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V.N.S. Chockalingam Chettiar and ors. Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Reported in(1959)2MLJ131
AppellantV.N.S. Chockalingam Chettiar and ors.
Respondentincome-tax Officer
Excerpt:
- .....manner laid down in sub-section (6) of section 18-a.2. the other point pressed upon us was that section 35 would have no application in this case because interest levied under sub-section (8) of section 18-a is not part of the assessment and the power of rectification conferred under section 35 is only rectification for mistake in the assessment as such. this contention is based on a fallacy. under section 35 what is rectified is a mistake--any mistake which has been brought to the notice of the income-tax officer. but all that the provision requires is that the mistake is apparent in the record of the appeal, revision, assessment or refund. the mistake need not be in the assessment as such. if the order of assessment shows that the penal interest has not been added to the tax.....
Judgment:

P.V. Rajamannar, C.J.

1. Two points were urged by Mr. Srinivasan, learned Counsel for the appellant in these appeals, against the common judgment of Balakrishna Ayyar, J., disposing of three writ petitions. The first point is that when there is a failure on the part of the assessee to submit an estimate under Section 18-A(3) the only consequence is that mentioned in Sub-section (9)(b) of that section, namely, that he would be liable to penalty which may be levied in accordance with the proviso to Sub-section (9)(b) and that Sub-section (8) which provides for the payment of interest would have no application. Learned Counsel was unable to cite any direct authority in support of this contention. He relied on an observation in the Judgment of the learned Chief Justice of Bombay in Commissioner of Income-tax v. Jagadishprasad Ramnath : AIR1955Bom255 , which runs thus:

The liability to pay advance tax in this case only arises if he submits an estimate, but if he fails or refuses to submit an estimate, no obligation to pay advance tax can arise and his only liability would be, if it was found on his regular assessment that he Was liable to pay advance tax, to pay a penalty under Section 18-A.

It is true that the learned Chief Justice used the word 'penalty' but does not refer to Clause (b) of Sub-section (9) of Section 18-A. We have no doubt whatever that what the learned Chief Justice was referring to was the interest levied under Sub-section (8) in that case. Actually the point which fell for decision in that case was whether an appeal lay to the Appellate Assistant Commissioner from an order passed by the Income-tax Officer levying interest under Section 18-A(8) of the Income-tax Act. We may point out that though this was all that was levied in that case the statement of the case referred to the levy of interest as levy of a penalty under Section 18-A(8). It is obviously incorrect because Section 18-A(8) does not contemplate levy of any penalty. Likewise in the second question of law, the interest levied under Section 18-A(8) of the Income-tax Act is referred to as penal interest. This again is not warranted by the provisions of the Act and we are in entire agreement with the observations of Balakrishna Ayyar, J., in his judgment under appeal that the interest levied under Sub-section (8) of Section 18-A is not penal interest. We, therefore, see nothing either in the decision or the observation above referred to by the Chief Justice in Commissioner of Income-tax v. Jagadishprasad Ramnath : AIR1955Bom255 , to support the appellant. Apart from authority, we are unable, on the plain language of the provision, to accept the argument of Mr. Srinivasan that if a new assessee fails to submit a return, the only consequence is that penalty can be imposed upon him. The reference to Section 28 in Sub-section (9)(b) of Section 18-A shows that the penalty is for failure to furnish estimate. The interest leviable under Sub-section (8) of Section 18-A, on the other hand, is interest on the basis of the regular assessment. In this case, admittedly there was no payment of advance tax under Section 18-A which was payable by the assessee. Therefore the provisions of Sub-section (8) of Section 18-A apply and the Income-tax Officer was justified in adding to the tax the interest calculated in the manner laid down in Sub-section (6) of Section 18-A.

2. The other point pressed upon us was that Section 35 would have no application in this case because interest levied under Sub-section (8) of Section 18-A is not part of the assessment and the power of rectification conferred under Section 35 is only rectification for mistake in the assessment as such. This contention is based on a fallacy. Under Section 35 what is rectified is a mistake--any mistake which has been brought to the notice of the Income-tax Officer. But all that the provision requires is that the mistake is apparent in the record of the appeal, revision, assessment or refund. The mistake need not be in the assessment as such. If the order of assessment shows that the penal interest has not been added to the tax determined on the basis of the regular assessment and such omission was a mistake, in our opinion, Section 35 directly applies and the mistake can be rectified under that section.

3. In the result, these appeals are dismissed.


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