Skip to content


Commissioner of Income-tax (Central) Vs. Anchor Pressing (P.) Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 604 of 1977
Judge
Reported in(1982)26CTR(All)447; [1982]136ITR505(All)
ActsCompanies (Profits) Surtax Act, 1964 - Sections 5(1), 5(2), 5(3), 9, 20, 21 and 22; Income Tax Act, 1961 - Sections 139(1), 139(2), 148 and 271(1); Wealth Tax Act, 1957 - Sections 14(1), 14(2) and 17
AppellantCommissioner of Income-tax (Central)
RespondentAnchor Pressing (P.) Ltd.
Appellant AdvocateMarkandey Katju, Adv.
Respondent AdvocateBharatji Agrawal, Adv.
Excerpt:
.....under this act, is satisfied that any person has, without reasonable cause, failed to furnish the return required under section 5, or to produce or cause to be produced the accounts, documents or other evidence required by the income-tax officer under sub-section (1) of section 6, or has concealed the particulars of the chargeable profits or has furnished inaccurate particulars of such profits, he may direct that such person shall pay, by way of penalty, in addition to the amount of surtax payable, a sum not exceeding--(a) where the person has failed to furnish the return required under section 5, the amount of surtax payable ;(b) in any other case, the amount of surtax which would have been avoided if the return made had been accepted as correct :provided that the income-tax officer..........under this act, is satisfied that any person has, without reasonable cause, failed to furnish the return required under section 5, or to produce or cause to be produced the accounts, documents or other evidence required by the income-tax officer under sub-section (1) of section 6, or has concealed the particulars of the chargeable profits or has furnished inaccurate particulars of such profits, he may direct that such person shall pay, by way of penalty, in addition to the amount of surtax payable, a sum not exceeding-- (a) where the person has failed to furnish the return required under section 5, the amount of surtax payable ;(b) in any other case, the amount of surtax which would have been avoided if the return made had been accepted as correct :provided that the income-tax officer.....
Judgment:

Rastogi, J.

1. The Income-tax Appellate Tribunal, Delhi Bench 'E', New Delhi, has referred the following question for the opinion of this court:

'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the decision in Calcutta Chromotype Pvt. Ltd. v. ITO : [1971]80ITR627(Cal) applicable to the case of the assessee and in confirming the cancellation of penalty ordered by the Appellate Assistant Commissioner ?'

2. The brief facts are these, M/s. Anchor Pressing (P.) Ltd., Aligarh (hereinafter referred to as 'the assessee'), should have filed its return for the assessment year 1968-69 under Section 5(1) of the C. (P.) S. T. Act, 1964 (hereinafter 'the Act'), on or before 30th September, 1968. The returnwas, however, filed on September 26, 1972, but before the assessment was made. The ITO initiated penalty proceedings for the delay in the filing of the return and issued a show-cause notice under Section 10 of the Act. Pursuant to the notice the assessee filed an objection in which mainly it was contended that there had been no failure on the part of the assessee to furnish a return under Section 5 of the Act, and that the delay in the submission of the return was not deliberate and wilful and hence Section 9 of the Act was not applicable. The ITO did not accept the assessee's explanation assatisfactory and imposed penalty in the sum of Rs. 5,500.

3. Aggrieved, the assessee filed an appeal before the AAC and it was contended that since there was no failure on the part of the assessee to furnish the return under Section 5 of the Act, penalty was not exigible under Section 9(a) and reliance was placed on a decision of the Calcutta High Court in Calcutta Chromotype Pvt. Ltd. v. ITQ : [1971]80ITR627(Cal) . This contention found favour with the AAC and he held that the penalty could not be levied under Section 9(a) of the Act because even though the return was filed after a delay, since it was filed before the making of the assessment, no default was committed.

4. From that order the revenue went up in appeal before the Income-tax Appellate Tribunal, but remained unsuccessful and now, at its instance, the question mentioned above has been referred to this court.

5. The question which falls for consideration is as to whether Section 9 of the Act envisages a levy of penalty for failure in the filing of the return under Section 5 of the Act only or also for the delay in the filing of the return under Sub-section (1) or (2) of that section. The relevant provisions of the Act may be seen. Section 5 provides for a return of chargeable profits. It reads as under :

'Return of chargeable profits.--In the case of every company whose chargeable profits assessable under this Act exceeded during the previous year the amount of statutory deduction, its principal officer, or where inthe case of a non-resident company any person has been treated as its agent under Section 163 of the Income-tax Act, such person shall furnish a return of the chargeable profits of the company during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, before the 30th day of September of the assessment year :

Provided that on an application made in this behalf the Income-tax Officer may, in his discretion, extend the date for the furnishing of the return.

(2) In the case of any company which in the Income-tax Officer's opinion is assessable under this Act, the Income-tax Officer may, before the end of the relevant assessment year, serve a notice upon its principalofficer, or where in the case of a non-resident company any person has been treated as its agent under Section 163 of the Income-tax Act, upon such person, requiring him to furnish within thirty days from the date of service of the notice a return of the chargeable profits of the company during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed :

Provided that on an application made in this behalf, the Income-tax Officer may, in his discretion, extend the date for the furnishing of the return.

(3) Any assessee who has not furnished a return during the time allowed under Sub-section (1) or Sub-section (2), or having furnished a return under Sub-section (1) or Sub-section (2) discovers any omission or wrong statement therein, may furnish a return or a revised return, as the case may be, at any time before the assessment is made. '

6. It would be seen that Sub-section (1) of Section 5 of the Act is analogous to Section 139(1) of the I.T. Act, 1961. Under this sub-section, a voluntary return is required to be furnished on or before the 30th day of September of the assessment year. Sub-section (2) is analogous to Sub-section (2) of Section 139 and it requires the furnishing of a return within thirty days from the date of the service of a notice issued by the ITO if he is of the opinion that a company is assessable under this Act. Sub-section (3) is almost analogous to Sub- Sections (4) and (5) of Section 139. This Sub-section requires that in case a company assessable under this Act has not furnished a return during the time allowed under Sub-section (1) or Sub-section (2) or having furnished a return under either of these two sections, discovers any omission or wrong statement therein, it may furnish a return or a revised return, as the case may be, at any time before the assessment is made.

7. Section 9 provides for penalties. It reads :

'9. Penalties.--If the Income-tax Officer, in the course of any proceedings under this Act, is satisfied that any person has, without reasonable cause, failed to furnish the return required under Section 5, or to produce or cause to be produced the accounts, documents or other evidence required by the Income-tax Officer under Sub-section (1) of Section 6, or has concealed the particulars of the chargeable profits or has furnished inaccurate particulars of such profits, he may direct that such person shall pay, by way of penalty, in addition to the amount of surtax payable, a sum not exceeding--

(a) where the person has failed to furnish the return required under Section 5, the amount of surtax payable ;

(b) in any other case, the amount of surtax which would have been avoided if the return made had been accepted as correct :

Provided that the Income-tax Officer shall not impose any penalty under this section without the previous authority of the Inspecting Assistant Commissioner.'

8. Under this section levy of penalty is provided for : (1) on failure to furnish the return required under Section 5, or (2) for failure to produce or cause to be produced the accounts, etc., required under Section 6(1), or (3) if the assessee has concealed the particulars of the chargeable profits or has furnished inaccurate particulars of such profits.

9. It was urged before us by Sri Markandey Katju for the revenue that the word 'required' occurring in this section is important inasmuch as it provides a keynote to its interpretation as also to find out the intention of the Legislature. According to Sri Katju, only Sub-sections (1) and (2) of Section 5 'require' a company assessable under this Act to file a return. Sub-section (3) does not so require the filing of a return. It is only an enabling provision.

10. After hearing counsel for the parties, we are not impressed with the submissions made by Sri Katju. In our opinion, the scope of Section 9 can better be determined by having a closer look at the object which this Act seeks to serve. This Act seeks to impose a special tax on the profits of certain companies. In the statements of objects and reasons it was stated (See : [1964]51ITR82(Mad) ) :

'The object of this Bill is to impose a special tax on companies (other than those which have no share capital, on their excess profits, namely, the amount by which the total income of a company as reduced by certain types of income and certain sums and the income-tax and super-tax payable by it exceeds a sum of ten per cent. of its capital, reserves and certain borrowed moneys or a sum of Rs. 2 lakhs, whichever is higher.'

11. In other words, this Act envisages a levy of surtax on excess profits of companies other than those which have no share capital over and above a certain figure. Such a company has to file its return for purposes of assessment to income-tax under Sub-section (1) or Sub-section (2) of Section 139 of the I.T. Act, 1961, as the case may be, and in the event of any default in the filing of such return or in the event of any delay in doing so, penalty shall be exigible under Section 271(1)(a) of that Act and Section 271(1)(a) clearly speaks of the failure to furnish the return of total income without reasonable cause under Sub-section (1) of Section 139 or by notice given under Sub-section (2) of Section 139 or Section 148 or within the time allowed and in the manner required by Sub-section (1) or by such notice, as the case may be. Under the W.T. Act the return of total wealth is required to be filed under Section 14 of that Act and for failure to furnish a return under Sub-section (1) as required or under Sub-section (2) if notice is given, penalty is provided for in Section 17 of that Act. In Section 9 of the Act, however, levy of penalty has been provided for failure to furnish a return,without reasonable cause, required under Section 5. It does not say that the failure should be to furnish the return within the time and in the manner prescribed under Sub-section (1) or within the time allowed in the notice issued under Sub-section (2). It envisages a levy of penalty only for the failure to furnish a return required under Section 5. In other words, if no return has been filed as required under Sub-section (1) or within the time given by the notice issued under Sub-section (2) but is filed under Sub-section (3) before the assessment is made, there will be no default.

12. We do not find any merit in the submission of Sri Katju that the word 'required' occurring in Section 9 refers only to the filing of a return required under Sub-section (1) or Sub-section (2) and that the provision contained in Sub-section (3) is only an enabling provision and a return filed under that provision would not cure the default provided for in Section 9. In the Shorter Oxford Dictionary, Vol. II, at page 1711, the word 'require', inter alia, has been stated to mean :

'To demand of any one to do something, to ask for something or person authoritatively or imperatively, or as a right, to demand, claim, insist on having, to ask for something as a favour, to beg, entreat, or request, to demand as necessary or essential on general principles, or in order to comply with some regulation ; or to feel, or be under, a necessity to do so something.'

13. In other words, if an assessee filed a return under Sub-section (3) of Section 5, it would also be a return 'required' by this provision. Simply because the word 'required' is not occurring in this sub-section it does not mean that it is only an enabling provision. The word 'required', therefore, does not necessarily mean an imperative or authoritative demand to file the return. It can be equated with 'authorised' as well. In Sub-section (3), therefore, if a company liable to tax under this Act has not furnished a return during the time allowed under Sub-section (1) or Sub-section (2), it may furnish a return at any time before the assessment is made. On this view, therefore, Section 9 provides for the levy of penalty on a failure to furnish the return required under Section 5 and not for the default in the filing of the return during the time allowed under Sub-section (1) or by notice under Sub-section (2).

14. The quantum of penalty leviable provided for in the Act also gives an indication as to the intention of the Legislature to penalise only a default in the filing of the return. Under Section 9 of the Act the penalty leviable is a sum not exceeding the amount of surtax while for default under Section 271(1)(a) of the I.T. Act, the penalty leviable is the sum equal to two per cent. of the assessed tax for every month during which the default continued. Further, Chap. XXII of the I.T. Act provides for offences and prosecutions. Failure to furnish a return of income is one such offence. Similarly, Sections 20 to 22 of the C.(P.)S.T. Act make provisions for offences and prosecutions. Theseoffences are failure to deliver returns, etc., furnishing of false statements and abetment of false returns, etc. Section 20 which provides for a penalty on failure to furnish returns, etc., specifically makes the failure without reasonable cause 'to furnish in due time any return under Sub-section (2) of Section 5', a default. It is, therefore, evident that wherever the Legislature intended to provide imposition of penalty or launching of prosecution for any particular default or offence, clear mention of the same was made.

15. In Calcutta Chromotype Pvt. Ltd. : [1971]80ITR627(Cal) , the question was of levy of penalty under Section 10 of the S.P.T. Act for failure to file return under Section 6(1) of that Act when the return was actually filed under Sub-section (3) thereof before the assessment was made. The S.P.T. Act, 1963, was superseded by the C.(P.)S.T. Act, 1964, and Sections 6 and 10 thereof were analogous to Sections 5 and 9 of the latter Act. The argument of the revenue that since the assessee filed the return long after the prescribed period under Sub-section (1) had expired and no application had been made to the ITO for an extension of time, it would be deemed to have filed its return in terms of Section 6 and would be liable to penalty under Section 10, was repelled by the learned judge and it was observed (p. 630) :

'If it was the intention of the Legislature to penalise an assessee for filing a return not within the time allowed under the section while permitting the assessee to file such a return at any time before the assessment was actually completed, then unless there were specific words in the section imposing such penalty as there are in the corresponding sections of the Income-tax Act, no penalty could be imposed for failure to file a return on the ground that the return was not filed within the period prescribed by Section 6. In my opinion, under the relevant provisions of the Super Profits Tax Act, 1963, the Income-tax Officer is not entitled to impose a penalty on the petitioner on the ground of failure to file a return within the time prescribed under that section when the return is filed before the assessment is made and the Income-tax Officer completes the assessment on the basis of such a return.'

16. The approach made by us to the construction of the relevant provisions could be considered from two-other aspects. One is that 'in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.' This rule of construction of a taxing statute has been pithily stated by Rowlatt J. in Cape Brandy Syndicate v. IRC [1921] 1 KB 64, 71 and quoted with approval by the Supreme Court in CIT v. Ajax Products Ltd. : [1965]55ITR741(SC) . Thus, an important rule of construction is that if the words of a statute are precise and unambiguous,they must be accepted as declaring the express intention of the Legislature. The second important aspect is that if the interpretation of a fiscal enactment is open to doubt, the construction most beneficial to the subject should be adopted. See CIT v. Vegetable Products Ltd. : [1973]88ITR192(SC) . Their Lordships have observed at p. 195 :

'If we find that language to be ambiguous or capable of more meanings than one, then we have to adopt that interpretation which favours the assessee, more particularly so because the provision relates to imposition of penalty.'

17. Therefore, looking to the scheme of the C. (P.) S.T. Act, the purpose which it was intended to serve and the clear language used in the relevant provisions, we are inclined to agree with the view taken in the Calcutta Chromotype Pvt. Ltd. : [1971]80ITR627(Cal) and hold that the ITO is not entitled to impose a penalty on the ground of the failure to file a return within the time prescribed under Sub-section (1) or Sub-section (2) of Section 5 when the return is filed before the assessment is made and the ITO accepts it and completes the assessment on the basis of such a return. In other words, Section 9 envisages the levy of a penalty for the failure to file a 'return under Section 5 without reasonable cause and not for the failure to file a return within the time prescribed under Sub-section (1) or Sub-section (2) thereof. ,

18. Our answer to the question referred, therefore, is in the affirmative, in favour of the assessee and against the department. The assessee is entitled to costs which we assess at Rs. 200.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //