R.M. Sahai, J.

1. THE assessee was assessed to wealth-tax as an individual for the assessment years 1964-65, 1965-66, 1966-67 and 1967-68. The accounting years followed by the assessee were Ram Navmi years. No voluntary returns of wealth were filed by him as required under Section 14(1) of the Act. The Wealth-tax Officer issued notice under Section 17 of the Act calling for return of net wealth for the assessment years which were served on the assessee on 26th of October, 1969. The returns were filed on 18th September, 1970. The assessments were completed on 30th January, 1971, and the Wealth-tax Officer initiated penalty proceedings under Section 18(1)(a) of the Act for delay in filing the returns. The returns of wealth filed were belated. Against the notice under Section 18(1)(a) dated 30th January, 1971, the assessee filed an application under Section 18(2A) of the Wealth-tax Act for waiver of penalty before the Commissioner of Wealth-tax, Lucknow, which was rejected by him. After the rejection of the application for waiver of penalty the Wealth-tax Officer issued a fresh show-cause notice on 28th August, 1971, which was served on the assessee but he did not appear nor did he file any explanation. The Wealth-tax Officer in the circumstances levied penalty under Section 18(1)(a) as in his opinion the assessee had not only not complied with the provisions of Sub-section (1) of Section 14 of the Wealth-tax Act but also did not file the returns in time in response to the notice issued under Section 17 of the Wealth-tax Act. The assessee filed appeals which were dismissed by the Appellate Assistant Commissioner of Income-tax, Gorakhpur Range, against which the assessee preferred appeals before the Tribunal. The Income-tax Appellate Tribunal rejected the contentions raised on behalf of the assessee but allowed the appeal partly as it was of the opinion that the increased scale of penalty was applicable only in a case where the default in furnishing the return of net wealth occurred on or after 1st of April, 1969. After allowing the appeal the Tribunal directed the Wealth-tax Officer to impose penalty on the scale in force prior to the Finance Act, 1969. Aggrieved by this order an application was filed on behalf of the Commissioner of Wealth-tax under Section 27(1) to draw up a statement of case which was allowed and the following question was referred for the opinion of the High Court:

"Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the Finance Act, 1969, was not retrospective in effect and the penalties under Section 18(1)(a) of the Wealth-tax Act, 1957, were exigible in these cases for the assessment years 1964-65, 1965-66, 1966-67 and 1967-68 on the scale in force prior to the Finance Act, 1969?"

2. ON the findings recorded by the Tribunal the only question that arises for consideration is whether penalty has to be calculated in accordance with the provisions contained in Finance Act, 1969, or as it stood before the amendment. It has been vehemently urged by Mr. Deokinandan, counsel for the department, that once the return was not filed a default occurred in the eye of law and this continued till the assessee did not file the return and as the proceedings were initiated by filing of the return at a time when the Finance Act, 1969, came into force, the law applicable in the case of the assessee would be the law as it was amended by Finance Act, 1969, and not the unamended law. He has cited a number of authorities in support of the proposition that it was a case of continuous default and the Tribunal erred in applying the unamended law.

In the alternative he has submitted that the penalty should be levied up to 31st of March, 1969, under the old Act and after 1st March, 1969, under the provisions of the new Act. He has placed reliance on Jain Brothers v. Union of India [1970] 77 ITR 107 (SC), Commissioner of Income-tax v. Data Ram Satpal [1975] 99 ITR 507 (All), Biswanath