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D.C. Puliani Vs. Commissioner of Income-tax and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberCivil Miscellaneous Writ No. 3068 of 1971
Judge
Reported in[1973]89ITR164(All)
ActsIncome Tax Act, 1961 - Sections 201(1), 220 to 232 and 246(1)
AppellantD.C. Puliani
RespondentCommissioner of Income-tax and ors.
Appellant AdvocateR.R. Agarwal and ;Bharatji Agarwal, Advs.
Respondent AdvocateDeokinandan, Adv.
Excerpt:
- - 221 from such person, principal officer or company unless the income-tax officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax. ' 5. the proviso also clearly shows that an income-tax officer may impose penalty under section 221, section 246(1) and (o) are there in the act from its very beginning......hearing before a division bench, the petitioner argued that as section 221 does not give power to impose penalty to the income-tax officer, specifically, the order imposing penalty is without power and invalid. he relied on smt. kusum kumari v. union of india, [1972] 85 i.t.r. 19 (all.). it is a division bench decision of the court. the decision squarely supports the petitioner's argument. but the bench hearing this petition had doubts about the correctness of smt. kusum kumari. so the case has been referred to a larger bench. hence, this petition is before us now.3. section 221 materially reads :'(1) when an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under.....
Judgment:

Dwivedi, J.

1. The petitioner defaulted in the payment of income-tax assessed on him. The Income-tax Officer imposed a penalty on him in accordance with Section 221, Income-tax Act, 1961. The petitioner filed a revision before the Commissioner of Income-tax against the order imposing penalty. It was rejected. He has now filed the present petition.

2. When the petition came up for hearing before a Division Bench, the petitioner argued that as Section 221 does not give power to impose penalty to the Income-tax Officer, specifically, the order imposing penalty is without power and invalid. He relied on Smt. Kusum Kumari v. Union of India, [1972] 85 I.T.R. 19 (All.). It is a Division Bench decision of the court. The decision squarely supports the petitioner's argument. But the Bench hearing this petition had doubts about the correctness of Smt. Kusum Kumari. So the case has been referred to a larger Bench. Hence, this petition is before us now.

3. Section 221 materially reads :

'(1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under Sub-section (2) of Section 220, be liable to pay by way of penalty, an amount which, in the case of a continuing default, may be increased from time to time, so, however, that the total amount of penalty does not exceed the amount of tax in arrears.'

4. Obviously, Section 221 does not empower specifically any authority to impose penalty on an assessee who has defaulted in payment of tax due by him. But, it cannot be assumed that Section 221 is otiose. Superfluity may be imputed to Parliament only in the last resort if no other provision in the Act is found to repair the omission in Section 221. It is a familiar rule of interpretation that a section in a statute should be construed in all its interconnections. Other provisions of the Act should be examined to find out its true import. Bearing in miud this familiar rule, we will examine other provisions of the Act. Section 246 provides for the filing of an appeal against various orders of the Income-tax Officer. It says that an assessee aggrieved by any of the orders of an Income-tax Officer, which are specified therein, may appeal to the Appellate Assistant Commissioner, Clause (o) of Section 246 mentions an order imposing a penalty under Section 221, It is unmistakably clear from Section 246(o) that an order imposing penalty under Section 221 may be made by an Income-tax Officer, Section 246(1) provides for an appeal from an order of the Income-tax Officer made under Section 201. Section 201(1) provides that if the principal officer of the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under the Act, he or it shall be deemed to be au assessee in default in respect of the tax. The proviso to Sub-section (1) of Section 201 reads :

' Provided that no penalty shall be charged under Section. 221 from such person, principal officer or company unless the Income-tax officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax.'

5. The proviso also clearly shows that an Income-tax Officer may impose penalty under Section 221, Section 246(1) and (o) are there in the Act from its very beginning. So when we read Section 221 in conjunction with Section 246(1) and (o) and the proviso to Sub-section (1) of Section 201, there remains no doubt that an Income-tax Officer is authorised to impose penalty under Section 221. The immediate background of Section 221 also indicates that it authorises the Income-tax Officer to impose penalty in default of payment of tax. Chapter XVII of the Income-tax Act is headed as ' collection and recovery of tax '. The chapter has got several sub-chapters. One sub-chapter is headed as ' collection and recovery '. This sub-chapter consists of 13 sections (Sections 220 to 232). Section 220 fixes the date for payment of the tax due. Tax is to be paid within 35 days of the service of the notice of demand on the assessee. The proviso to Sub-section (1) of Section 220 indicates that the power under the proviso is to be exercised by the Income-tax Officer. Section 222 requires a certificate to be sent to the Tax Recovery Officer for collection of the arrears of tax. The certificate is to be issued by the Income-tax Officer. Section 225 provides for stay of proceedings for recovery of tax and the amendment or withdrawal of the certificate by the Income-tax Officer. Section 226 states that notwithstanding the issue of a certificate to the Tax Recovery Officer under Section 222, the Income-tax Officer may recover the tax by any one or more of the modes provided therein. Section 228 provides for the recovery of tax from a person in Pakistan on the certificate issued by the Income-tax Officer. Section 229 provides that penalty shall also be recovered in the manner provided for the recovery of tax. Section 230 empowers the Income-tax Officer to take action in a certain contingency. Section 230A also empowers the Income-tax Officer to take certain action in a certainother contingency. Section 232 authorises the Income-tax Officer to institute a suit for recovery of tax. It is only Section 221 which does not expressly authorise the Income-tax Officer to impose penalty. But its immediate context would suggest that Parliament intended to authorise the Income-tax Officer to impose penalty.

6. Counsel for the petitioner wants us to apply the rule of strict interpretation to the construction of Section 221. But the rule of strict interpretation does not allow the court to overlook the relevant context of Section 221. As already stated,'when Section 221 is read along with Section 246(1) and (o), there is left no room for doubt that the power under Section 221 is exercisable by the Income-tax Officer. In Smt. Kusum Kumari v. Union of India, the Bench was not referred to Section 246(1) and (o).

7. Counsel for the petitioner has also referred us to the amendment made by Parliament in Section 221. The amended Section 221 authorises expressly the Income-tax Officer to impose penalty in default of payment of tax. But the amendment cannot assist in the construction of the unamended Section 221,

8. No other point has been pressed before us.

9. In the result, the petition is dismissed with costs.


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