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V. N. S. Sockalingam Chettiar and Others Vs. Income-tax Officer, Pudukottai. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberWrit Appeals Nos. 17 and 25 to 27 of 1959
Reported in[1959]36ITR451(Mad)
AppellantV. N. S. Sockalingam Chettiar and Others
Respondentincome-tax Officer, Pudukottai.
Excerpt:
- .....apply and the manner laid down in sub-section (6) of section 18a.the other point pressed upon us was that section 35 would have no application in this case because inters levied under sub-section (8) of section 18a is not a 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:

RAJAMANNAR, C.J. - 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 petitons. The first point is that when there is a failure on the part of the assessee to submit an estimate under section 18A(3) the only consequence is that mentioned in sub-section (9)(b) if that section, namely, that he would be liable to penalty to which may be lived 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 that contention. He relied on an observation in the judgment of the learned Chief Justice of Bombay in Commissioner of Income-tax v. Jagdish Prasad Ramanath 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 18A.'

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 18A. We have no doubt whatever that what the learned chief Justice was referring to was the interest lived 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 18A(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 18A(8). It is obviously incorrect because section 18A(8) does not contemplate levy of any penalty. Likewise in the second in the second question of law, the interest levied under section 18A(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 18A 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. Jagdish Prasad Ramnath, 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 return, the only consequences is that penalty can be imposed upon him. The reference to section 28 in sub-section (9)(b) of section 18A shows that the penalty is for failure to furnish estimate. The interest leviable under sub-section (8) of section 18A, of 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 18A which was payable by the assessee. Therefore the provisions of sub-section (8) of section 18A apply and the manner laid down in sub-section (6) of section 18A.

The other point pressed upon us was that section 35 would have no application in this case because inters levied under sub-section (8) of section 18A is not a 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 bases of the regular assessment and such omisson was a mistake, in our opinion, section 35 directly applies and the mistake can be rectified under that section.

In the result, these appeals are dismissed.

Appeals dismissed.


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