RAJAGOPALA AYYANGAR, J. - M.C.T.M. Corporation Private Ltd., the petitioner before us, was incorporated as a private limited liability company in Pudukottai State. The Income-tax Officer of Pudukottai assessed the petitioner for the assessment year 1951-52 on the basis of a total income of Rs. 3,66,260 and issued a demand for the appropriate tax due. This order was passed on March 31, 1954. The validity of this assessment or demand is not now in controversy. Subsequently by a communication dated March 13, 1956, the Income-tax Officer issued notice to the petitioner under section 35 of the Act to show cause why this assessment should not be rectified by the addition of a further sum of Rs. 15,104-2-0 to the tax as ascertained by order dated March 31, 1954, the addition being stated to be interest chargeable under section 18A(8) of the Income-tax Act, which by mistake had been omitted to be included. The petitioner objected to the proposed rectification on several grounds to the details of which we shall refer presently. But these objections were overruled and a sum of Rs. 10,591-3-0, this representing the correct figure for interest, was added to the tax demand by an order dated March 29, 1956. Against this order the petitioner preferred a revision under section 33A to the Commissioner of Income-tax but this having been rejected the present petition has been filed for the issued of a writ of certiorari, disputing the legality of the addition. The case of the petitioner before the departmental authorities and before us was twofold : (1) that the petitioner was not bound to have submitted a return of his estimated income under section 18A(3) of the Act and to have paid the appropriate tax due thereon, with the consequence that it was not chargeable with interest under section 18A(8) of the Act. This was rested primarily on the ground that the petitioner had been assessed to tax under the provisions of the Indian Income-tax Act before the assessment year 1951-52, and that this took it out of the operation of section 18A(3); (2) and that if the advance tax was payable by it, still the failure to include it in the final assessment order dated March 31, 1954, was not a mistake of the type which could be rectified under section 35 of the Act. In view of these arguments it is necessary to set out the material portions of section 18A of the Act :
'18A. (1)(a) In the case of income in respect of which provision is not made under section 18 for deduction of income-tax at the time of payment, the Income-tax Officer may, on or after the 1st day of April, in any financial year, by order in writing, require an assessee to pay quarterly to the credit of the Central Government on the 15th day of June, 15th day of September, 15th day of December and 15th day of March in that year, respectively, an amount equal to one quarter of the income-tax and super-tax payable on so much of such income as is included in his total income of the latest previous year in respect of which he has been assessed, if that total income exceeded the maximum amount not chargeable to tax in his case by two thousand five hundred rupees. Such income-tax and super-tax shall be calculated at the rates in force for the financial year in which he is required to pay the tax, and shall bear to the total amount of income-tax and super-tax so calculated on the said total income the same proportion as the amount of such inclusions bears to his total income or, in cases where under the provisions of sub-section (1) of section 17 both income-tax and super-tax or super-tax are chargeable with reference to the total world income, shall bear to the total amount of income-tax and super-tax which would have been payable on his total world income of the said previous year had it been his total income the same proportion as the amount of such inclusions bears to his total income :......
(2) If any assessee who is required to pay tax by an order under sub-section (1) estimates at any time before the last instalment is due that the part of his income to which that sub-section applies for the period which would be the previous year for an assessment for the year next following is less than the income on which he is required to pay tax and accordingly wished to pay an amount less than the amount which he is so required to pay, he may send to Income-tax Officer an estimate of the tax payable by him calculated in the manner laid down in sub-section (1) on that part of his income for such period; and shall pay such amount as accords with his estimate in equal instalments on such of the dates specified in sub-section (1)(a) as have not expired or in one sum if only the last of such dates has not expired :
Provided that the assessee may send a revised estimate of the tax payable by him before any one of the dates specified in sub-section (1)(a) and adjust any excess or deficiency in respect of any instalment already paid in a subsequent instalment or in subsequent instalments.
(3) Any person who has not hitherto been assessed shall, before the 15th day of March in each financial year, is his total income of the period which would be the previous year for an assessment for the financial year next following is likely to exceed the maximum amount not chargeable to tax in his case by two thousand five hundred rupees send to the Income-tax Officer an estimate of the tax payable by him on that part of his income to which the provisions of section 18 do not apply of the 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 as have not expired, by instalments which may be revised according to the proviso to sub-section (2).
(8) Where, on making the regular assessment, the Income-tax Officer finds that no payment of tax has been made in accordance with the foregoing provisions of this section, interest calculated in the manner laid down in sub-section (6) shall be added to the tax as determined on the basis of the regular assessment.'
Before dealing with the construction of these provisions and the argument addressed to us on behalf of the petitioner, we might briefly summarise the reasoning contained in the orders of the Income-tax Officer and the Commissioner on the foot of which the petitioners contentions were overruled. In its objections to the notice under section 35 issued by the Income-tax Officer, the petitioner raised the point that its case did not fall within sub-section (3) by reason of there having been a previous assessment. The assessment relied on in this connection was for the year 1946-47. The Income-tax Officer rejected this plea recording :
'It is found that the assessment (for 1946-47) was made only indirectly on the agents Messrs. S. Rm. M. Ct. M. Firm, Madras. Further no computation of the total income or loss was made, but the assessee was declared as not liable. I accordingly compute the interest payable under section 18A(8) as under.........';
and proceeded to determine that a total interest of Rs. 10,591-3-0 was due from the petitioner. In the revision preferred by the petitioner to the Commissioner of Income-tax besides the objection based on the scope of section 35 the plea that the petitioner had already been assessed before the relevant year 1951-52 and hence was outside section 18A(3) was raised. In regard to the latter point besides referring to the assessment for the year 1946-47 the petitioner also called in aid the assessments for the year 1939-40 to 1941-42. During these years the petitioner was not directly assessed but the shareholders of the petitioner-company were assessed on the basis of the profits of the petitioner-company under section 44D of the Act. The argument urged on behalf of the petitioner was that, as the income of the petitioner was ascertained for the purpose of computing the tax liability of the shareholders, it amounted to an assessment of the petitioner-company itself during those years. The Commissioner rejected the revision, without however dealing in his order with the petitioners case as regards its having been assessed during the period 1939-40 to 1941-42, but after discussing in detail the other matters set out in the revision petition.
In the present writ petition besides the points urged in the revision to the Commissioner, the petitioner also raised for our consideration the following further points. Even if the case of the petitioner fell under section 18A(3), (1) the failure to submit an estimate and pay the tax payable thereon was bona fide and due to justifiable cause and the Income-tax Officer ought to have waived the interest under the last proviso to section 18A(6). (2) The primary default committed by the petitioner was the non-submission of the estimate and not the payment of the tax, which latter would come in only if an estimate was submitted and to this situation only sub-section (9) and not sub-section (8) would be attracted. We also heard elaborate arguments as to whether the assessments for 1946-47 and during 1939 to 1942 could be treated as 'assessments' of the petitioner for the purpose of section 18A(3). Learned counsel on the other side also made elaborate submissions on the points we have set out earlier as having been raised before us. In view however of a certain fact, which emerged on an examination of the record, we find that a discussion on most of these points had become unnecessary. This fact was that from the assessment year 1933-34 up to and including 1938-39 a film called S. Rm. M. Ct. M. firm carrying on business at Madras, was treated as the agent of the petitioner, then a non-resident corporation, and the income of the petitioner accruing and arising in British India was assessed in the hands of this resident-agent, the film. That this was an assessment of the petitioner-company during those years was not the subject of dispute. It was also common ground that there was no demand by the Income-tax Officer under section 18A(1) requiring the petitioner to pay in advance the tax. No doubt the existence of this assessment was not brought to the notice of the Income-tax Officer or the Commissioner, but as the truth of this fact was not in dispute we do not consider that the petitioner is disentitled to rely on this for disputing its liability to pay interest.
The point urged by learned counsel for the Department was that section 18A(1) and 18A(3) should be construed as complementary to each other, and that section 18A(3) should be held to lay an obligation upon every person to submit an estimate of his income and pay tax in advance, where the Income-tax Officer was precluded from making a demand under section 18A(1). To understand this argument it is necessary to advert to the scheme of section 18A(1). The Income-tax Officer is directed to base his demand for computing the tax payable in in advance on the total income of the latest previous year in respect of which the person has been assessed.' (We are leaving out of account the reference to the minimum amount of the income as irrelevant to the present context). So long as the total income assessed in each year is above the minimum prescribed there can be no doubt, that unless the Income-tax Officer makes a demand for the advance payment of the tax, there is no obligation on the assessee to pay, and there would be no default on his part attracting the liability to pay interest under sub-section (8). Suppose, however, the total income for the second year falls below the minimum or these is a computation of loss. If during the year following such an assessment the total income of the assessee is Rs. 6,000 or upwards the Income-tax Officer cannot make a demand under section 18A(1) because the latest previous year for which the person had been assessed disclosed a total income less than the minimum. The submission of learned counsel for the Department was that an assessee in such a position should be held to be 'a person who has not hitherto been assessed' within the opening words of section 18A(3) and was therefore bound to voluntarily submit an estimate of his income for that year and pay the tax due on such estimate. We feel unable to accept this construction of section 18A(3). What in effect learned counsel for the Department submits is that we should read the words 'or in regard to whom the Income-tax Officer cannot made a demand under sub-section (1)' after the opening words of sub-section (3) we have extracted earlier. It is obvious that sub-section (3) does not cover every case where the Income-tax Officer is not enabled to make a demand under sub-section (1), but this is not a gap, assuming that it was not designed, which could be remedied by any process of construction. The result is that we must hold that the petitioner was not a person who had not hitherto been assessed, since it was admittedly assessed to tax during the period 1933-34 to 1938-39. The fact that during the period 1939-40 to 1950-51 it was not assessed to tax does not bring it within section 18A(3).
If the petitioner was not bound to have voluntarily submitted an estimate within section 18A(3), it is common ground its case could not fall within section 18A(8). The demand for interest was therefore without legal basis.
The writ petition is accordingly allowed and the rule is made absolute. The order of the Income-tax Officer dated March 29, 1956, levying the assessment on the petitioner is set aside.
In view however of the assessments for 1933-34 to 1938-39 not being brought to the notice of the Income-tax Officer, there will be no order as to costs in this writ petition.