K.H. Hegde, J.
1. These are reference under section 66(1) of the Indian Income-tax Act, 1922 (to be hereinafter referred to as the 'Act'), in I.T.A. Nos. 289 and 290 of 1961-62 before the Income-tax Appellate Tribunal, Madras Bench.
2. The learned judge set out the statement of case which ran as follows :
By this application, the assessee requires the Appellate Tribunal to refer to the High Court certain questions of law, which are said to arise out of the Tribunal's consolidated order dated 24th April, 1962, in I.T.A. No. 289 of 1961-62 and I.T.A. No. 290 of 1961-62. Inasmuch as, in our opinion, a question of law does not arise out of the aforesaid order, we hereby draw up an agreed statement of the case and refer it to the High Court of Mysore at Bangalore under section 66(1) of the Indian Income-tax Act.
3. The assessee was a partner in the firm of K. Y. Pilliah & Son. In the assessment year 1956-57, the total income of the assessee was computed at Rs. 31,314. The assessment was completed on August 24, 1959. First assessment was for 1954-55 on March 12, 1959, for which return had been filed on April 2, 1955. The assessee had also filed return for the assessment year 1955-56 on April 2, 1956. For the assessment year 1956-57, in the view that the assessee had not paid advance tax under section 18A (3), penalty proceedings were initiated and notice under section 28(3) issued. The Income-tax Officer thought that during the financial year ended March 31, 1956, the assessee should have paid advance tax under section 18A(3) since he had not hitherto been assessed, rejecting the assessee's contention that he was not a new assessee within the meaning of section 18A(3). The penalty so imposed was Rs. 1,247.
4. The assessee appealed to the Appellate Assistant Commissioner who held that the words 'hitherto assessed' used in section 18A(3) clearly mean actual assessments and that the attempt of the representative of the assessee to equate 'hitherto assessed' to 'assessable' could not be accepted. He held that the assessee had failed to comply with the provisions of section 18A(3) for the assessment year 1956-57 and penalty under section 18A(9)(b) read with section 28(1)(a) was correctly levied.
5. The assessee appealed to the Tribunal and contended :
(i) that since the assessee had filed returns for 1954-55 and 1955-56, he could not be deemed to be a new assessee for the assessment year 1956-57 when alone a duty was case upon him by the statue to furnish before the 15th March of that financial year an estimate of tax payable by him on that part of his income to which the provisions of section 18 did not apply;
(ii) That the words 'hitherto assessed' in sub-section (3) of section 18A must be interpreted to mean 'assessed for the earlier assessment year irrespective of the date of completion of the assessment for the earlier assessment years' :
(iii) that the assessment for 1954-55 was completed on June 26, 1956, and to interpret the words 'hitherto assessed' having regard to the contingency of the Income-tax Officer having completed the assessment for 1954-55 earlier than or later to 15th March, 1956, was not correct;
(iv) that if the assessment for 1954-55 had been completed prior to 15th of March 1956, there would have been no liability for filing an estimate before the 15th of March, 1956, non-compliance with which requirements alone would entail the invocation of section 18A(9)(b);
6. The departmental representative contended :
(i) that section 18A(3) case the duty on any person who had not hitherto been assessed to make an estimate of the tax payable by him before the 15th day of March of that financial year, on that part of his income to which the provisions of section 18 did not apply;
(ii) that the ambit of his duty should not be circumscribed by the exigencies of the assessment but upon a strict construction of the language of the section;
(iii) that, in fact, till March 15, 1956, no assessment had been made on the assessee and so he came within the mischief of section 18A(3), noncompliance with which brought him within the penalty core; and, lastly,
(iv) that for the years 1954-55 and 1955-56, the two preceding years, estimates had been made by the assessee and tax also paid under section 18A.
7. The Tribunal negatived the assessee's contentions and held that the assessee had failed to comply with the provisions of section 18A(3) and brought himself within the pale of section 18A(9) and upheld the levy of penalty. Copy of the order of the Tribunal is annexure 'A' and forms part of the case.
8. The question of law that arises is :
'Whether, on the facts and circumstances of the case, the penalty under section 18A(9)(b) read with section 28(1)(a) of the Indian Income-tax Act of 1922 was correctly levied ?'
9. In these petitions a common questions of law arises for considerations. That question being 'Whether, on the facts and circumstances of the case, the penalty under section 18A(9)(b) read with section 28(1)(a) of the 'Act' was correctly levied ?'
10. There is no dispute as regards the facts in these cases. The question is as to what is the meaning to be attached to the words any person who has not hitherto been assessed'. On behalf of the assessee, it was contended that these words should be understood to mean' any person against whom assessment proceedings have not hitherto been commenced'. The contention of the learned counsel for the assessee in this regard is clearly opposed to the rule of grammatical construction. The words 'any person who has not hitherto been assessed' in simple language mean 'a person who has not been assessed up to that date'. The words 'assessed' in the context clearly means 'actual assessments'. It may be that an assessment proceeding is pending. But that does not amount to assessment under section 18A(3) of the 'Act'. What is required under that provisions is the factum of assessment and not the pendency of an assessment proceeding.
11. It may be that sometimes the applicability of section 18A(3) is attracted because of the delay in making the assessment. But that is not a relevant consideration interpreting section 18A(3). It is open to the assessee to make his own estimate and pay advance tax on that basis.
12. We do not think that the assessee can take any benefit from the following observations of Chagla C J. in Scindia Steam Navigation Co, Ltd, v. Commissioner of Income-tax :
'A very starling result would follow if Mr. Joshi's contentions were to be accepted. Different provisions of the Indian Income-tax Act would apply according to when the assessment was made. Although the assessment would be for the income of the previous year yet the liability to tax with regard to that income would not be a uniform and consistent liability but it would vary with the time when the Income-tax Officer chose to assess the income to tax. It would therefore depend entirely upon the Income-tax Officer by taking up an assessment of an assessee when he pleases to determine what law should be made applicable to his assessment. There are many anomalies and perhaps absurdities in the Indian Income-tax Act, but unless we are compelled to take this view of the Indian Income tax law we should be very reluctant to be driven to a council which is not only so startling but to all principle of taxing law. Fortunately, in this case, we have not to decide the matter as a matter of first impression. There is a clear decisions of the Privy council which has dealt with the very matter and has come to a conclusion which, in our opinion, is opposed to the contention put forward by Mr. Joshi.'
13. These observations Were made in a different context and they are not apposite for our present purpose.
14. It is true that sometimes the expressions 'assessment' is used not merely in the sense of computation of income but also to denote the declaration of the liability of the assessee as well as the proceedings relating to computation. But, in the instant case, it is clear from the scheme of the section 18A as well as from the context in which the words 'any person view the assessment proper, i.e. the tax determined.
15. We do not agree with Sri. K. Srinivasan, the learned counsel for the assessee, that the scheme of section 18A indicates that section 18A(3) applies only to cases wherein assessment proceedings have not commenced.
16. The argument that section 18A(3) is a machinery provision and therefore should be liberally construed is irrelevant in the present context as in our opinion the language of section 18A(3) is plain and unambiguous. For that very reason, we are unable to appreciate the contention that section 18A(3) is a penal provision and, therefore, should be construed strictly. The object of section 18A(9)(b) (provision providing for penalty) avowedly is to a assimilate the position of a person who has failed to submit the estimate under section 18A(3) to that of a person who has failed to furnish a return under section 22 and that object is sought to be achieved by enacting the fiction which is contained in section 18A(9)(b); see Commissioner of Income-tax v. S. Teja Singh.
17. We do not think that the assessee can take any benefit from the decision of the Supreme Court in Gursahai Saigal v. Commissioner of Income-tax. It bears on a different principle of law.
18. Similarly, there is no force in the contention of the assessee that section 212(3) of the Indian Income-tax Act, 1961, is declaratory of the law as it stood previously. Even under section 212(3) what is relevant is actual assessment. That section speaks of 'person who has not previously been assessed'. Hence, that section is of no assistance to the assessee.
19. For the reasons mentioned above, all the contentions advanced by the learned counsel for the assessee fail.
20. Hence our answer to the question referred is that on the facts and circumstances of the case, the penalty under section 18A(9)(b) read with section 28(1)(a) of the 'Act' was correctly levied.
21. Assessee to pay the costs. Advocate's fee Rs. 250. (One set).