Judgment

VENKATARAMIAH, J.:- The Commissioner of Wealth Tax, Amritsar has filed the above appeals by special leave against the judgment of the High Court of Punjab and Haryana in a reference made under Section 27 (1) of the Wealth-tax Act, 1957 (hereinafter referred to as the Act) answering in favour of the assessee the following two questions :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the offence relating to the omission to file the Wealth-tax returns was a continuing offence?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the penalties of Rs. 5382/- and Rs. 7759/- levied by the department on the assessee under Section 18 (1) (a) of the Wealth-tax Act, 1957, for the assessment years 1964-65 and 1965-66 respectively?"

2. The assessee, the respondent in these appeals 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 assessments for the aforementioned years on March 22, 1971 determining the total wealth at Rs. 1,45,800/- for the assessment year 1964-65 as against the declared wealth of Rs. 1,38,550/- and at Rs. 1,65,200/- for the assessment year 1965-66 as against the declared wealth of Rs. 1,59,127/- and also commenced proceedings for levying penalty under Section 18 (1) (a) of the Act for late submission of returns. Ultimately the penalties were levied as follows :-

"Assessment year 1964-65 :

(i) For the period from 1-7-64 to 31-3-69: Penalty at 2% p.m. subject to maximum of 50% of the wealth tax payable under Section 18 (1) (a) before its amendments on 1-4-69 by the Finance Act, 1969: Rs. 115/-

(ii) For the period from 1-4-69 to 18-3-71:

Penalty at 1/2% of the net wealth for each month of the default under Section 18 (1) (a) as amended by the Finance Act, 1969. Rs. 5,267/-

Rs. 5,382/-

Assessment year 1965-66.

(i) For the period from 1-7-65 to 30-3-69:

Penalty at 2% p.m. subject to maximum of 50% of the wealth-tax payable under Section 18 (1)(a) before its amendment on 1-4-69 by the Finance Act, 1969: Rs. 163/-

(ii) For the period from 1-4-69 to 18-3-71:

Penalty at 1/2% of the net wealth for each month of default under Section 18(1)(a) as amended on 1-4-69 by the Finance Act, 1969: Rs. 7,596/-

Rs. 7,759/-

3. The above orders levying penalties were upheld in appeal by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar. At the instance of the assessee a consolidated reference was made by the Income-tax Appellate Tribunal to the High Court referring the above two questions for its opinion. The High Court answered the said questions in favour of the assessee after rejecting the contention of the department that the default or failure to file the return in time was a continuing default and that the penalty had to be computed for the period prior to April 1, 1965 in accordance with Section 18 as it stood prior to its amendment by the Wealth-tax (Amendment) Act, 1964, for the period between April 1, 1965 to March 31, 1969 in accordance with Section 18 of the Act as amended by the Wealth-tax (Amendment) Act, 1964 and for the period between April 1, 1969 to March 18, 1971 (on which date the returns were filed) in accordance with Section 18 of the Act as amended by the Finance Act, 1969. Aggrieved by the decision of the High Court, the Department has filed these appeals under Article 136 of the Constitution.

4. Before dealing with the contentions of the parties, it is appropriate to set out the provisions of the Act which have a bearing on the question involved in the present appeals as they stood during the relevant periods :

5. Prior to Apr. 1, 1965, sub-sections (1) and (3) of Section 14