filing. The Wealth Tax Officer computed the penalties based on amendments made in 1964 and 1969, treating the failure to file as a 'continuing offence'. The penalties were upheld by the Appellate Assistant Commissioner and the Income Tax Appellate Tribunal. The High Court, however, ruled in favour of the assessee, holding that the default was not continuing and the penalty should be computed based on the law in force on the original due dates. The Commissioner of Wealth Tax appealed this decision to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that the omission to file Wealth Tax returns by the due date is a single default, not a continuing offence. The penalty must be computed in accordance with the law in force on the last day on which the return was required to be filed. The amendments made to Section 18 of the Wealth Tax Act in 1964 and 1969 do not have retrospective effect. The words 'for every month during which the default continued' in Section 18(1)(a) serve only as a multiplier for determining the quantum of penalty and do not render the default a continuing one. The Court reasoned that a continuing wrong is one where the law violated makes the wrongdoer continuously liable, unlike a completed wrong whose effects may linger. The default in filing a return is complete on the expiry of the last date for filing. The principle underlying Section 6 of the General Clauses Act is applicable. The appeals filed by the Commissioner of Wealth Tax were dismissed.

What were the issues?

1. Whether the omission to file Wealth Tax returns by the due date constitutes a continuing offence under Section 18(1)(a) of the Wealth Tax Act, 1957? (Question of law) 2. Whether the amendments to Section 18 of the Wealth Tax Act made in 1964 and 1969 have retrospective effect, and if so, how should the penalty be computed for the period prior to and after these amendments? Assessee's Arguments: The assessee contended that the default of not filing the return was a single default occurring on the last date for filing. The amendments of 1964 and 1969 were not retrospective. Therefore, the penalty should be computed based on the law in force on the original due dates for filing the returns. Revenue's Arguments: The revenue argued that the failure to file the Wealth Tax returns was a continuing offence. Consequently, the penalty had to be computed for different periods according to the law in force at those times, specifically referencing the 1964 and 1969 amendments. The revenue relied on the principle that the penalty is geared to the time lag between the due date and the actual filing date.

Which sections of the Income-tax Act were involved?

Section 18(1)(a),Section 14(1),Section 27(1)

AI-generated summary — verify with the full judgment below

) 419 COMMISSIONER OF WEALTH TAX, AMRITSAR v. SURESH SETH April 7, 1981 [ R.S. PATHAK AND E.S. VENKATARAMIAH, JJ.] Wealth Tax Act, 1957-Scope of section 18(1) (a) of the Act-Whether the offenre relating to the omission to file the Wealth Tax Returns was a continuing offence--Penalty has to be computed in accordance with the law in force on the last day on which the return in question has to be filed-The 1964 and 1969 Amend- ments to the Wealth Tax Act has no retrospective effect.

The assessee-respondent filed his Wealth Tax returns for the assessment years 1964-65 and 1965-66 on March 18, 1971, while he was required by section 14(1) of the Act to file the return for the assessment year 1964-65 on or before June 30, 1964 and the return for the assessment year 1965-66 on or before June 30, 1965. The Wealth Tax Officer completed the assessment for the said years on March 22, 1971 and also commenced proceedings for levying penalty under section 18(1) (a) of the Act for the late submission of returns. The Wealth Tax Officer levied the penalties for different periods at different rates, as provided by the 1964 and 1969 Amendments, treating the failure to file the retur

The order continues below.

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