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income Tax Officer, Distt. Ii(ii), Kanpur and ors. Vs. Shri Mani Ram Etc. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtSupreme Court of India
Decided On
Judge
Reported inAIR1969SC543; [1969]72ITR203(SC); [1969]1SCR724
ActsIncome Tax Act, 1922 - Sections 18A(3), 18A(3), 18A(5) and 23B
Appellantincome Tax Officer, Distt. Ii(ii), Kanpur and ors.
RespondentShri Mani Ram Etc.
Cases ReferredInland Revenue Commissioners v. Dowdall
Excerpt:
.....his income, and in the case referred to in clause (b), to havefailed to furnish the return of his total income; 23. (1) if the income-tax officeris satisfied without requiring the presence of the assessee or the productionby him of any evidence that a return made under section 22 is correct andcomplete, he shall assess the total income of the assessee, and shall determinethe sum payable by him on the basis of such return. (2) if the income-tax officer isnot satisfied without requiring the presence of the persons who made the returnor the production of evidence that a return made under section 22 is correctand complete, he shall serve on such person a notice either to attend at theincome-tax officer's office or to produce, or to cause to be there produced,any evidence on which such..........to one-quarter of the income-taxand super-tax payable on so much of income as is included in his total incomeof the latest previous year in respect of which he has been assessed, if thattotal income exceeded the maximum amount not chargeable to tax in his case bytwo thousand five hundred rupees. such income-tax and super-tax shall becalculated at the rates in force for the financial year in which he is requiredto pay the tax, and shall bear to the total amount of income-tax and super-taxso calculated on the said total income the same preparation as the amount ofsuch inclusions bears to his total income or, in cases where under theprovisions of sub-section (1) of section 17 both income-tax and super-tax arechargeable with reference to the total world income, shall bear to the.....
Judgment:

Ramaswami, J.

1. In these appeals, which have been heard together, a common question oflaw arises for determination, that is, whether the expression 'any personwho has not hitherto been assessed' in section 18A (3) of the Income-taxAct, 1922 (hereinafter called the Act), after the Income-taxAmendment (Act 67 of 1949), should be interpreted so as to include aperson who has only been provisionally assessed under section 23B of that Act.

2. The respondents in these appeals are four persons - Mani Ram, Jagmohan,Kishandas, Bhagirathmal - partners of Shri Kishan Das Dhankutti, Kanpur. Theywere members of a joint Hindu family carrying on business until they camedivided in the middle of assessment year 1953-54. Thereafter, they werecarrying on the business in partnership. For the year 1953-54, the firmsubmitted a return showing loss. But in the next succeeding year 1954-55 itdisclosed a profit and submitted a return. All the four partners filed returnsindividually on September 27, 1954, and they were provisionally assessed ontheir returns on October 14, 1954. But the regular assessment was made for thisyear only on February 27, 1958. The firm continued to make profits in thesubsequent years 1955-56, 1956-57, 1957-58 and 1958-59 and the partners filedreturns for their income for each of these years and were regularly assessedfor these years under section 23 sometime after 27-2-1958. Theassessment order for 1958-59 was in fact made on 19-2-1959. It is not disputedthat none of the four partners sent any estimate of the tax payable on theirincome as required by section 18A of the Income Tax Act, 1922 or pay the taxin advance. Therefore, the Income Tax Officer, Kanpur while assessing themunder section 23 of the Act held that they were liable to pay interest undersection 18A(8) and determined the amount payable by each in respect of each ofthe years on the basis of the income found taxable in the regular assessment.In addition, he applied the provisions of section 18A(9)(b) and imposed apenalty for each year of assessment by virtue of section 28 read with section18A(9) (b) of the Act. The four partners preferred appeals to the AppellateAssistant Commissioner on the ground that the levy of interest and penalty wasunauthorised. But the appeals were dismissed. The partners applied in revisionto the Commissioner of Income Tax under section 33A(2), but the revisionapplications were dismissed. The respondents thereafter moved the AllahabadHigh Court for grant of a writ to quash the orders of the Income Tax Officerand of the Appellate Assistant Commissioner in appeal, The applications forwrit were allowed by Mr. Justice S.C. Manchanda who held that section 18A(3)could not apply to the facts of the case as there had been a provisionalassessment under section 23B in the year 1954. Against the decision of theSingle Judge the appellants preferred appeals before the Division Bench. Theseappeals were dismissed by a common judgment of the Allahabad High Court dated25th March, 1963. The present appeals are brought to this Court by specialleave from the judgment of the Allahabad High Court dated 25th March, 1963 inthe batch of appeals affirming the judgment of the Single Judge dated 25th May,1956 in C.W.M. No. 1591 of 1962 and the connected writ applications.

3. It is necessary at this stage to set out the provisions of sections 18A,23 and 23B of the Income-tax Act, 1922, as they stood at the material time :

'18A. (1) (a) In the case ofincome in respect of which provision is not made under section 18 for deductionof income-tax at the time of payment, the income-tax Officer may, on or afterthe 1st day of April in any financial year, by order in writing, require anassessee to pay quarterly to the credit of the Central Government on the 15thday of June, 15th day of September, 15th day of December and 15th day of Marchin that year, respectively, an amount equal to one-quarter of the income-taxand super-tax payable on so much of income as is included in his total incomeof the latest previous year in respect of which he has been assessed, if thattotal income exceeded the maximum amount not chargeable to tax in his case bytwo thousand five hundred rupees. Such income-tax and super-tax shall becalculated at the rates in force for the financial year in which he is requiredto pay the tax, and shall bear to the total amount of income-tax and super-taxso calculated on the said total income the same preparation as the amount ofsuch inclusions bears to his total income or, in cases where under theprovisions of sub-section (1) of section 17 both income-tax and super-tax arechargeable with reference to the total world income, shall bear to the totalamount of income-tax and super-tax which would have been payable on his totalworld income of the said previous year had it been his total income the sameproportion as the amount of such inclusions bears to his total world income.

(2).....

(3) Any person who has not hithertobeen assessed shall, before the 15th day of March in each financial year, ifhis total income of the period which would be the previous year for anassessment for the financial year next following is likely to exceed themaximum amount not chargeable to tax in his case by two thousand five hundredrupees, send to the Income-tax Officer an estimate of the tax payable by him onthat part of his income to which the provisions of section 18 do not apply ofthe said previous year calculated in the manner laid down in sub-section (1),and shall pay the amount on such of the dates specified in that sub-section ashave not expired, by installments which may be revised according to the provisoto sub-section (2) ...

(6) Where in any year an assesseehas paid tax under sub-section (2) or sub-section (3) on the basis of his ownestimate, and the tax so paid is less that eighty per cent. of the taxdetermined on the basis of the regular assessment, so far as such tax relatesto income to which the provisions of section 18 do not apply and so far as itis not due to variations in the rates of tax made by the Finance Act enactedfor the year for which the regular assessment is made, simple interest at therate of six per cent per annum from the first day of January in the financialyear in which the tax was paid up to the date of the said regular assessmentshall be payable by the assessee upon the amount by which the tax so paid fallsshort of the said eighty percent...

(8) Where, on making the regularassessment, the Income-tax Officer finds that no payment of tax has been madein accordance with the fore-going provisions of this section, interestcalculated in the manner laid down in sub-section (6) shall be added to the taxas determined on the basis of the regular assessment.

(9) If the Income-tax Officer, inthe course of any proceedings in connection with the regular assessment issatisfied that any assessee -

(a) has furnished undersub-section (2) or sub-section (3) estimates of the tax payable by him which heknew or had reason to believe to be untrue, or

(b) has without reasonablecause failed to comply with the provisions of sub-section (3), the assessee shall be deemed, inthe case referred to in clause (a), to have deliberately furnished inaccurateparticulars of his income, and in the case referred to in clause (b), to havefailed to furnish the return of his total income; and the provisions of section28, so far as may be, shall apply accordingly.

23. (1) If the Income-tax Officeris satisfied without requiring the presence of the assessee or the productionby him of any evidence that a return made under section 22 is correct andcomplete, he shall assess the total income of the assessee, and shall determinethe sum payable by him on the basis of such return.

(2) If the Income-tax Officer isnot satisfied without requiring the presence of the persons who made the returnor the production of evidence that a return made under section 22 is correctand complete, he shall serve on such person a notice either to attend at theIncome-tax Officer's office or to produce, or to cause to be there produced,any evidence on which such person may rely in support of the return.

(3) On the day specified in thenotice issued under sub-section (2), or as soon afterwards as may be, theIncome-tax Officer, after hearing such evidence as such persons may produce andsuch other evidence as the Income-tax Officer may require, on specified points,shall, by an order in writing, assess the total income of the assessee, anddetermine the sum payable by him on the basis of such assessment.

(4) If any person fails to makethe return required by any notice given under sub-section (2) of section 22 andhas not made a return or a revised return under sub-section (3) of the samesection or fails to comply with all the terms of a notice issued undersub-section (4) of the same section or, having made a return, fails to complywith all the terms of a notice issued under sub-section (2) of this section,the Income-tax Officer shall make the assessment to the best of his judgmentand determine the sum payable by the assessee on the basis of such assessmentand, in the case of a firm, may refuse to register it to or may cancel itsregistration if it is already registered.

23B. (1) The Income-tax Officermay, at any time after the receipt of a return made under section 22, proceedto make in a summary manner, a provisional assessment of the tax payable by theassessee, on the basis of his return and the accounts and documents, if any,accompanying it, after giving due effect to (i) the allowance referred to inparagraph (b) of the proviso to clause (vi) of Sub-section (2) of section 10,and (ii) any loss carried forward under sub-section (2) of section 24.

(2) A partner of a firm may beprovisionally assessed under sub- section (1) in respect of his share in thefirm's income, profits and gains, if its return has been received, although thereturn of the partner himself may not have been received,

(3) A firm may be provisionallyassessed under sub-section (1) as if it were an unregistered firm, unless thefirm fulfills such conditions as the Central Government May, by notification inthe official Gazette, specify in that behalf.

(4) There shall be no right ofappeal against a provisional assessment made under sub-section (1).

(5) For the avoidance of doubt,it is hereby declared that the provisions of section 45 (except the firstproviso) and section 46 apply in relation to any tax payable in pursuance of aprovisional assessment made under sub-section (1) as if it were a regularassessment made under section 23.

(6) Income-tax paid or deemed tohave been paid under section 18 or section 18A in respect of any incomeprovisionally assessed under sub- section (1), shall be deemed to have beenpaid towards the provisional assessment.

(7) After a regular assessmenthas been made under section 23, any amount paid or deemed to have been paidtowards a provisional assessment made under sub-section (1), shall be deeded tohave been paid towards the regular assessment; and where the amount paid ordeemed to have been paid towards the provisional assessment, exceeds the amountpayable under the regular assessment, the excess shall be refunded to the assessee.

(8) Nothing done or suffered byreason or in consequence of any provisional assessment made under this sectionshall prejudice the determination on the merits of any issue which may arise inthe course of the regular assessment under section 23.'

4. It was argued on behalf of the appellants that a mere provisionalassessment under section 23B of the Act will not satisfy the requirements ofsection 18A(1) of the Act because the language of section 18A(1) shows that theprovisions of the sub-section only apply when the amount of tax to be depositedin advance is determined on the basis of the assessee's total income of theprevious year to which he has been assessed. It was contended that in the caseof a provisional assessment under section 23B of the Act, there is nocomputation of the total income of the previous year and that under section 23Bof the Act all that is done is to determine provisionally the income-taxpayable on the basis of the return filed without properly going through theprocess of assessing the total taxable income. It is not possible to acceptthis argument because, even when the tax is provisionally assessed, therenecessarily has to be a determination of the total income of the assessee. Theonly difference is that under section 23 the total income is determined afterthe Income Tax Officer has satisfied himself fully about the correctness of thereturn- filed by taking steps, if necessary, under sections 22(4) and 23(2) ofthe Act. In the case of a provisional assessment under section 23B of the Act,the powers under sections 22(4) and 23(2) of the Act are not to be exercisedand the Income Tax Officer has to determine the tax on the basis of the returnfiled by the assessee after taking into consideration the accounts and documentsavailable, if any, and after giving effect to certain allowances and losses. Inother words, what the Income Tax Officer has to do is to assess provisionallythe total income of the assessee and thereafter he has to determine the taxpayable on the basis of that provisionally assessed income.

5. The argument was next stressed that section 18A(11) was introduced intothe Act when section 23B did not exist at all and, consequently, no inferenceshould be drawn that the word 'assessed' used in section 18A(1) wasmeant to cover a provisional assessment under section 23B of the Act also. Inother words, the argument of the appellants was that when the word'assessed' was used in section 18A(1) of the Act, Parliament couldnot have contemplated that this word would cover a case of provisionalassessment as no section relating to provisional assessment existed in the Actat that time. We are unable to accept this argument as correct. It should benoticed that Parliament introduced certain amendments in section 18A of the Actconsequential to be introduction of section 23B of the Act. There is areference to the provisional assessment made under section 23B in sub-section(5) of section 18A, but Parliament took no step to restrict the meaning of theword 'assessed' in section 18A(3) so as to exclude a reference toprovisional assessment under section 23B of the Act. If Parliament contemplatedthat section 18A(3) should apply only in the case of a 'regularassessment' there was no reason why it did not put some qualifying wordsor expressions before or after the word 'assessed' in section18A-(1). It is not possible to accept the submission of the appellants thatParliament in fact intended to bring about such a decision but onlyaccidentally omitted to do so. On the other hand, the language of section 18A(l)as it stands, can only lead to interpretation that the provisions contained init would become applicable whenever a person has been assessed whatever be thenature of the assessment-whether it be a regular assessment or a provisionalassessment.

6. It is important to notice that in section 18A(1) the expression'assessed' is used without any qualification or restriction as towhether the assessment should be a regular assessment or any other type ofassessment under the Act. It is also manifest that in section 18A, sub-section(5), the two expressions 'provisional assessment' and 'regularassessment' are expressly mentioned. The expression 'regularassessment' is also repeatedly used in section 18A, sub-section (6), (7),(8) and (9). We see, therefore, no warrant for restricting the meaning of theword 'assessed' in section 18A(1) so as to include only a'regular assessment' under section 23 of the Act. There is no reasonwhy Parliament did not add the word 'regularly' in the sub-section soas to qualify the word 'assessed'. Since there is no suchqualification, the word 'assessed' in section 18A(3) should be readin its ordinary sense as including every kind of assessment including a provisionalassessment under section 23B of the Act.

7. In the last place, counsel on behalf of the appellants referred to thelanguage of sections 210 and 212(3) of the Income-tax Act, 1961, which state :

'210. Order by Income-taxOfficer. - (1) Where a person has been previously assessed by way of regularassessment under this Act or under the Indian Income-tax Act, 1922 (11 of1922), the Income-tax Officer may, an or after the 1st day of April, in thefinancial year, by order in writing, require him to pay to the credit of the CentralGovernment advance tax determined in accordance with the provisions of sections207, 208 and 209.

(2) The notice of the demandissued under section 156 in pursuance of such order shall specify theinstallments in which the advance tax is payable under section 211.

(3) If, after the making of anorder by the Income-tax Officer under this section and before the 15th day ofFebruary of the financial year, tax is pad by the assessee under section 140Aor a regular assessment or a provisional assessment under section 141 of theassessee or of the registered firm of which he is a partner is made in respectof a previous year later than that referred to in the order of the Income-taxOfficer, the Income-tax Officer may make an amended order requiring the assesseeto pay in one installment on the specified date, or in equal installments onthe specified dates, if more than one, falling after the date of the amendedorder, the advance tax computed on the basis of the total income on which taxhas been paid under section 140A or in respect of which the regular assessmentor the provisional assessment aforesaid has been made, as reduced by theamount, if any, paid in accordance with the original order.

212. Estimate by assessee. - (1)......

(3) Any person who has notpreviously been assessed by way of regular assessment under this Act or underthe Indian Income-tax Act, 1922 (11 of 1922), shall, before the first day ofMarch in each financial year, if his total income exclusive of capital gains ofthe period which would be the previous year for the immediately followingassessment year is likely to exceed the maximum amount not chargeable toincome- tax in his case by two thousand five hundred rupees, send to theIncome-tax Officer -

(i) an estimate of the total incomeexclusive of capital gains of the said previous year;

(ii) an estimate of the advancetax payable by him calculated in the manner laid down in section 209;

and shall pay such amount asaccords with his estimate, on such of the dates specified in section 211 ashave not expired, by installments which may be revised according to sub-section(2).'

8. The argument was that these sections apply to a case of a regularassessment and the enactment of these sections should be treated as aParliamentary exposition of section 18A(3) of the earlier Act as referring onlyto a case of regular assessment. We are unable to accept this argument ascorrect. There is nothing in the 1961 Act to suggest that Parliament intendedto explain the meaning or clear up doubts about the meaning of the word'assessed' in section 18A(3) of the earlier Act. Generally speaking,a subsequent Act of Parliament affords no useful guide to the meaning ofanother Act which came into existence before the later one was ever framed.Under special circumstances, the law does, however, admit of a subsequent Actto be resorted to for this purpose but the conditions under which the later Actmay be resorted to for the interpretation of the earlier Act are strict; bothmust be laws on the same subject and the part of the earlier Act which it issought to construe must be ambiguous and capable of different meanings. Forexample, in Kirkness (Inspector of Taxes) v. John Hudson & Co. Ltd.[1955] A.C. 696 it was held by the House of Lords that the ordinary meaning of theword 'sale' importing a consensual relation is to be attributed tothe use of it in the context of section 17(l)(a) of the Act of 1945. Sincethere was no ambiguity in the section, it was not permissible to seek guidancein its construction from later Finance Acts, although it was directed byParliament to be construed as one with them. At page 714 of the Report ViscountSimonds states:

'I have looked at the later Acts to which theAttorney-General referred in order to satisfy myself that they do not contain aretrospective declaration as to the meaning of the earlier Act. They clearly donot, and I do not think that it has been contended that they do. At the highestit can be said that they may proceed upon an erroneous assumption that the word'sold' in section 17(1) (a) of the Income Tax Act, 1945, has a meaning which Ihold it has not. This may be so and, if so, it is an excellent example of theproposition to which reference was made in the report of the Committee of thePrivy Council in In re MacManaway [1951] A.C. 161 and again by my noble andlearned friend Lord Radcliffe in Inland Revenue Commissioners v. Dowdall,O'Mahoney & Co. Ltd. [1952] A.C. 401 that the beliefs or assumptions ofthose who frame Acts of Parliament cannot make the law.'

9. For the reasons expressed above, we hold that the judgment of the HighCourt dated 25th March, 1963, is right and these appeals must be dismissed withcosts. One set of hearing fee.

10. Appeals dismissed.


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