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SCA/8976/1995 37/ 37 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 8976 of 1995
For
Approval and Signature:
HONOURABLE
MR.JUSTICE D.A.MEHTA Sd/-
HONOURABLE
MR.JUSTICE BANKIM.N.MEHTA
Sd/-
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
YES
2
To be
referred to the Reporter or not ? YES
3
Whether
their Lordships wish to see the fair copy of the judgment ? NO
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ? NO
5
Whether
it is to be circulated to the civil judge ? NO
=========================================================
ROSHANLAL
S JAIN & OTHERS (A O P) - Petitioner(s)
Versus
DEPUTY
COMMISSIONER OF INCOME-TAX (ASSESSMENT) & 1 - Respondent(s)
=========================================================
Appearance :
MR
JP SHAH for Petitioner(s) : 1,
NOTICE SERVED
BY DS for Respondent(s) : 1,
MR MANISH R BHATT for Respondent(s) :
1,
SERVED BY RPAD - (R) for Respondent(s) : 2,
MR KETAN A DAVE
for Respondent(s) :
2,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MR.JUSTICE BANKIM.N.MEHTA
Date
: 23/09/2008
ORAL
JUDGMENT
(Per
: HONOURABLE MR.JUSTICE D.A.MEHTA)
SYNOPSIS.
Sr.No.
CONTENTS
Paragraph No. 1 to 26
01
FACTS
1 – 3
02
CONTENTIONS :
(a) Petitioner
(b) Respondent
4 ? 7.4
8 – 8.4
03
REASONING
9 – 25
04
CONCLUSION
26
1. The
petitioner, an Association of persons, has preferred this petition
challenging :[i] the calculation of interest and the notice of demand
for the three Assessment Years under consideration as bad in law to
the extent there is an overcharging of interest; [ii] Section 234A of
the Income Tax Act,1961 (the Act) is ultravires to the extent the
said section provides for charging of interest evenafter the payment
of tax; [iii] Sections 234A and 234B of the Act of the Act are
ultravires to the extent both the provisions charge interest for the
same period making the petitioner liable to interest @ 48%.
2. Assessment
Years in question are 1991-92, 1992-93 and 1993-94, the respective
accounting periods being financial years ended on 31.3.1991,
31.3.1992 and 31.3.1993 respectively. Respondent No.1 (hereinafter
referred to as ‘the respondent authority’) is the Assessing Officer
having jurisdiction over the petitioner assessee. Assessment orders
for the three years in question were passed by the Assessing Officer
and while calculating total amount payable by the petitioner
assessee interest under sections 234A, 234B and 234C of the Act was
charged by the respondent authority. Pursuant to assessments framed
on 14.3.1995 for the three years under consideration notices of
demand at Exhibits E1, E2, and E3 were issued on 28.3.1985. It is
these notices of demand which are under challenge on merits apart
from the challenge to constitutional validity of provisions of
sections 234A and 234B of the Act.
3. The
prayers made in the petition read as under:
?S12.In
the premises aforesaid, the petitioner prays that :
this
Hon’ble Court be pleased to call for the records of the proceedings,
look into them and issue a writ of certiorari or any other
appropriate writ, order or direction quashing the demand notices at
Exhibits E1, E2 and E3.
this
Hon’ble Court be pleased to issue a writ of mandamus or any other
appropriate writ, order or direction, directing the respondent not
to collect the interest as charged in the above demand notices;
this
Hon’ble Court be pleased to declare that section 234A is ultra vires
to the extent it provides for charging of interest even after the
payment of taxes and that both sections 234A and 234B are ultra
vires to the extent both of them charge interest for the same period
making the assessee liable to 48% rate of interest for that period;
this
Hon’ble Court be pleased to instruct the department to adjust
payments made before filing the return first against Income Tax
payable and not against the interest as has been done by the
department while calculating the interest payable under section
234B of the Act.
that
pending the hearing and final disposal of this application
this Hon’ble Court be pleased to ask Respondent No.1 to maintain
status quo in the matter of recovery of interest calculated and
demanded in the demand notices at Exhibits E1, E2 & E3;
that
this Hon’ble Court be pleased to grant any further or other relief
as this Hon’ble Court deems just and proper in the circumstances of
the case;
that
this Hon’ble Court be pleased to allow this petition with costs
against the Respondent.??
4. The
learned Counsel for the petitioner has submitted that the calculation
of interest and notices of demand are bad in law to the extent there
is overcharging of interest in each of the years under consideration
which is to the extent of following amounts :
?SA.Y.
1991-92 5,93,316/-
A.Y.
1992-93 75,582/-
A.Y.
1993-94 16,04,423/-
-----------
Total
22,73,321/-
-----------
?S
In
regard to the challenge raised, the petitioner has summarised
difference of opinion between the petitioner and the respondent in
the following words :
?S(i) Regarding interest
u/s 234A, according to the petitioner interest can be
charged on tax payable from the due date of filing of the return of
income to the date of payment of tax but according to the
department the interest is payable not upto the date of paying
off of the tax but even thereafter till the date of filing of the
return of income.
(ii) In respect of charging
of interest u/s 234B, the department has charged the interest on
interest whereas the petitioner contends to the contrary.
(iii)According to the
department for some part of common period 48% interest is payable
under the Act which means interest becomes chargeable for some part
of the period both u/s 234A and u/s 234B whereas according to the
petitioner, the interest is not to be charged for any part of
the period under both these sections simultaneously, which means no
part of the dues will suffer more than 24% of interest??.
5.
In relation to the challenge to constitutional validity of the two
sections the submission, in the alternative, is that in the event the
interpretation placed by the petitioner on the provisions of
Sections 234A and 234B of the Act is not accepted, then the provision
of section 234A of the Act to the extent the interest runs evenafter
payment of tax falls foul of Article 14 of the Constitution of India
as being irrational, arbitrary and the provision cannot be justified
for any imaginable reasons. Similarly in relation to section 234B of
the Act it was submitted by the learned Counsel, again in the
alternative, that where the interest is payable under both the
provisions viz. sections 234A and 234B of the Act there would be
double charging of interest and hence section 234B of the Act should
be read down to save the provision from the very same charge of
irrationality and unconstitutionality, or either both the provisions
or any one of them be declared as ultavires the Constitution to the
extent the provisions impose liability of paying interest over
again for the same period amounting to interest being charged at
the rate of 48%.
6. The
contentions raised on behalf of the petitioner can be broadly divided
into two categories : the first being on the interpretation of
provisions and the second being on the basis of validity of the
provisions.
7. In
relation to the first contention the learned Advocate placed great
emphasis on Delhi High Court judgment in the case of
Dr. Prannoy Roy and Anr. Vs. CIT (2002) 254 ITR 755 to
contend that interest under section 234A would be payable only in a
case where tax had not been deposited prior to the due date of the
filing of the return. It was submitted that the said decision dealt
with all the issues relating to operation of section 234A of the Act
and was a complete answer to the stand of the department. That the
Court should therefore hold that in sofaras interest charged u/s.
234A of the Act is concerned, once it is found that prior to the date
of filing of return of income the entire tax had been paid no
interest could be charged. It was submitted that as held by the
following two decisions of the Apex Court and the decision of
Karnataka High Court payment of interest was compensatory in nature
and therefore also no interest should be levied and collected in
relation to the amount which had already paid to the Revenue.
(1986)160
ITR 961 ? Central Provinces Manganese Ore. Co. Ltd. Vs. CIT,
– with special reference to observations at page No.966 of the
report.
(1988)169
ITR 221 ? Ganesh Dass Sreeram Vs. Income Tax Officer,-with
special emphasis as to observations at page No.230 of the report.
(1998)232
ITR 62 ? Dr.S.Reddappa And Ors. Vs. Union of India and ors,- with
special reference to observations at page No. 71 of the report.
7.1 It
was further submitted that once one High Court had interpreted a
provision the said judgment must normally be followed by other High
Courts considering that Income Tax Act is an All India Statute. For
this purpose reliance was placed on a decision of this Court in case
of CIT Vs. Deepak Family Trust, (1995) 211 ITR 575, wherein
earlier decisions of Bombay High Court were referred to. Emphasis was
laid on the case of Maneklal Chunilal (1953) 24 ITR 375 (Bom.)
to contend that so far this principle was consistently followed by
this High Court holding that it would be a wise judicial policy and
practice not to take a different view even if the High Court is of
the opinion that a different view of the matter should be taken.
7.2 In
support of the submissions made as to why provisions of sections 234A
and 234B of the Act should be read as contended by the petitioner
following decisions were cited to emphasise the principles of
interpretation laid down by the Apex Court.
[i] (1971)82
ITR 570
R.B.Jodha
Mal Kuthiala Vs. CIT.
[ii] (1981)131
ITR 597
K.P.
Varghese Vs. Income Tax Officer.
[iii](1965)
57 ITR 176
CIT
Vs. Gangadhar Banerjee And Co.(Pvt.)Ltd.
[iv] (1985)156
ITR 323
CIT Vs. J.H.Gotia.
[v] (1996)220
ITR 50
Commissioner of Gift Tax Vs.
Smt. C.D.R.Laxmidevi.
The
propositions canvassed on basis of the aforesaid decisions were that
while interpreting a taxing statute the provision has to be
interpreted reasonably and in consonance with justice even though it
may be true that equitable considerations are irrelevant in
interpreting tax laws. That where required, the Court must construe
the statutory provisions so as to avoid absurdity and mischief;
where the plain literal interpretation of a statutory provision
produces a manifestly unjust result which could never have been
intended by the Legislature, the Court is entitled to modify the
language used by the Legislature or even do some violence so as to
achieve the intention of the Legislature and produce a rational
construction. That attempt should be made to ensure that equity and
taxation do not always remain strangers and construction which
results in equity rather than injustice, should be preferred to the
literal construction. That Court would not adopt such an
interpretation which would expose the statute to the vice of being
ultravires the Constitution.
7.3 As
regards the contention based on challenge to constitutional validity
of the provisions attention was invited to the following decisions :
[1] AIR
1974 SC 555
E.P.Royappa
Vs. State of Tamil Nadu – with special reference to paragraph Nos.
85 and 86 of the judgment.
[2] AIR
1978 SC 597
P.K.
Varghese Vs. Income Tax Officer ? with
special reference to paragraph No.56 of the judgment.
[3] 1995(1)
SCC 519
State
of T.N. & Ors Vs. Ananthiammal & Ors. with special reference
to paragraph No.7 of the judgment.
[4] 2007(6)
SCC 668
Bidhannagar
(Saltlake) Welfare Assn. Vs. Central Valuation Board & Ors. with
special reference to paragraph No.37 and other paragraphs dealing
with interpretation of statutes.
It
was submitted, based on these decisions that even in taxing statutes
reasonableness of the provision has to be considered in context of
rights of a person vis-a-vis other similarly situated persons and if
the provision is found to be arbitrary and/or irrational the same
should be either read down or should be held to be ultravires the
Constitution. That in the instant case insofar as section 234A of the
Act is concerned the same be held to be ultravires the Constitution
to the extent the provision requires an assessee to pay interest even
after the tax has been paid before filing of the return. Similarly in
relation to section 234B of the Act, it was submitted that when the
said provision, as read by respondent authority, charges interest for
the same period for which interest had already been charged u/s. 234A
of the Act, the said provision was unreasonable and had to be struck
down. Alternatively, the provision be read down so as to ensure that
an assessee is not called upon to pay double interest for the same
period.
7.4 It
was therefore urged that the interest charged under the two
provisions to the extent there was overcharging in each year be held
to be bad in law and/or ultravires the Constitution.
7.5 An
incidental contention was also raised based on provisions of sections
59 to 61 of the Indian Contract Act, 1872 to submit that the
respondent authority had erred in law in not treating the amount of
tax paid as tax and appropriating the same towards interest and thus
charging interest on an amount which in fact had already been paid as
tax. For this purpose attention was invited to certain challans of
payment to point out that the said challans specifically denoted
that the amount paid under the said challans was towards tax and not
interest. That in fact both the respondent authority and the assessee
had understood the said aspect of the matter in same sense as could
be seen from the final part of the respective assessment orders where
the respondent authority had directed to give credit for prepaid
taxes but it was only while calculating interest that such credit was
denied. That the said practice adopted by the assessee was in
consonance with provisions of section 139(9) of the Act and the
Explanation thereunder which required an assessee to attach proof of
payment of taxes before filing return of income as otherwise the
return of income would be treated as a defective return.
8. On
behalf of the respondent authority learned Senior Standing Counsel
submitted that the petitioner could not be given credit for the tax
paid after the end of the Financial Year but before the date of
filing of the return considering the statutory scheme commencing
from section 207 of the Act relating to advance tax. For this
purpose, reliance was placed on decision of this Court in the case of
Life Bond Fabric Pvt. Ltd. Vs. CIT, (1995)216 ITR
529 to contend that the interest which was leviable had
to be calculated in terms of the statutory scheme of the Act and
there was no discretion vested in the Assessing Authority, as well as
Apex Court decision in case of CIT vs. Hindustan
Bulk Carriers (2003) 259 ITR 449 with special reference to
observation at page No.458 of the report.
8.1 Responding
to the contention raised on behalf of the petitioner based on
consistent practice to follow a judgment of another High Court even
in case where the Court was otherwise not agreeable with the view
expressed it was submitted that in fact, this High Court had already
explained the circumstances in which a different view could be
adopted as laid down in the case of N.R.Paper And
Board Limited and Ors. Vs. Deputy Commissioner of Income Tax, (1998)
234 ITR 733.
8.2 As
regards the challenge to constitutional validity of the provisions
attention was invited to the decision of Karnataka High Court in the
case of Dr.S.Reddappa and Ors. Vs. Union of India and
Ors.(supra) with special reference to observations at
page Nos. 70 and 71, as well as judgment of Bombay High Court in the
case of Umesh S. Bangera Vs. Union of India &
Ors.(2004) 268 ITR 405 with special reference to
observations at page Nos. 409, 410 and 411. It was submitted that the
provisions of sections 234A and 234B of the Act being compensatory in
nature for breach of civil obligation cannot be termed to be
unreasonable as the provisions accord uniform treatment to similarly
situated persons and have eliminated the subjective discretion of
the Taxing Authority and thus obviated arbitrariness. That the
safeguard provided in the statute itself cannot be termed to be
penal in nature and thereby unconstitutional.
8.3 Responding
to the contention that interest was being charged for the same period
over again, the learned Counsel pointed out that both the defaults
u/Ss. 234A and 234B of the Act are in respect of separate civil
obligations and therefore cannot be held to be either bad in law or
unconstitutional.
8.4 Lastly,
it was contended that in absence of any contract between the
petitioner and the respondent authority, the provisions of Indian
Contract Act cannot be pressed into service by the petitioner and
even otherwise as held by the Apex Court in the case of
I.C.D.S. Ltd. Vs. Smithaben H.Patel & Ors. AIR 1999 SC 1036,
the provisions can apply only in a case where there are different
debts whereas in the present case there are no different debts.
9.
For the purpose of appreciating the contentions raised it is
necessary to consider the provisions of sections 234A and 234B of the
Act. The relevant extracts relatable to the Assessment Years in
question read as under:
?SInterest for defaults in
furnishing return of income.
234A.(1) Where the return of
income for any assessment year under sub-section (1) or sub-section
(4) of section 139, or in response to a notice under sub-section (1)
of section 142, is furnished after the due date, or is not
furnished, the assessee shall be liable to pay simple interest at
the rte of two percent for every month or part of a month comprised
in the period commencing on the date immediately following the due
date, and,-
(a) where the return is
furnished after the due date, ending on the date of furnishing of
the return; or
(b) where no return has been
furnished, ending on the date of completion of the assessment under
section 144,
on the amount of [the tax on
the total income as determined under sub-section (1) of section 143
or on regular assessment as reduced by the advance tax, if any, paid
an any tax deducted or collected at source]??
xxx xxx
xxx
?SInterest for defaults in
payment of advance tax.
234B.(1) Subject to the other
provisions of this section, where, in any financial year, an assessee
who is liable to pay advance tax under section 208 has failed to pay
such tax or, where the advance tax paid by such assessee under the
provisions of section 210 is less than ninety per cent of the
assessed tax, the assessee shall be liable to pay simple interest
at the rate of two per cent for every month or part of a month
comprised in the period from the 1st day of April next
following such financial year [to the date of determination of total
income under sub-section (1) of section 143 or regular assessment],
on an amount equal to the assessed tax or, as the case may be, on the
amount by which the advance tax paid as aforesaid falls short of the
assessed tax]??.
10. On
a plain reading of the aforesaid two provisions, it is apparent that
section 234A of the Act is in relation to liability to pay interest
for default in late furnishing of return or non furnishing of return,
while section 234B of the Act pertains to liability to pay interest
for default in payment of advance tax. However, in both the
provisions interest is payable on the amount which is the difference
between the amount of tax payable on the total income as determined
u/s. 143(1) of the Act or on regular assessment as reduced by the
advance tax paid, deducted at source, or collected at source.
11. Therefore,
one has to consider what is the meaning of advance tax, tax deducted
at source and tax collected at source. The definition of the term
‘advance tax’ appears in section 2(1) to mean advance tax
payable in accordance with provisions of Chapter XVIIC. Before
adverting to Chapter XVIIC of the Act, a look at section 4 of the Act
would be helpful. The said provision deals with Charge of income tax
and provides that income tax shall be charged for any Assessment Year
at the prescribed rates in accordance with and subject to the
provisions of the Act in respect of the total income of the previous
year of every person. Sub-section (2) of Section 4 of the Act lays
down that in respect of income chargeable under sub-section (1)
income tax shall be deducted at source or paid in advance, where it
is so deductible or payable under any provision of the Act.
Therefore, the scheme that emerges is that income tax is chargeable
for any Assessment year in relation to total income of the previous
year and such income tax is payable by the mode of deduction at
source or by the mode of payment in advance as prescribed. Previous
year in relation to any Assessment Year has been defined under
sub-section (2) of section 3 to mean the period which begins with
the date immediately following the last day of the previous year
relevant to the Assessment Year commencing on 1st April
and ending on 31st March.
12. Chapter
XVII relates to COLLECTION AND RECOVERY OF TAX. Under part ‘A’
section 190 of the Act provides for Deduction at source and advance
payment. Under sub-section (1) of section 190 of the Act, it is
provided that notwithstanding that the regular assessment in respect
of any income is to be made in a later assessment year, the tax on
such income shall be payable by deduction or collection at source or
by advance payment, as the case may be, in accordance with the
provisions of Chapter XVII. Thus section 190 of the Act provides for
the situation where even if the regular assessment is framed
subsequently, viz. in later Assessment Year, even then in respect
of any income for which such regular assessment is to be made the
tax shall be payable either by deduction or collection at source or
by advance payment in the mode and manner prescribed by the
provisions of Chapter XVII of the Act.
13. Part
‘C’ of Chapter XVII deals with Advance payment of tax and under
section 207 of the Act the Liability for payment of advance tax is
prescribed. The said provision stipulates that tax shall be payable
in advance during any Financial Year in accordance with provisions
of sections 208 to 219 in respect of total income of the assessee
which would be chargeable to tax for the Assessment Year immediately
following that Financial Year. Thus on a conjoint reading of section
4, section 2(1), section 190 and section 207 of the Act the scheme
that emerges is that eventhough assessment of the total income may be
made later in point of time the liability to pay income tax is
relatable to the Financial Year immediately preceding the Assessment
Year in question and such liability has to be discharged either by
way of having tax deducted at source or collected at source, or
making payment by way of advance tax in accordance with the
provisions of sections 208 to 219 of the Act.
14. Section
208 of the Act stipulates that advance tax shall be payable during a
Financial Year in every case where the amount of such tax payable by
the assessee during that Financial Year, as computed in accordance
with the provisions of Chapter XVII of the Act, is one thousand five
hundred rupees or more (at the relevant point of time). It is not the
case of the petitioner-assessee that the tax payable during any of
the three years in question was less than one thousand five hundred
rupees. Therefore, statutorily liability was cast on the petitioner
assessee to pay advance tax during the Financial Year as provided by
the legislative scheme considered hereinbefore. In the circumstances,
it is not necessary to deal with the mode and manner by which advance
tax is to be computed or the point of time when the payment is to be
made. However, section 211 of the Act lays down the limit with the
corresponding date on which an instalment of advance tax is due and
the amount which is to be paid as advance tax. Even on this count,
the petitioner-assessee has not stated that any payment as such had
been made. In fact in the petition itself there is an indication that
interest levied u/s. 234C of the Act by the respondent authority is
not disputed by the petitioner as averred in paragraph No.2 of the
petition. Section 234C of the Act relates to liability to pay
interest for deferment of advance tax, viz. where there is short fall
in payment of advance tax considering the prescribed percentage which
is payable on each of the due dates commencing from 15th
September and ending on 15th March of every Financial
Year.
15. It
is in the backdrop of the aforesaid legal position and the facts
which have come on record that the contentions raised by the
petitioner have to be examined. The petitioner does not dispute that
there is default in payment of advance tax. In other words there is a
short fall of advance tax by the stipulated percentage as
prescribed by section 234B of the Act. The petitioner also does not
dispute that there is a short fall in payment of advance tax on the
due dates prescribed u/s. 211 of the Act. Admittedly, payments of
tax on which the petitioner is resting his case are the payments made
beyond the Financial Year. The payments so made are therefore
contrary to the legislative scheme. In the circumstances, the
question that will have to be posed and answered is whether an
assessee who has acted contrary to the legislative scheme can seek
equity.
16. In
this context the illustrations given by the learned Advocate for the
petitioner during course of hearing may not be apposite to the issue
at hand. Admittedly, Central Board of Direct Taxes has issued
circulars whereby an assessee who is prevented by circumstances
beyond his control can seek full or partial waiver of interest levied
under any of the provisions. (Reference[1997]225 ITR(St.)101 as
modified on 30.1.1997). Therefore, interpretation of the provisions
cannot be based on such hypothetical instances where an assessee, if
facts are proved, can seek relief by way of waiver. The petitioner
cannot be heard to say that the petitioner has violated the
requirements laid down by the statute, considering the scheme of
payment of tax in light of the charge fastened on the total income of
the previous year u/s.4 of the Act, but should be yet treated
differently, i.e. different from other assessees who have complied
with the law.
17. As
noted hereinbefore even for the purpose of computing interest u/s.
234A of the Act, the difference of the amount on which interest
becomes payable has to be worked out by deducting the advance tax
paid including any tax deducted or collected at source from the tax
on the total income determined at the time of assessment. The default
of filing of return of income beyond the prescribed date is also
admitted. Therefore, it is not possible to accept the contention of
the petitioner assessee that the amount paid beyond the Financial
Year should be deducted from the tax on the total income as
determined on regular assessment. This has to be so considering the
definition of the term ?Sadvance tax?? as appearing in
section 2 of the Act which categorically stipulates that ?Sadvance
tax?? means the advance tax payable in accordance with the
provisions of Chapter XVII-C of the Act. Even if contextual
interpretation is adopted considering the opening portion of section
2 of the Act which states :??unless the context
otherwise requires??, the contention raised by the
petitioner does not merit acceptance; the context and setting of the
aforesaid provisions do not even prima facie indicate that any other
view, like the one canvassed by the petitioner is possible.
18. Coming
to section 234B of the Act, the said provision directly deals with
payment of interest for defaults in payment of advance tax. In fact
the provision itself fastens liability to pay interest on the basis
of liability to pay advance tax u/s. 208 of the Act and failure to
pay such tax or where the advance tax paid by the assessee under the
provisions of section 210 is less than the prescribed percentage of
the assessed tax. Therefore, even for the purpose of section 234B of
the Act the petitioner cannot seek credit for the amounts paid beyond
the Financial Year. Merely because the amounts have been paid before
the return of income is filed the petitioner cannot seek any relief
on that count.
19. Section
140A of the Act provides for Self assessment. The said section
stipulates that where any tax is payable on the basis of any
return required to be furnished, after taking into account the
amount of tax, if any, already paid under any provision of the Act
the the assessee shall be liable to pay such tax together with
interest payable under any provision of the Act for any delay in
furnishing return, or any default or delay in payment of advance tax,
before furnishing the return and the return shall be accompanied by
proof of payment of such tax and interest. In other words the
Legislature has specifically provided that once there is default in
either furnishing of return or in payment of advance tax, both as
regards the amount and the period, interest has to be worked out by
the assessee himself, pay the same, and attach proof of having made
such payment with the return of income and such payment would be
treated as self assessment tax, which would be inclusive of the
amount of tax and the amount of interest payable. Thus there is an
inherent indication in the statutory scheme that any payment made
beyond the Financial Year has to be considered but such payment has
to be accompanied by the interest payable for the default committed
in filing of the return of income or default in payments of advance
tax during the Financial Year. For this purpose, Legislature has not
equated both defaults, as to furnishing of return beyond the
prescribed date and short fall in advance tax, by providing for
computing interest separately for both the defaults. Therefore,
merely because some amount is paid beyond the Financial Year but
before the return is filed the assessee cannot plead that the
assessee is not liable to pay interest u/s. 234A of the Act. Nor can
the assessee be given credit for such payment made beyond the
Financial Year for the purpose of computing interest u/s. 234B of the
Act for the default in payments of advance tax.
20. Thus
considering the legislative intent which unfolds on a conjoint
reading of the aforesaid provisions it is not possible to agree with
the petitioner that the petitioner had not incurred any liability to
pay interest either u/s. 234A or u/s. 234B of the Act. The
petitioner also cannot contend that there is any overlapping of the
period for which the petitioner cannot be made liable for paying
interest under both the provisions considering the fact that both
the defaults are independent of each other. The doctrine of double
jeopardy envisaged by Article 20(2) of the Constitution of India or
section 300 of the Code of Criminal Procedure, 1973 can have no
application in these proceedings. The defaults, and not offences,
are not one : non-filing or late filing of return and non-payment or
short payment of advance tax cannot be equated. The period for which
the liability to pay interest arises has to be computed in accordance
with the termini fixed by each of the provisions viz. sections 234A
and 234B of the Act. The contention that if the statutory provision
results in an absurdity or mischief not intended by Legislature the
Court should import words so as to make sense out of the provisions
also does not merit acceptance considering the fact that on a plain
reading of the provisions the legislative intent which is
discernible cannot be said to result in an absurdity.
21. In
fact, when one considers this contention the other contention as to
arbitrariness or unreasonableness of the provision is also required
to be considered simultaneously. The petitioner states that the
provision is arbitrary and unreasonable because the petitioner is not
being granted credit for amounts paid beyond the Financial Year but
before the date of filing of the return and hence, the provision is
arbitrary, inequitable and unreasonable. Nothing can be farther
from truth inasmuch as in light of the legislative scheme considered
hereinbefore, majority of the assessees who become liable to pay
advance tax after having crossed the threshold limit, are fastened
with liability to pay tax in accordance with the charge levied u/s.4
of the Act. Such assessees may be having income from salary, or from
profession or business, or income from other sources etc. If they are
subjected to payment of tax by any of the prescribed modes viz. tax
deducted at source or paid by way of advance tax in accordance with
the provisions of chapter XVIIC of the Act, the assessee cannot seek
any relief on the ground of being discriminated against. To the
contrary, if the plea raised by the petitioner is accepted, not only
would it require to give a gobye to the entire statutory scheme but
it would also result in discrimination against majority of the
assessees who comply with requirements of the statutory provisions.
No person is entitled to seek any relief on basis on inverse
discrimination.
22. Thus,
no case is made out by the petitioner for equitable relief. The
contention based on various judgments cited in support of principles
of interpretation also cannot carry the case of the petitioner any
further in light of the statutory scheme laid down by the Act. It is
true that the Court must interpret the provisions of the statute upon
ascertaining the object of the legislation through the medium or
authoritative forms in which it is expressed. It is settled law that
the Court should, while interpreting provisions of the statute,
assign its ordinary meaning. It is also a cardinal principle of
interpretation of statute that the words of a statute must be
understood in their natural, ordinary or popular sense and construed
according to their grammatical meaning, unless such construction
leads to some absurdity or unless there is something in the context
or in the object of the statute to suggest to the contrary. Another
salutary principle of construction is that when the words of the
statute are clear, plain and unambiguous then the Court is bound to
give effect to that meaning, irrespective of the consequences.
Applying the aforesaid principles also it is not possible to accept
the contentions raised by the petitioner.
23. Insofar
as the contention regarding the provisions being ultravires the
Constitution no case is made out by the petitioner. It is true that
the nature of the levy is compensatory in character but from that it
is not possible to come to the conclusion that there is any
arbitrariness or unreasonableness which would warrant striking down
the provision. Even otherwise, the position in law is well settled. A
taxing statute enjoys a greater latitude. An inference in regard to
contravention of Article 14 of the Constitution would, however,
ordinarily be drawn if the provision seeks to impose on the same
class of persons similarly situated a burden which leads to
inequality. That is not the case here. As already recorded
hereinbefore, the petitioner also cannot successfully contend that
there is any unreasonable classification considering majority of
assessees who comply with the statutory requirements.
24. The
other contention that is required to be considered is based on
provisions of sections 59 to 61 of the Indian Contract Act. The same
also cannot carry the case of the petitioner any further. As noticed
hereinbefore, the statutory scheme provides u/s. 140A of the Act to
make payment of tax and interest for the stated defaults before the
return is filed and therefore, to contend that the respondent
authority could not have appropriated the amount paid towards
interest does not merit acceptance. The Explanation under
sub-section (1) of section 140A of the Act specifically provides that
where the amount paid by the assessee under the said sub-section
falls short of the aggregate of the tax and interest payable under
sub-section (1), the amount so paid shall first be adjusted towards
the interest payable as aforesaid and the balance, if any, shall be
adjusted towards the tax payable. In light of this specific provision
under the Act the general law under the Contract Act cannot be
pressed into service by the petitioner. The said contention also
therefore does not merit acceptance.
25. The
submission based on uniformity of expression of opinion on the
ground of wise judicial policy also does not deserve acceptance.
There can be no dispute about the proposition that in income-tax
matters which are governed by an all -India statute, when there is a
decision of a High Court interpreting a statutory provision, it
would be a wise judicial policy and practice not to take a different
view. However, this is not an absolute proposition and there are
certain well-known exceptions to it. In cases where a decision is
sub silentio, per incuriam, obiter dicta or based on a concession or
takes a view which it is impossible to arrive at or there is
another view in the field or there is a subsequent amendment of
the statute or reversal or implied overruling of the decision by a
High Court or some such or similar infirmity is manifestly
perceivable in the decision, a different view can be taken by the
High Court. This is clearly borne out from the decision of this
Court in Arvind Boards and Paper
Products Ltd. v. CIT [1982] 137 ITR 635, which had also
taken into consideration the Bombay decision in the case of
Maneklal Chunilal and Sons Ltd.
[1953] 24 ITR 375 as
well as (1995) 211 ITR 575 CIT Vs. Deepak Family Transit No.1 and
others. Hence, in light of the legislative scheme considered
hereinbefore the Court, despite highest esteem and respect, is unable
to agree with the opinion expressed by the High Court of Delhi in
the case of Dr. Prannoy Roy and Another
(supra).
26. In
the circumstances, on none of the grounds pleaded in the petition or
at the time of hearing, the petition merits acceptance. The petition
is accordingly rejected. Rule discharged. Interim relief stands
vacated. There shall be no order as to costs.
Sd/-
Sd/-
(D.N.Mehta,
J.) (B.N.Mehta, J.)
M.M.BHATT
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