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K. Sankaran Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberIncome-tax Reference Case Nos. 14, 15 and 16 of 1975
Judge
Reported in[1980]122ITR754(Ker)
ActsIncome Tax Act, 1961 - Sections 280C, 280K, 280R and 280T; General Clauses Act, 1897 - Sections 3(19) and 6
AppellantK. Sankaran
RespondentCommissioner of Income-tax
Appellant Advocate K.S. Rajamony,; A. Shahul Hameed and; Siby Mathew, A
Respondent Advocate P.A. Francis and; P.K. Raveendranatha Menon, Advs.
Excerpt:
.....under act - section 280c practically in position of charging section which makes it obligatory to make annuity deposit at rates prescribed - power under section 280k given to income tax officer to determine amount of annuity deposit by making provisional assessment under section 141 or regular assessment under section 143 - court confirmed view taken by tribunal - question referred answered against assessee. - - penalty for failure to make deposit. (2) if the income-tax officer, in the course of any proceedings in connection with the regular assessment, is satisfied that any depositor- (a) has furnished under section 280h an estimate of advance deposit to be made by him which he knew or had reason to believe to be untrue, or (b) has without reasonable cause failed to furnish an..........on which the assessee has placed reliance. these provisions are :'280r. penalty for failure to make deposit.--(1) if any person who is liable to make an annuity deposit under this chapter fails to make such deposit within the time specified therefor, the income-tax officer may direct that the depositor shall pay by way of penalty an amount not exceeding one-half of the annuity deposit which he is liable to make. (2) if the income-tax officer, in the course of any proceedings in connection with the regular assessment, is satisfied that any depositor- (a) has furnished under section 280h an estimate of advance deposit to be made by him which he knew or had reason to believe to be untrue, or (b) has without reasonable cause failed to furnish an estimate of advance deposit to be made by.....
Judgment:

Gopalan Nambiyar, C.J.

1. The assessee retired as the Chief Justice of this court in 1960. In respect of his income-tax assessments for the assessment years 1964-65, 1965-66 and 1966-67, the question arose whether annuity deposit was payable under the provisions of Chap. XXII-A of the I.T. Act, 1961, introduced by the Finance Act, 1964.

2. Overruling the assessee's contention, the Income-tax Appellate Tribunal found that the annuity deposits were payable. It referred the following question of law under section 256(1) of the Income-tax Act for determination and opinion of this court :

' Whether the Income-tax Officer on the date he completed the assessments for assessment years 1964-65, 1965-66 and 1966-67 was, after the repeal by way of omission of sections 280K and 280T of the Income-tax Act, 1961, with effect from April 1, 1967, competent to determine for these three assessment years the amount of annuity deposit required to be made by the assessee '

3. Chapter XXII-A dealing with annuity deposits was introduced in the I.T. Act, by the provisions of the Finance Act, 1964, with effect from April 1, 1964. We may briefly notice the provisions of this Chapter. Section 280A provides that the provisions of the Chapter shall apply to every person, whether an individual, a HUF, an unregistered firm, or an association of persons or body of individuals whether incorporated or not or an artificial juridical persons. Section 280B deals with definitions. Section 280C is important and is as follows :

' 280C. Requirement as to annuity deposit.--(1) Where any Central Act enacts that any person to whom the provisions of this Chapter apply shall make for any assessment year an annuity deposit with the Central Government at any rate or rates, such person shall make such deposit at that rate or those rates in accordance with, and subject to the provisions of, this Chapter in respect of the adjusted total income of the previous year or previous years, as the case may be.

(2) In respect of the adjusted total income in relation to which an annuity deposit is to be made under Sub-section (1), such deposit shall be made in advance in accordance with the provisions of sections 280E to 280-I.'

4. Section 280D provides for repayment of annuity deposit. Section 280E deals with computation of advance deposit. Section 280F provides for an order by the ITO. Under this provision the ITO was enabled to require an assessee to make an advance deposit in accordance with Section 280E. Section 280C provides for instalments of advance deposits; Section 280H, for estimate by depositor; Section 280-1, for commission receipts ; and Section 280J, for annuity deposit on the basis of self-assessment. Then follows Section 280K which is as follows :

' 280K. Annuity deposit on the basis of provisional or regular assessment.--At the time of making a provisional assessment under section 141 or a regular assessment, or as soon thereafter as may be, the Income-tax Officer shall, by order in writing, determine the amount of annuity deposit, if any, required to be made by the depositor on the basis of. the income so assessed after taking into account the amount of annuity deposit, if any, already made by him in respect of that assessment year. '

5. We omit several other provisions except sections 280R and 280T on which the assessee has placed reliance. These provisions are :

'280R. Penalty for failure to make deposit.--(1) If any person who is liable to make an annuity deposit under this Chapter fails to make such deposit within the time specified therefor, the Income-tax Officer may direct that the depositor shall pay by way of penalty an amount not exceeding one-half of the annuity deposit which he is liable to make.

(2) If the Income-tax Officer, in the course of any proceedings in connection with the regular assessment, is satisfied that any depositor-

(a) has furnished under section 280H an estimate of advance deposit to be made by him which he knew or had reason to believe to be untrue, or

(b) has without reasonable cause failed to furnish an estimate of advance deposit to be made by him in accordance with the provisions of Sub-section (3) of Section 280H, he may direct that such depositor shall pay by way of penalty a sum-

(i) which, in the case referred to in clause (a), shall not exceed half the amount by which the advance deposit actually made during the financial year immediately preceding the assessment year under the provisions of sections 280E to 280-I falls short of-

(1) seventy-five per cent, of the annuity deposit required to be made on the basis of income assessed by way of regular assessment (such deposit being calculated at the rates in force in the financial year immediately preceding the assessment year), or

(2) where a notice under section 280F was issued to the depositor, the deposit required to be made thereunder,

whichever is less ; and

(ii) which, in the case referred to in clause (b), shall not exceed half the amount equal to the seventy-five per cent, referred to in clause (i)(1).

(3) No order imposing a penalty under this section shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard.'

' 280T. Recovery of arrears of deposit and penalty.--For the removal of doubts, it is hereby declared that any arrear of annuity deposit and any penalty imposed under this Chapter shall be recoverable in the manner provided in Chapter XVII-D for the recovery of arrears of tax.'

6. The provisions relating to annuity deposits go up to Section 280X.

7. By the Finance Act, 1966, the provisions of Sections 280K, 280R and 280T omitted with effect from April 1, 1967. The determination of the annuity deposit payable by the assessee was made only by the assessment orders dated March 28, 1969, January 9, 1970, and November 7, 1970.

8. The contention on behalf of the assessee was that as the three sections, Sections 280K, 280R and 280T, had been omitted, the annuity deposit scheme had become unworkable. The ' omission ' of the three sections, it was said, would not constitute a repeal of the said provisions so as to attract Section 6(c) of the General Clauses Act, 1897, and, therefore, the ITO had no right or power to determine the annuity deposit payable. The Tribunal, following the decision of the Madras High Court in J. K. K. Angappan v. ITO : [1974]94ITR397(Mad) , held that the omission of the three sections, and, in particular, of Section 280K of the Act, amounted, in effect and in substance, if not, in fact, to a repeal, that Section 6(c) of the General Clauses Act was, therefore, attracted, and that despite the assessment having been made in 1969 it was open to the officer to determine the annuity deposit, and take it into account in making the assessment. The correctness of this view has been canvassed in the question of law referred for our opinion.

9. We think that the Tribunal was correct in its conclusion. We have referred to the provisions of Chap, XXII-A of the I.T. Act. Section 280C is practically in the position of a charging section which makes it obligatory on the persons concerned to make the annuity deposit at the rate or rates prescribed ' in accordance with and subject to the provisions of this chapter '. Mark the words that the liability is only to make the deposit ' in compliance with the provisions of the chapter '. The liability being there, we do not think its practical enforcement is in any way affected by the omission of the three sections, namely, Sections 280K, 280R and 280T. The omission of the latter two sections appear to us to be quite inconsequential. Considerable stress was laid on Section 280K ; and it was argued that this was the vital provision in regard to the enforcement of the annuity deposit scheme and that, in the absence of this section, determination and demand of annuity deposit by the ITO was impossible. We are unable to agree. The obligation to make the deposit being there under section 280C, the power under section 280K given to the ITO to determine the amount of annuity deposit by making a provisional assessment under section 141 or a regular assessment under Section 143, appears to us to be quite a redundant and a supererogatory power. Even in the absence of such an express provision, the officer is bound to have this power under the provisions of the I.T. Act under which he has to proceed to make a regular assessment (the provision for provisional assessment has been deleted with effect from April 1, 1971). In making the assessment, the officer is bound to take into effect the income derived from all sources and to give credit to all deductions to which the assessee is entitled under the appropriate statutory provisions. This would be sufficient to clothe the officer with the power to take into account the annuity deposit paid by the assessee and to give appropriate deduction for the same. We are of the opinion that despite the omission of the three sections by the Finance Act of 1966, from Chap. XXII-A of the I.T. Act, the rest of the sections are quite effective and operative to enforce the scheme for payment of annuity deposit and to make the determination of the same by the officer still possible.

10. We also feel that the view taken by the Madras High Court in /. K. K. Angappan v. ITO : [1974]94ITR397(Mad) is reasonable and acceptable.

11. Section 3(19) of the General Clauses Act defines the term ' enactment' as follows :

' 3. In this Act, and in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context,--...

(19) 'enactment' shall include a Regulation (as hereinafter defined) and any Regulation of the Bengal, Madras or Bombay Code, and shall also include any provision contained in any Act or in any such Regulation as aforesaid:......'

12. And Section 6(c) of the Act reads:

' 6. Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not--...

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed.'

13. The result of the combined operation of these provisions is that the repeal of an enactment includes the repeal of any provision contained therein ; and once such repeal takes place, the consequence provided by Section 6(c) of the Act is bound to follow and the rights and liabilities acquired or accrued are kept alive to be enforced in appropriate proceedings, even subsequent to the repeal.

14. We are, accordingly, of the opinion, that the view taken by the Tribunal was correct.' We answer the question referred in the affirmative, that is, against the assessee and in favour of the revenue. There will be no order as to costs.

15. A copy of this judgment under the signature of the Registrar, and the seal of this court, will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench, as required by law.


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