MAYA RANI PUNJversusCOMMISSIONER OF INCOME TAX, DELHI,

                                                                827


                          MAYA RANI PUNJ                              A
                                v.
                COMMISSIONER OF INCOME TAX, DELHI,

                        DECEMBER 11, 1985

[V ,0, TULZAPURKAR, SABYASACHI MUKHARJI AND RANGANATH MISRA, JJ ·]    B


      Income Tax Act 1922 : Section 28, Income Tax Act 1961:
Sections 271 (l)(a), 297(1) and 297(2)(j).

      lJelay in f illng return for assessment year under 1922 Act -
Penalty - Quantum of - Determination - 1961 Act coming into           c
effect - Discretion to reduce penalty fixed under new Act -
Provision of new Act -·Availability of.

      Imposition of penalty - Assessment year or date of filing
return - Not material - Satisfaction of assessing authority that
default occurred - Importance of.                                     D

      Return - Non-filing of -whether a continuing default.

      The appellant is the ·assessee. The year of assessment was
1961-62. The return was due by September 28, 1961 but the same
was neither. filed within that time, nor was any extension asked      E
for. The assesses filed the return on May 3, 1962 beyond more
than seven ·months of the due date. With effect from April 1, 1962
the Income Tax Act of 1961 had come into force, The . Income Tax
Officer finding that the assessee had not been prevented by any
reasonable cause for not complying with the statutory obligation
to make the return, took proceedings under section 27l(l)(a) of
the 1961 Act and imposed a penalty of Rs.4,060 for failure to         F
furnish the return within time.

      The assessee challenged the imposition of penalty by
preferting an appeal to the Appellate Assistant Collmissioner who
refused to interfere and dismissed the appeal.
                                                                      G
      On further appeal the Appellate Tribunal held that penalty
was leviable under the 1961 Act, but the amount of penalty had to
be quantified according to the provisions of section 28 of the
Income Tax Act, 1922 and applying the provisions of the said Act
reduced the penalty to Rs. 400.

     The question whether 'the Tribunal was in law competent to       H
reduce.the penalty levied under section 27l(l)(a) to a figure
    828               SUPREME COURT REPORTS      [1985J SUPP. 3 s.c.R.


A   lower than the Slllll equal to 2% of the tax for every month during
    which the default continued' , was referred at the instance of the
    Revenue to the High Cour~ which answered the reference in favour
    of the Revenue and against the assessee by relying upon section
    297(2)(j) of the 1961 Act and holding that section 271(1) of the
    Act was applicable to the levy of penalty for defaults comnitted
B   under the 1922 Act, and that the word 'may 1 used in section
    297(1) of the 1961 Act vested in the Income Tax Officer
    discretion either to levy or not to levy a 'penalty but if he did
    decide to levy one, he had no option but to levy the penalty at
    the prescribed rate.

          Dismissing the appeal of the assessee, this Court,
c
          HELD: 1. The assessment was made on June 30, 1964 and
    proceedings for imposition of penalty were directed to be
    initiated that day. Provisions of section 27l(l)(a) of the 1961
    Act were fully applicable and the demand of penalty was thus
    justified being within the limits of law. [842 CJ

D        2. Under the 1922 Income Tax Act liability to make a return
    was contingent upon service of notice under section 22, while
    under the 1961 Income Tax Act every person having a taxable
    income has under section 139 the liability to make a return
    within the time provided by the Act. [833 DJ

B         In the instant case, clause (£) of section 297(2) of the
    1961 Act is not attracted because the return was filed on May 3,
    1962 and assessment was made subsequent to April 1, 1962. [833 DJ

          3. For the imposition of penalty it was not the assessment
    year or the date of the filing of the return that was important
F   but it was the satisfaction of the income tax authorities that a
    default had been comnitted by the assessee which attracted the
    provisions relating to penalty. Whatever be the stage at which
    the satisfaction was reached, the scheme of section 274(1) and
    275 of the Act of 1961 was that the order imposing penalty mw!t
    be made after the completion of the assessment. The crucial date,
G   therefore, for the purpose of penalty is the date of such
    completion, and the satisfaction of the authority that
    proceedings for levy of penalty be initiat.ed. [834 F-GJ

          In the instant case, though the default occurred in
    September 1961 the date relevant for the purpose of initiating
H   proceedings for imposition of penalty is when, following the
                        MAYA RANI v. c.I.T.                      829

                                                                        A
 assessment made, the Income Tax Officer decided to initiate the
 penalty proceed1ngs. The proper provision to apply for dealing
'with the situation relating to penalty is as provided in section
 27l(l)(a) of the 1961 Act. [837 A-B]
                        '
      Jain Brothers & Ors. v. U.O.I. & Ors., 77 i.T.R. 107;
                                                                        B
Dlird 1 - Ta Officer, Mnngalcrce v. H, llll"odar Bhat, 7l I.T.R,
606 - [1969] 2 s.c.R. 29, referred to.

       4. Under section 26 of the 1922 Act the upper limit of
penalty only was provided and there was no prescription of any
particular rate as found in section 27l(l)(a) of 1961 Act.
Pem.l.ty contemplated under the respective sections of the two
                                                                        c
Acts is quasi-criminal in character. [834 H - 835 A]

       5. Accrual of penalty depends upon tne terms of the statute
imposing it and in view of the language uaed in section 27l(l)(a)
of the 1961 Act, the position is beyond di.spute that the
                                                                        D
Legislature intended to deem the non-filing of the return to be a
continuing default the wrong for which penalty is to be visited,
cannences from the date of default and continues month after
moµ th until complisnce is made and the default comes to an end,
The rule of de die in diem is applicable not on daily but on
monthly basis:-(840 H-] - -
                                                                        E

       Corpus Juria Seci!!Mh11, Vol 85, P• 1027, referred to.

       6. The imposition of penalty not confined to the first
 default but with reference to the continued default is obviously
 on the footing that non-complicance with the obligation of making
 a return is an infraction as long as the default continued.
                                                                        F
 Without sanction of law no penalty is imposable with reference
 to the defaulting conduct. The position that penalty is
 imposable not only for the first default but as long as the
 default continues and such penalty is to be calculated at a
 prescribed rate on monthly basis is indicative of the legislative
 intention in Ulllllistakable terms that as long as the assessee does
                                                                        G
 not comply with the requirements of law he continues to be guilty
 of the infraction and exposes himself to the penalty provided by
 law. [841 D-E]

       D>lld 1""'*' Ta Officer, Hsngalore v. H.        ~ar      Bhat,
 [1969) 2 s.c.R. 29, referred to and CosMssioDer of Wealth Tax,
 .Amitaar v. Sureah Seth, [1981) 3 s.c.a. 419, explained and
                                                                            H
 over-ruled.
    830                SUPREME COURT REPORTS      [1985] SUPP. 3 s.c.R.


A         7. If a duty continues from day to day, the non-performance
    of that duty from day to day is a continuing wrong. The.
    legislative scheme under section 27l(l)(a) of the 1961 Act in
    making provision for a penalty conterminus with the default to be
    raised provides for a situation of continuing wrong. [842 B]

B         Ajit Kumar Sarkar v. Asaistant Registrar of Coapanies, West
    Bengal, [1979] Tax Law Reports 2001; United Savings and Finauce
    Co. Pvt. Ltd. & Anr. v. The Deputy Qdef Officer, Reserve Bank of
    India, [1980] Crl. L.J. 607; Oriental Bault of ec-rce &Anr. v.
    Delhi Development Authority & Ors., [1982] Crl. L.J. 2230; G.D.
    Bbattar &Ors. v. The State, A.I.R. 1957 Cal. 483, referred to.

C           CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1943 of
    1974.

          From the Judgment and Order dated 21.12.1972 of      the Delhi
    High Court in Income Tax Reference No. 50 of 1968

          S.K. Dholakia,   R.C.   Bhatia and   P.C.   Kapoor   for   the
D   Appellant.

          S.C. Manchanda, M.N. Tandon and Miss A. Subhashini for     the
    Respondent.

            The Judgment of the Court was delivered by
E
          SABYASACHI MUKllAR.JI, J, The assessee is in appeal by
    special leave challenging the decision of the Delhi High Court
    reported in 92 I.T.R. 394.

           The year of assessment is 1961-62. The return was due by
F   September 28, 1961, but the same was neither filed within that
    time, nor was any extension asked for. The assessee filed the
    return on May 3, 1962 beyond more than seven months of the due
    date. With effect from April 1, 1962, the Income Tax Act of 1961
    ('1961 Act' for short) had come into force. The Income Tax
    Officer took proceedings under section 27l(l)(a) of the 1961 Act
G   and imposed a penalty of Rs, 4,060 for failure to furnish the
    retur\1 within the time on a finding that the assessee had not
    been prevented by any reasonable cause for not complying with the
    statutory obligation to make the return. The assessee challenged
    the imposition of penalty by preferring an appeal to the
    Appellate Assistant Commissioner who refused to interfere and
H   dismissed the appeal. On further appeal the Appellate Tribunal
          MAYA RANI v. C.I.T. [SABYASACllI MllKHARJI, J.]           831

                                                                          A
held that penalty was leviable under the 1961 Act but the amount
of penalty had to be quantified acco<ding to the provisions of
section 28 of the Income Taic Act, 1922 ( 1 1922 Act' for short).
Applying the provisions of the 1922 Act, the Tribunal reduced the
penalty to Rs.400. At the instance of the Revenue the following
                                                                          B
question was referred to the High Court under section 256(1) of
the 1961 Act:

           "Whether, on the facts and in the circumstances of the
           case, the Tribunal was in law competent to reduce the
           penalty levied under section 2'7l(l)(a) to a figure
           lower than the sum equal to 2% of the taic for every           c
           month during which the default continued but not
           exceeding the aggregate 50% of the taic?"

The High Court answered the reference in favour of the revenue
and against the assessee.
                                                                          D
     Though the quantum of peMlty is small, the question of 'law
is of substantial importance, and covers on aspect which often
arises for determination before the tax authorities and the High
Courts.
                                                                          E
     Provisions of three sections, one of the 1922 Act and two of
the 1961 Act, are relevant for the decision of the point at
issue. Section 28 of the 1922 Act, as far as relevant, provided :

           "Penalty   for   concealment   of   income   or   improper
           distribution of profits :-
                                                                          F
           (1) If the Income Taic Officer, or the Appellate
           Assistant Commissioner.or the 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
                                                                          G
           return of his total income which he was required to
           furnish, by notice given under sub-section (1) or
           sub-section (2) of section 22 or section 34, or has
           without reasonable cause failed to furnish it within
           the time allowed and in the manner required by such
           notice, or

                                                                    x     H
           (b)        x              x            x
     832                SUPREME. COURT REPORTS         [1985] SUPP. 3 s.c.R.


A
                (c)         x                  x          x                  x

               he or it may direct that such person shall pay by way
               of penalty in the case referred to in clause (a) in
               addition to the amunt of the income tax and super
B              tax, if any, payable by him, a sum not exceeding one
               and a half times that aDDunt ••••• "

          The two sections relevant to the point of the 1961 Act are
     sections 271 and 297. Section 271 is the corresponding provision
     of section 28. Sub-section (l)(a) thereof is the relevant
     provision. It provides :
c
               "If the Income Tax Officer • • • is satisfied that any
               person :

               (a) has without reasonable cause failed to furnish the
               return of total income which he. was required to
               furnish under sub-section (l) of section 139 or by
jJ             notice given under sub-section (2) of section 139
               or section 148 or has without reasonable cause failed
               to furnish it within the time allowed and in the
               manner required by sub-section ( l) of section 139 or
               by such notice, as the case may be, or

                (b)         x         x            x      x         x

                (c)         x         x            x      x          x

               he may direct that such person shall pay by way of
               penalty
F
                (a)         x             x        x      x              x

                (b) in any other case, in addition to         the amount         of
                the tax, if any, payable by him, a sum equal to 2% of
                the   assessed tax for        every month during which the
G               default continued."

     Section 297(1) repealed the 1922 Act. Sub-section (2), as far as
     relevant, provided :

                "Notwithstanding the repeal of the Indian Income Tax
H               Act, 1922 (hereinafter referred to as the repealed
                Act), -
         MAYA RANI v. c.r.T. [SABYASACHI MUKllARJI, J.]      833

                                                                     A
          (a) to (e)        x                x               x

          (f) any proceeding for the imposition of a penalty in
          respect of any assessment completed before the first
          day of April, 1962 may be initiated and any such
          penalty may be imposed as if this AcJ: had not been        B
          passed ;

          (g) any proceeding for the imposition of a penalty i'n
          respect of any assessment for the year ending on March
          31, 1962, or any earlier year which is completed on or
          after first day of April, 1962 may be initiated and        C
          any such penalty may be imposed under this Act ,,,"

     It is sufficient to take note of the position that under the
1922 Act liability to make a return was contingent upon service
of notice under section 22 while under the 1961 Act every person
having a taxable income has under section 139 the liability to       D
make a return within the time provided by the Act. On the facts
of the case before us, clause (f) of section 297(2) of the 1961
Act is not attracted because the return was filed on May 3, 1962,
and assessment was made subsequent to April 1, 1962.

      The Income Tax Officer found that there was default for a      E
little more than seven months. He imposed penalty at the rate of
2% as provided in section 27l(l)(a) of the 1961 Act and raised a
demand of Rs. 4 ,060. That demand has been upheld in appeal. The
Tribunal did not refer to the provisions of section 271 (l)(a)
while reducing the penalty to Rs. 400 but the reduction was
directed on the basis that the assessee was ill and had been
absent from headquarters on that account. Before the High Court      F
the Revenue had taken the stand that there was statutory
prescription in the matter of imposition of penalty and the Act
having provided that tlfe penalty shall be a sum equal to 2% of
the ·assessed tax for every month during which the default
continued, a sum equal to the prescribed rate had to be imosed
and could not be reduced. The High Court accepted the stand of       G
the Revenue and found support for its conclusion by relying upon
section 297(2)(j) of the 1961 Act and holding that section 271(1)
of that Act was applicable to the levy of penalty for defaults
committed under the 1922 Act. According to the High Court the
words "such penalty" occurring in clause (g) of section 297(2) of
 the 1961 Act related to penalty which was referred to in the
earlier part of that clause, · namely, penalty imposable under       H
 section 271 of the 1961 Act and had no reference to penalty under
 section 28 of the 1922 Act. It was of the further view that the
     834                   SUPREME' COURT REPORTS     [1985] SUPP, 3 S.C.R,
 A

     >0rd 'may' under section 297(1) of the 1961 Act vested in the
     Income Tax Officer discretion either to levy or not to levy a
     penalty but if he did decide to levy one, he had no option but to
     levy penalty at the prescribed rate. ln the instant case, the
B
     Income Tax.Officer was, therefore, obliged to levy penalty at the
     rate of 2% per month subject to a maximum of 50% of the demanded
     tax. Exercising the same pow~rs as the Income Tax Officer did,
     the Appellate Tribunal had no jurisdiction to reduce the penalty
     to a sum lesser than the prescribed rate. Support for the conclu-
     sion of the !Ugh Court was drawn from c Constitution Bench deci-
     sion of this court in Jain Brother & Ors. v. Onion of India &
     Ors., 77 I.T.R. 107.
c
           In Jain Brothers' Case this Court mainly examined and
     decided about the vire8 of section 297(1)(g) as also the
     justification of fixing the commencement of the Act of 1961 with
     effect from April 1, 1962. Challenge was on the ba"i' of Article
     14 of the Constitution. This Court took the view that it was for
D
     the Legislature to fix the date when a particular statute would
     come into force and with the repealing of the 1922 Act Parliament
     was fully competent and it was within its legislative
     jurisdiction to fix April 1, 1962, as the date of commencement of
     the 1961 Act. The validity of section 297 (2) and in particular
     clauses (f) and (g) thereof was upheld. The Court held that
E
     penalty proceedings were not necessarily a continuation of the
     assessment proceedings. It was well settled that in fiscal
     enactments the legislature has a larger discretion in the matter
     of classification so long as there was no departure from the rule
     that persons included in a class are not singled out for special
     treatment. It was not possible to say that while applying the
F    penalty provisions contained in the Act of 1961 to cases of
     persons whose assessments were not completed after April l, 1962,
     any class has been singled out for special treatment. It was
     obvious that for the imposition of penalty it was not the
     assessment year or the date of the filing of the return that was
     important   but     it was   the satisfaction of the income       tax
G    authorities that a default had been committed by the assessee
     which attracted the provisions relating to penalty. Whatever the
     stage at    which    the satisfaction was      reached· the scheme of
     sections 274(1) and 275 of the Act of 1961 was that the order
     imposing penalty must be made after the completion of the assess-
     ment. The crucial date, therefore, for the purpose of penalty is
Ii   the date of such completion, and the satisfaction of the autho-
     rity that proceedings for levy of penalty be initiated.

           Under section 28 of the 1922 Act the upper limit of penalty
     only was provided and there was no prescription of any particular
     rate as found in section 27l(l)(a) of 1961 Act. That penalty
          MAYA RANI v. C. I. T. [ SABYASACHI MllKl!ARJI, J. )   835

                                                                      A
contemplated under the respective sections of the two ACtS is
quasi-criminal in character is not disputed. Mr. Dholakia fOr the
appellant canvassed before us that in Jain Brothers' case the
challenge raised by the assessee was not examined with reference
to the 'provisions of Art. 20(1) of the Constitution. Under
sub-art. (1) of Art. 20 no person is to be sub~.ected to a penalty    B
greater than that which might have been inflicted under the law
in force at the time of the cOllJllission of the offence. According
to counsel, when there was default in furnishing the return
within September 28, 1961, the breach had occurred and the
assessee had exposed himself to be visited with penalty. That was
a time when the Act of 1922 was in force. Therefore, for levying      c
penalty on the assessee resort soould have been, made to the
provisions of section 28 of the 1922 Act and not to section
27l(l)(a) of the 1961 Act. If the 1922 Act applied, in the
absence of a prescription of any particular rate or the minimun,
it was open to the Tribunal to reduce the penalty in the manner
it has done and no objection could be raised to the reduction of      D
the quantum of penalty. In Jain Brothers' csse the conclusions of
a three Judge Bench in ?bird 1 - Tax Officer, Vangalore v. H.
Damodar Bhat, 71 I.T.R. 806      8
                                  [1969) 2 s.c.R. 29, were quoted
with approval. In Damaodar Bhat's case this Court had said :

           "In other words, the procedure of the new Act will         E
           apply to the csses contemplated by section 297(2)(j)
           of the new Act mutatis mutandis."

In Jain Brothers' case the Court held that "similarly the
provisions of section 271 of the Act of 1961 will apply mutatis
1illltandis to proceedings relating to penalty initiated in
accordance with section 297(2)(g) of that Act."                       F

      Learned,counsel for the appellant has taken the stand that
the observations in Damodar Bhat' s case which were approved by
the five Judge Bench in Jain ilorther's case related only to the
procedural part of it and this Court did not decide the question
of qlll!ntum.                                                         G

     The contention of Mr. Dholakia that in providing a
prescribed rate of penalty for imposition under section 27l(l)(a)
of the 1961 Act there has been breach of Article 20(1) of the
Constitution cannot be accepted. A five Judge Bench of this Court
in K. Satwant Singh v. 'lbe State of Punjab, [1960) 2 s.c.R. 89,
examined a similar submission at great length keeping Article 20      H
of the Constitution in view. In the matter before the
Constitution Bench this question arose for consideration in view
    836                SUPREME COURT REPORTS      [1985] SUPP. 3 s.c.R.
A

    of the fact that no minimum sentence of fine had been provided
    under section 420 of the Indian Penal Code which was the law in
    force at the time of the occurrence but the provisions of
    Ordinance No. 29 of 1943 made imposition of a minimwn fine
B   compulsory. Imam, J, who spoke for the Constitution Bench, at
    page 113 of the report stated :

                "In the present case even if it be assumed that
               section 10 of the Ordinance was an ~ post facto law
               in that in the matter of penalty a minimum sentence of
               fine was directed to be imposed by a court whereas at
C              the time that the appellant committed the offence,
               section 420 contained no such provision, what is
               prohibited under Article 20 of the Constitution is the
               imposition of a penalty greater than that which might
               have been inflicted under the law in force at the time
               of the commission of the offence. The total sentence
               of fine - 'ordinary' and 'compulsory' - in the present
D              case cannot be said to be greater than that which
               might have been imposed upon the appellant under the
               law in force at the time of the commission of the
               offence, because the fine which could have beee
               imposed upon him under section 420 was unlimited. A
               law which provides for a minimum sentence of fine on
E              conviction cannot    be read as one which imposes a
               greater penalty than that which might have been
               inflicted under the law at the time of the commission
               of the offence where for such an of fence there was no
               limit as to the extent of fine which might be
               imposed."
F
         Mr. Dholakia candidly accepts that his submission is
    contrary to the ratio of the decision. It is conceded that under
    section 28 of the 1922 Act in the facts of the case a fine of
    more than Rs. 4,060 (being within the limit of 1/2 times of the
    tax amount) could have been levied. While conceeding to that
G   extent,   Mr.   Dholakia   submits   that   the   decision   of   the
    Constitution Bench of this Court in Satwant Singh's case requires
    reconsideration as it has not taken into account the ratio of an
    important decision of the United States Supreme Court in the case
    of Elbert B. Lindsay v. State of WsshiDgton, (1937) 81 L. Ed.
    1182. We are bound by the decision of the Constitution Bench. It
H   has held the field for a quarter of a century without challenge
    and non-consideraUon of an American decision which apparently
    was not then cited before this Court does not at all justify the
         MAYA RANI v. C. I~ T. [ SABYASACHI MUKJIARJI, J • I   837
                                                                     A
submission at the Bar for a reconsideration of the decision of
this Court in Satwant Singh'a case. On the ratio of Jain
Brothers' case, the following conclusions are reached :

          (a) Though the default occurred in September, 1961 the
                                                                     B
          date   relevaot for     the purpose of initiating
          proceedings for imposition of penalty is when,
          following the assessment made, the Income Tax Officer
          decided to initiate penalty proceedings;

           (b) The proper provision to apply for dealing with the
           situation relating to penalty is as provided in
                                                                     c
           section 27l(l)(a) of the 1961 Act.

     The question that remains for consideration now is as to
whether the default of non-filing of the return wit.hin the time
stipulated by law is not a continuing offence. Thia aspect is
                                                                     D
relevant in the matter of imposition of penalty and its
quantification. In the decision of this Court in Collaiseioaer of
Wealth Tax, Amritsar v. Sureeh Seth, 129 I.T.R. 328 • [1981) 3
s.c.R. 419, the default related to non-filing of the return under
section 18(l)(a) of the Wealth Tax Act. The law relating to
penalty under that. Act was amended in 1964 and again in 1969.
                                                                     E
These amendments were not retrospective. With reference to the
application of these amendments the question as to whether the
default was a single one or a continuing one fell for
conaideration. The amended Wealth Tax provided for imposition of
penalty with reference to every month during which the default
continued. This Court took the view that such a provision
indicated the legislative intention that a multiplier had to be
                                                                     F
adopted for determining the quantum of penalty and did not have
the effect of making the default a continuing one. The default
having already occurred prior to the enforcement of the
amendments, the amending provisions had no application. Dealing
with the point this Court observed :
                                                                     G
           "A liability in law ordinarily arises out of an act of
           coomission or an act of omission. When a person does
           an act which law prohibits him from doing it and
           attaches a penalty for doing it, he is stated to have
           cotmnitted an act of cotmnission which amounts to a
           wrong in the eye of law. Similarly, when a person
           omits to do an act which is required by law to be
                                                                     H
           performed by him and attaches a penalty for such
           omission, he is said to have committed an act of
           omission which is also a wrong in the eye of law.
    838              SUPREME COURT REPORTS        [1985] SUPP. 3 s.c.R.
A
              Ordinarily a wrongful act or failure to perform an act
              required by law to be done becomes a completed act of
              commission or omission, as the case may be, as soon as
              the wrongful act is committed in the former case and
              when the time prescribed by law to perform an act
B             expires in the latter case and the liability arising
              therefrom   gets   fastened   as   soon   as   the   act   of
              commission or of omission is completed. The extent of
              that liability is ordinarily measured according to the
              law in force at the time of such completion. In the
              case of acts amounting to crimes the punishment to be
              imposed cannot be enhanced at all under our ·
c             Constitution by any subsequent legislation by reason
              of Article 20(1) of the Constitution which declares
              that no person shall be subjected to a penalty greater
              than that which might have been inflicted under the
              law in force at the time of the commission of the
              offence."

D   There can be no dispute to what has been stated above. In Suresh
    Seth's case this Court proceeded to say :

              "In other cases, however, even though the liability
              may be enhanced it can only be done by a subsequent
              law (of course subject to the Constitution) which
E             either by express words or by necessary implication
              provides for such enhancement. In the instant case the
              contention is that the wrong or the default in
              question has been altered into a continuing wrong or
              default giving rise to a liability de die in diem,
              that is, from day to day. The distinctive nature~a
F             continuing wrong is that the law that is violated
              makes the wrong doer continuously liable for penalty.
              A wrong or default which is complete but whose effect
              may continue to be felt even after its completion is,
              however, not a continuing wrong or default. It is
              reasonable to take the view that the court should not
G             be eager to hold that an act or omission is continuing
              wrong or default unless there are words in the statute
              concerned which make out that such was the intention
              of the legislature. In the instant case whenever the
              question of levying penalty arises what has to be
              first considered is whether the assessee has failed
H             without reasonable cause to file the return as
              required by law and if it is held that the he has
              failed to do so then penalty has to be levied in
         MAYA RANI V• c.1.r. [SABYASACHI MUKHARJI, J.]      839

                                                                   A
          accordance with the measure provided in the Act. When
          the default is the filing of a delayed return the
          penalty may be correlated to the time lag between the
          last day for filing it without penalty and the day on
          which it is filed and the quantwn of tax or wealth
          involved in the case for purposes of determining the     B
          quantwn of penalty but the default however is only one
          which takes place on the expiry of the last day for
          filing the return without penalty and not a continuing
          one. The default in question does not, however, give
          rise to a fresh cause of action every day.
                                                                   c
      This conclusion has been seriously disputed by learned
counsel for the Revenue and according to him the amended Wealth
Tax Act and section 27l(l)(a} of the 1961 Act provides for a
continuing default, A llench of this Court in State of Bibar v.
lleokaran Nenshi, [1973] l s.c.R. 1004, while examining the        D
provisions of section 66 of the Mines Act, very appropriately
drew the distinction between continuing offence and offences
which take place when an act or omission is committed once and
for all. Shelat, J. speaking for the Court stated :

          "A continuing offence is one which is susceptible of     E
          continuance and is distinguishable from the one which
          is committed once and for all. It is one of those
          offences which arises out of a failure to obey or
          comply with a rule or its requirement and which
          involves a penalty, the liability for which continues
          until the rule or its requirement is obeyed or
          complied with.     On   every   occasion that    such    F
          disobedience or non-compliance occurs and recurs there
          is the offence committed. The distinction between the
          two kinds of offences is between an act or omission
          which constitutes an offence once and for all and an
          act or omission which continues and therefore,
          constitutes a fresh offence every time or occasion on    G
          which it continues. In the case of a continuing
          offence, there is thus the ingredient of continuance
          of the offence which is absent in the case of an
          offence which takes place when an act or omission is
          committed once and for all."

Under Regulation 3 read with section 66 of the Mines Act failure   H
to file the annual return by the appropriate date becomes an
offence. There was no scope for applying the rule or de ~ in
~
    840              SUPREME COURT REPORTS      [1985] SUPP. 3 S.C.R.


A        VENKATARAMIAll, J, in Suresh Seth's case quoted Lord Lindley
    in Hole v. Chard. Union, [1894] 1 Ch. D. 293, where the following
    observation had been made :

              "What is a continuing cause of action? Speaking
              accurately, there is no such thing; but what is called
B             a continuing cause of action is a cause of action
              which arises from the repetition of acts or omissions
              of the same kind as that for which the action was
              brought.''

         Some decisions of different High Courts were also quoted
    with approval by Venkataramiah, J, in support of the conclusion
C   that the default had been committed on the last day allowed to
    file the return and there was no case of a continuing default.
    We are inclined to agree with counsel for the Revenue that the
    conclusion reached in Suresh Seth's case is contrary to law. Jain
    Brother's case was not referred to all in Suresh Seth's case. On
    the facts found in Suresh Seth's case where the returns for the
    assessment years 1964-65 and 1965-66 had been filed on March,18,
D   1971, and for which assessment was made on March 22, 1971, the
    ratio of Jain Brothers' case would have been fully applicable.
    Though Jain Brothers' case was with reference to the Income Tax
    Act, 1961, the provisions of section 18(l)(a) of the Wealth Tax
    Act, as amended, brought in a similar provision and a sum equal
    to 2% of the tax for every month during which the default
E   continued with an optimum of 50% of the tax due become payable.
    As rightly pointed out in Jain Brothers' case, the question of
    imposition of penalty would arise only after assessment of tax is
    made and, therefore, in Suresh Seth's case on the analogy of the
    ratio accepted by this Court in Jain Brothers' case the amended
    provisions would become applicable.
F
         In 'Words & Phrases', Permanent Edition, under the head
    'Continuing Offence', instances have been given which indicate
    that as long as the default continues the offence is deemed to
    repeat and, therefore, it is taken as a continuing offence. As
    has been appropriately indicated in Corpus Juris Secundum, Vol.
G   85, P• 1027, accrual of penalty depends upon the terms of the
    statute imposing it and in view of the language used in section
    27l(l)(a) of the 1961 Act, the position is beyond dispute that
    the Legislature intended to deem the non-filing of the return to
    be a· continuing default - the wrong for which penalty is to be
    visited, commences from the date of default and continues m.c_ath
H   after month until compliance is made and the default comes to an
    end. The rule of de die in ~ is applicable not on daily but on
    monthly basis.
             MAYA RANI v. C.I.T. [VENKATARAMIAH, J.]            841


     In State v. A.H. Bhiwaudiwalla, A.I.R. 1955 Bombay 161, (a         A
decision referred to in Suresh Seth's case), Gajendragadkar, J.
(as he then was), after quoting the observations of lleaumount,
C.J. in an earlier Full Bench decision of that Court observed:
           11
              Even  so,   this   expression   has    acquired   a
           well-recognised meaning in criminal law. If an act           B
           committed by an accused person constitutes an offence
           and if that act continues from day to day, then from
           day to day a fresh offence is committed by the accused
           so long as the act continues. Normally and in the
           ordinary course an offence is committed only once. But
           we may have offences which can be committed from day         c
           to day and it is offerlces · falling in this latter
           category that are described as continuing offences."

     The imposition of penalty not confined to the first default
but with reference to the continued default is obviously on the
footing that non-compliance with the obligation of making a             D
return is an infraction as long as the default continued. Without
sanction of law no penalty is imposable with reference to the
defaulting conduct. The position that penalty is imposable not
only for the first default but as long as the default continues
and such penalty is to be calculated as a prescribed rate on
monthly basis is indicative of the legislative intention in             E
unmistakable terms that as long as the assessee does not comply
with the requirements of law he continues to be guilty of . the
infraction and exposes himself to the penalty provided by law.

     There are several statutory provisions where such default is
stipulated to be visited with daily penalty. For instance, see
Ajit Kumar Sarkar, v. Assistant Hegistrar of Companies, West            F
Bengal 1979 Tax Law Reports 2001, where the Calcutta High Court
dealing with the provisions of section 159 and 162 of the
Companies Act of 1956, held the liability to be a continuous one;
United Savings and Finance Co. Pvt. I.Qi. & Anr. V• The Deputy
Qlief Officer, Beserve Bank of India, 1960 Crl.L.J. 607, where
referring to section 58B(2) of the Reserve Bank of India Act it         G
was held that refusal to comply with the terms of the said
section created an offence and continued to be an offence so long
as such failure or refusal persisted; Oriental Bank of C::C.....rce &
Anr. v. Delhi Development Authority & Ors., 1982 Crl.L.J. 2230,
where referring to the provisions of the Jlelhi Jlevelopment Act of
1957, the Court held that the offence was a continuous one. In
G.D. Bhattar & Ors. v. The State, A.I.R.195.7 Cal. 483, it was          H
     842               sul'REME COURT REPORTS    [1985] SUPP. 3 s.c.a.

A    pointed out that a continuing offence or a continuing wrong is
     after all a continuing breach of the duty which itself is
     continuing. If a duty continues from day to day, the non-perform-
     ance of that duty from day to day is a continuing wrong. We are
     of the view that the legislative scheme under section 27l(l)(a)
B    of the 1961 Act in making provision for a penalty coterminus with
     the default to be raised provides for -situation of continuing
     wrong.

          In the instant case assessment was made on June 30, 1964,
c    and proceedings for imposition of penalty were directed to be
     initiated that day. Provisions of section 27l(l)(a) of the 1961
     Act were fully applicable and the demand of penalty was thus
     justified being within the limits of law. In our opinion the High
     Court had taken the right view and the appeal has, therefore, to
     be dismissed. In the facts of the case we direct parties to bear
lJ   their own costs.




     N.V.K.                                          Appeal dismissed.