High Court Of Gujarat
Parshottam Nagindas & Ors. vs. B.R. Adwalpalkar, CIT
Section 273A
Asst. Year 1974-75, 1975-76
C.K. Thakkar & Rajesh Balia, JJ.
Special Civil Appln. No. 3836 of 1980
26th July, 1995
Counsel Appeared
N.R. Divetia, for the Petitioner : G.N. Shah for M.R. Bhatt & Co., for the Respondent
RAJESH BALIA, J.:
The petitioners who are carrying on the business of manufacture and sale of art silk cloth in Surat in the name and style of M/s Parshottamdas Nagindas as firm, filed returns of income for the asst. yrs. 1973-74, 1974-75 and 1975- 76 on 18th March, 1976, 31st March, 1976 and 31st March, 1976 respectively. The returns were filed though after the prescribed period under s. 139 in the case of each assessment year, but prior to issuance of notice under sub-s. (2) of s. 139 or under s. 148 of the Act. The petition relates to the asst. yrs. 1974-75 and 1975-76. The assessment of income for the asst. yr. 1974-75 was made on 28th Aug., 1976 and that of asst. yr. 1975-76 on 19th Nov., 1976. Apart from levy of penalty under s. 271(1)(a) for late filing of returns, the ITO also levied interest under s. 139(8) and 217 of the IT Act, 1961 and levied penalty under s. 273(b) of the Act. The petitioners filed an application on 11th Jan., 1979 under s. 273A(1) of the Act of 1961 for waiving of reducing the penalty levied under s. 271(1)(a) and 273(b) and for interest charged under s. 139(8) and under s. 217 of the Act. So far as levy of penalty under s. 271(1)(a) is concerned, the CIT found that the requisite conditions laid down in s. 273A(1) were fulfilled and, therefore, penalties levied under s. 271(1)(a) for all the three assessment years including asst. yrs. 1974-75 and 1975-76 were reduced to nil. However, while considering the prayer for waiver or reduction of interest charged under s. 139(8) and 217 of the Act and waiver of penalty under s. 273(b), the prayer was declined that though the assessee had made full and true disclosure of the income before issuing to him a notice under s. 139(2) and/or under s. 148 of the Act, the assessee had not paid tax on income disclosed in its return in accordance with the provisions of s. 140A, he cannot be said to have fulfilled the condition under cl. (c) of s. 273A(1) regarding payment of tax on the income returned in accordance with the provisions of s. 140A within the time stipulated therefor and, therefore, the assessee is not entitled to benefit of the provisions under s. 273A(1) in respect of interest under ss. 139(8) and 217; and penalty under s. 273(b). It is not in dispute that the assessee had paid the entire amount of income-tax together with interest under s. 139(8) and 217 of the Act before submitting the application under s. 273A(1).
The assessee’s contention was that what is required under the Act is payment of tax on the income disclosed before considering the application and it is not the condition that such tax should have been paid in accordance with s. 140A of the Act.
It is the rejection of this prayer vide order dt. 27th Sept., 1980 at Annexure J is under challenge in this petition.
The relevant provisions of s. 273A(1) as it stood at the relevant time of making the application on 11th Jan., 1979 is as under : “273A(1). Notwithstanding anything contained in this Act, the CIT may, in his discretion, whether on his own motion or otherwise,—………. (iii) reduce or waive the amount of interest paid or payable under sub-s. (8) of s. 139 or s. 215 or s. 217 or the penalty imposed or imposable under s. 273; if he is satisfied that such person— ……… (c) in the cases referred to in cl. (iii), has prior to the issue of a notice to him under sub-s. (2) of s. 139, or where no such notice has been issued and the period for the issue of such notice has expired, prior to the issue of notice to him under s. 148, voluntarily and in good faith; made full and true disclosure of his income and has paid the tax on the income so disclosed; and also has, in all the cases referred to in cls. (a), (b) and (c), co-operated in any inquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year.
(2) Notwithstanding anything contained in sub-s. (1),—………. (b) if in a case falling under cl. (c) of sub-s. (1) of s. 271, the amount of income in respect of which the penalty is imposed or impossable for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the aggregate amount of such income for those years, exceeds a sum of five hundred thousand rupees, no order reducing or waiving the penalty under sub-s. (1) shall be made by the CIT except with the previous approval of the Board.
(3) Where an order has been made under sub-s. (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section in relation to any other assessment year at any time after the making of such order.
(4) Without prejudice to the powers conferred on him by any other provision of this Act, the CIT may, on an application made in this behalf by an assessee, and after recording his reasons for so doing, reduce or waive the amount of any penalty payable by the assessee under this Act or stay or compound any proceeding for the recovery of any such amount, if he is satisfied that— (1) to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case; and (ii) the assessee has co-operated in any enquiry relating to the assessment or any proceeding for the recovery of any amount due from him.
(5) Every order made under this section shall be final and shall not be called into question by any Court or any other authority.”
4. The short question that arises for our consideration is what is point of time at which the assessee must have paid tax on the income so disclosed by him, so as to fulfil the conditions of cl. (c) of s. 273A(1). While it was contended by the assessee that as no time has been prescribed within which the tax ought to have been paid on the income disclosed by the assessee for the purpose of invoking provisions of s. 273A, it is sufficient that the tax actually has been paid before consideration of case under the provisions of s. 273A. The requirement of payment of s. 140A cannot be read into the aforesaid provision, in the absence of any reference to the provision of requirement of making payment within the prescribed time. The contention of the Revenue is that the requirement of paying the tax on the admitted income disclosed in accordance with the provisions of s. 140A is inherent in the scheme of the statute and it is only if the payment of admitted tax has been made before the commencement of assessment proceedings in accordance with the provisions of s. 140A, results in the fulfilment of condition of cl. (c) without which an application for reduction or waiver of the amount of interest paid or payable by the assessee under sub-s. (8) of s. 139 or s. 217 or penalty imposed under s. 273(b) cannot be considered.
5. It will be apposite to notice the relevant provisions under which interest is leviable and which have been made subject to provision of s. 273A of the Act. Under s. 273A(1)(i) interest amount paid or payable under s. 139(8) or s. 215 or s. 217 can be reduced or waived, so also the penalty imposed or imposable under s. 273 of the Act.
6. Sec. 139(8) envisages levy of interest in case return required to be filed under sub-s. (1) or (2) is beyond the date specified for filing of such return or no return has been filed even under sub-s. (4) of s. 139. Interest is leviable with effect from the date immediately following the day when the filing of return is due upto the date of filing of return. In case no return is filed interest is chargeable upto the date of completion of assessment under s. 144, that is to say, upto best judgment assessment. Interest in either case is to be calculated on the actual amount of tax determined and to be adjusted by advance tax paid if any. It further authorises the ITO himself to reduce or waive the interest payable under that section under circumstances specified in Rules. Rule 117A prescribes such circumstances in which the Assessing Officer (AO) himself can reduce or waive the interest. While sub-rr. (i), (ii), (iii) prescribe the class of persons in whose case of late filing of return interest payable can be waived or reduced. Sub-r. (iv) prescribes for such benefit in case return has been furnished in pursuance of notice under s. 148 and sub-r. (v) provides for such reduction or waiver in case assessee shows sufficient cause on account of which he was prevented from filing the return in time.
7. Vis-a-vis above provision, s. 273A(1)(i) is an additional provision conferring benefit on the assessee concerning reduction or waiver of interest payable under s. 139(8). It is to be noticed that while the assessing authority has been empowered to reduce or waiver interest in the case of returns filed in pursuance of notice under s. 139(2) and also in case it has been filed in pursuance of s. 148 as per r. 117A(iv), cl. (c) excludes exercise of such power in case income has been disclosed in pursuance of notice under s. 139(2) or 148. It is also of some importance to notice that entire amount of interest payable under s. 139(8) [sic can be waived under cl. (c)] whether in case a return has been filed belatedly under s. 139(1) but before issuance of notice under s. 139 (1) or 148, or no return has been filed under s. 139(4) but the assessee has voluntarily and in good faith made full and true disclosure of his income. Filing of return is not a condition of exercise of power under s. 273A(1)(i)(c). Voluntarily and in good faith true and full disclosure of income is possible even without filing a formal return in prescribed forms. In this connection we may refer to Cheldas Khusal Das Patel vs. CIT (1992) 103 CTR (Guj) 1 : (1992) 196 ITR 200 (Guj) wherein this Court held : “There is nothing in the above provision to support the Revenue’s argument that disclosure could be made only by a valid return. What the provision envisages is a disclosure and not a disclosure by a valid return. It is significant that provision does not require the filing of a return of income for disclosure of income. It could be made either by an application or a letter or a return which may be beyond the period prescribed for assessment.”
8. The other interests which have been made subject to provisions of s. 273A are under ss. 215 and 217. Sec. 215 provides for payment of interest in case advance tax paid under s. 209A or 212 is less than 75% of the assessed tax. Under sub-s. (1) of s. 215 interest is payable from 1st of April next following the financial year upto the date of regular assessment. The interest is payable on the amount of tax that falls short of assessed tax. However, the said period for which interest is payable under sub-s. (1) is liable to be adjusted under sub-s. (2) of that section if the assessee has before completion of assessment paid tax under s. 140A or otherwise. Likewise under s. 217 an assessee incurs liability to pay interest on the assessed tax in case the assessee fails to submit estimate of his income in terms of s. 209A. The interest payable upto regular assessment is also to be adjusted in case any tax has been paid under s. 140A or otherwise as per provisions of s. 215 (2) of the Act. Under sub-s. (4) of s. 215 r/w r. 40 which has also been made applicable in case of levy of interest under s. 217 the AO has been empowered to reduce or waive the interest payable under s. 215 or 217 in the circumstances enumerated in r. 40, viz., (1) where assessment has been completed more than one year after submission of return and for such delay assessee is not responsible, (2) where person is under s. 163 agent of another person, or (3) where assessee has income from an unregistered firm assessed under s. 183(b) or (4) where assessee has made large profits after 15th March (if assessee’s previous year is financial year) in unforeseeable circumstances. Apart from assessing authority, IAC [now Dy. CIT] is empowered to reduce or waive the interest in case he thinks such reduction or waiver is justified in the circumstances of the case. Such powers are not subject to payment of tax under s. 140A or otherwise.
9. Vis-a-vis above provisions of ss. 215 and 217 we notice that there is no exclusion of any interest payable under s. 215 whether to be calculated under sub-s. (1) or sub-s. (2) from the operation of s. 273A. Apart from liability of interest, a person also incurs liability to penalty for furnishing false estimate or failure to pay advance tax under s. 273. Such penalty imposable is also subject to power of reduction or waiver by the CIT under s. 273A(iii) and (c).
It is of considerable significance that notwithstanding existing wide powers conferred on assessing authority and IAC [now Dy. CIT] to reduce or waive interest payable under ss. 139(8), 215 and 217 r/w rr. 117A and 40, the Act conferred further powers in this regard on CIT also with a non-obstante clause. While sub-cl. (1) deals with specific penalties and interest liabilities to be considered for waiver or reduction in the circumstances detailed it also envisaged that such a power is to be exercised by the CIT only once in favour of the erring assessee, whether for one assessment year or number of assessment years simultaneously. But no second benefit under this sub- section can be availed. That is the effect of sub-s. (3). Yet under sub-s. (4) CIT has been vested with penalty powers to reduce or waive amount of any penalty payable by the assessee under the Act or stay the recovery if he is satisfied that (1) to do otherwise would cause genuine hardship to the assessee having regard to circumstances of the case and (2) the assessee has cooperated in any enquiry relating to assessment or any proceeding for recovery of any amount due from him. This provision operates without prejudice to power conferred under other provisions of the Act. This makes it operative in spite of and in addition to provisions of sub-s. (1) to (3). Provisions of sub-s. (4) will be applicable to penalty under s. 273 as well, though not in respect of interest. This we notice for the reason that power under s. 273A(1) is subject to same conditions regarding interest payable under ss. 139(8), 215 and 217 and penalty under s. 273, under sub-cl. (iii) and (c) of sub-s. (1) of s. 273A. Reduction or waiver of amount of penalty under s. 273, while under sub-s. (1) is subject to voluntarily full and true disclosure of income and payment of tax on such disclosed income, the same is not subject to such conditions for exercise of such power of reduction or waiver or stay under sub-s. (4) of that section.
13. We may also notice another two conditions for exercise of power under s. 273A(1) : firstly in all cases in which power is sought to be exercised, whether under cls. (a), (b) or (c) of sub-s. (1), the assessee must have co-operated in any enquiry relating to the assessment of his income and secondly he must have either paid or made satisfactory arrangement for payment of tax or interest payable in consequence of an order passed under the Act in respect of relevant assessment year.
14. All in all the object of these provisions appear to be to secure payment of tax amount and give relief to an otherwise erring assessee but who has finally co-operated in the enquiry by making full and true disclosure of his income voluntarily. Also to provide him a clear path to charter his course on once availing such benefit, in the case of exercise of power under s. 273A(1). This is clear from sub-s. (3).
15. Amidst these provisions we revert back to provision which has this attention call. What is the meaning of words “any such person….has paid the tax on the income so disclosed”, appearing in sub-cl. (c) of sub-s. (1) of s. 273A. Is it to be implicit in these expression that such person has paid the tax on income so disclosed at the time of disclosure, or when it has become due under any provision of the Act or payment at any time before the exercise of power fulfils the requirement for such exercise.
16. Obviously, without adding the words like `as per s. 140A’, or `in accordance with the provisions of the Act’, or `within the time prescribed’, the plain reading of the provision does not lead to such implicit meaning of the words existing in statute.
17. It is well known canon of construction of statute that ordinarily no words can be added or read into an Act unless it is absolutely necessary to do so. Departure from this rule is legitimate only in such cases where literal construction may result in depriving certain existing words of all meaning or to avoid any part of statute becoming meaningless or otiose. It has been stated in Craise’s Statute Law while noticing that it is not allowable to read words which are not there, where the alternative lies between either supplying by implication words which are not there or adopting a construction which deprives certain existing words of all meaning, it is permissible to supply the words.
18. In Smt. Renuka Bose vs. Rai Manmathnath Bose AIR 1945 PC 108 the Board said : “It is contrary to all rules of construction to read words in an Act unless it is absolutely necessary to do so.”
19. The principle was reiterated in Shyam Kishori Devi vs. Patna Municipal Corpn. AIR 1966 SC 1678 : “The words of a statute never should in interpretation be added to or subtracted from without almost a necessity.”
20. In Sri Ram Narain vs. State of Bombay AIR 1959 SC 459 the Supreme Court was considering the provisions of Bombay Tenancy & Agricultural Lands (Amendment) Act, 1956, which provided for extinguishment or modification of rights in estates. Vis-a-vis Art. 31A the contention was raised that protection under Art. 31A(1)(a) was extended only to extinguishment or modification of rights through the mechanism of compulsory acquisition of those rights. Repelling the contention Bhagwati, J., speaking for the Constitution Bench said : “Acceptance of the interpretation which is sought to be put upon these words by the petitioner would involve the addition of words `in the process of the acquisition by the State of any estate or of any rights therein or in the process of such acquisition’, which according to well known canons of construction cannot be done. If the language of the enactment is clear and unambiguous it would not be legitimate for the Courts to add any words thereto and evolve therefrom some sense which may be said to carry out the supposed intention of the legislature. The intention of the legislature is to be gathered only from the words used by it and no such liberties can be taken by the Courts for effectuating a supposed intention of the legislature.”
21. The principle was stated by Sarkar, J. in British India General Insurance Co. Ltd. vs. Captain Itbarsingh AIR 1959 SC 1331 to be— “In order that sub-s. (2) of s. 90 of Motor Vehicles Act, 1939 may be interpreted in the way the learned Solicitor General suggest we have to add words to it…..this the rules of interpretation do not permit us to do unless the section as it stands is meaningless or of doubtful meaning.”
22. In Ram Narain vs. State of Uttar Pradesh AIR 1957 SC 18 the question arose about conditions of taxability under Uttar Pradesh Town Area Act (2 of 1914). The appellant who was having a business office in the town of Karnal, but was not a resident thereof had contended that residence in the area is a necessary condition of taxation under the provisions of s. 14(f) read with Rules. The Court rejected the contention firstly by holding that “if the argument of the appellant is correct, then the proviso to cl. (f) is meaningless in so far as it envisages an overlapping between cl. (d) and cl. (f) in other cases, and secondly” …….. “to do so will be to read in cl. (f) words which do not occur there”.
23. In yet another case while examining the question whether under s. 42 of the Motor Vehicles Act permit is to be obtained by the owner himself the Court held in Viswanath vs. Shanmugham AIR 1969 SC 493— “This section does not, in our view, on the language require that owner himself should obtain the permit, it only requires the owner that the transport vehicle shall not be used except in accordance with the conditions of permit. The High Court would add the words `to him’ after the words `permit granted’, but in our view there is no justification for inserting those words.”
24. The Supreme Court in Assessing Authority-cum-Excise & Taxation Officer vs. East India Cotton Manufacturing Co. (1981) 3 SCC 531 quoted with approval dicta of Lord Mersey in Thompson vs. Goold & Co. 1910 AC 409 that— “It is strange thing to read into an Act of Parliament words which are not there and in the absence of clear necessity, it is a wrong thing to do.” and the principle enunciated by Lord Loveborn L.C. in Vickar Sons & Maxim Ltd. vs. Evans 1910 AC 444 that— `We are not entitled to read words into an Act of Parliament unless clear reasons for it is to be found within the four corners of the Act itself.” The Court was considering construction of expression in s. 8(3)(b) of Central Sales-tax Act “for use…. in the manufacture…. of goods for sale”. Whether it meant the goods manufactured by registered dealer must be intended or sale by himself for it also included where goods are manufactured by registered dealer under a job contract and are intended for sale by such third party. Applying the above test the Court held— “Now here we find that the expression used by the legislature as also the rule making authority is simpliciter “for use….in the manufacture….of goods for sale” without any addition of words indicating that the sale must be by any particular individual….The Court must construe the language of s. 8(3)(b) according to its plain words and it cannot write in the section words which are not there. To read the words `by him’, after the words `for sale’ in s. 8(3)(b) would not be construction but judicial paraphrasing which is impermissible to the Court.” The principle aptly applies to case at hand.
Coming to the present case we find that expression used by legislature in cl. (c) of s. 273A(1) which governs the class of cases falling in cl. (iii) thereof is simplicitor “such person has paid the tax on the income so disclosed”, without addition of any words indicating any particular time limit within which such an amount must have been paid before the provision becomes operative. Unless there are clear reasons to read words of such limitation like “within the period specified in s. 140A” or “within the time prescribed” or “within the time provided for payment of such dues”, it will be impermissible for this Court to resort to such paraphrasing.
It was strenuously contended by Mr. Mihir Thakore, learned counsel for the Revenue that unless one read such limitations into the provision the words will be rendered meaningless in as much as the final clause of sub-s. (1) which governs all the cases of cls. (a), (b), and (c) also requires such payment after passing of order of assessment and if the payment of amount envisaged under cl. (c) can also be postponed until consideration of exercise of power under that sub-section, such express requirement will carry no meaning.
On careful consideration we are unable to agree. The first and foremost condition of exercise of power in favour of assessee for reducing or waiving the penalty or amount of interest in all cases (a), (b) or (c) is that assessee or person concerned must have voluntarily and in good faith made full and true disclosure of his income. In the case of penalties for late filing of return and levy of interest such disclosure must have been made prior to issuance of any notice by the assessing authority to file a return, whether under s. 139(2) or s. 148. In so far as considering such reduction or waiver of penalty for concealment under s. 271(1)(c), such disclosure must come prior to detection. Second condition common to all cases is that person must co-operate in any enquiry relating to assessment of income. Thirdly when assessment orders have been made, the person must have either paid the tax or interest in consequence of such order or must have made satisfactory arrangements for payment of such tax or interest. This actual payment of assessed tax and interest is in alternative to making satisfactory arrangements for such payment and is not sine qua non for exercise of powers. However, cl. (c) when it says that such person must have paid the tax on income so disclosed means that in case falling in cl. (iii) actual payment of amount of tax on admitted income is sine qua non for exercise of beneficial power in favour of assessee for reducing or waiving the amount of interest payable under ss. 139(8), 215 or 217 and penalty under s. 273. But for this condition in cl. (c), the actual payment of tax on admitted income would also have been subject to same alternatives of being either paid or being subject to satisfactory arrangements for making such payments. Therefore, it cannot be said that if the meaning suggested by learned counsel for Revenue is not accepted the words will become meaningless or otiose.
On the other hand, we notice from circumstances of provisions that the acceptance of such contention will result in excluding certain amount of levy of interest and penalty from the provisions of s. 273A(1) which have not been expressly excluded. It is to be noticed that levy of interest or penalty under s. 273 which has come into existence as a result of late filing of return or disclosure of income after issuance of notice under s. 139(2) or 148 has been specifically excluded from the purview of operation of s. 273A(1), but there is no further limitation or exclusion on exercise of power of reduction or waiver of interest and penalties paid or payable under those provisions. In case of non filing of return interest under s. 139(8) is levied upto the date of regular assessment. In case of short fall in payment of advance tax or failure in submitting estimates of advance tax interest is chargeable ordinarily upto the date of regular assessment under ss. 215 and 217. It is only in case any payment has been made under s. 140A or otherwise, adjusting calculation of interest has to be made as per s. 215(2) r/w s. 217(2). The provision of s. 273A(1) is not restricted to reducing or waiving the interest payable upto the date specified in s. 140A but interest payable under ss. 139(8), 215 and 217 is liable to be considered for reduction or waiver in its totality. Reading the provision as per the contention of Revenue will amount to limit the operation of section only in respect of amount of interest leviable under s. 215(2) and subject to filing a valid return. Thus the proposed construction, in our opinion, unduly restricts its scope and imports other than express limitations in exercise of power envisaged. Had the legislature intended to limit the scope of provision under consideration only subject to payment of tax under s. 140A, nothing prevented it to use words expressing such intention like it has used in excluding the disclosure subsequent to notice under s. 139(2) and s. 148, though power to give benefit even in those cases exist elsewhere. Thus, in our opinion, the plain reading of expression in question without any addition does not render any words meaningless or otiose. Acceptance of construction suggested by Revenue on the other hand will lead to putting on limitation and restrictions on operation of provision other than those expressly provided therein.
It was also contended that while cases falling under cl. (a) and (b) are not subjected to condition of payment as in cl. (c), the condition should be given special sanctity by construing it as a condition precedent before concluding para of s. 273A(1) becomes operative. It was argued that if not under s. 140A, but at least payment must be made by the person concerned before the stage is reached for cooperating in the enquiry, that is to say, before notice of proceedings are issued.
We are unable to agree. Firstly, we do not find any indication to read such two stages in the process of exercise of power relating to reduction or waiver of certain consequences following from breach of certain provision of the Act. So far as levy of penalties for late filing of return or for concealment are concerned, the levy itself is always in discretion of the assessing authority and is penal in nature. The levy and quantum is not determinate before assessment and in the very nature of things its payment in respect thereof cannot be demanded prior to passing of order. On the other hand charge of interest is compensatory in nature for withholding money that is due and charge is not in the discretion of assessing authority. The demand for actual payment of tax, which is admitted, has direct nexus to purpose where one wants waiver of interest at least admitted principal amount is paid. The scheme is clearly that where one seeks exoneration from paying compensation for late payment, principal amount must be paid actually before one claims benefit, in other cases, where sum itself is not a consequence of withholding of principal sum of tax, but for other defaults, even satisfactory arrangement of payment may fulfil the requirement.
It may also be noticed that prior to 1st April, 1976, it was not even required that tax should be paid before or with filing of return and return should be accompanied with proof of such payment. Tax was required to be paid within 30 days of filing of return. There is no restriction on completing the regular assessment before expiry of 30 days and a situation may be envisaged that before the expiry of period of deposit of tax under s. 140A, a regular demand has come into existence, payment of which is governed by different provision. In such event no occasion may arise for payment of tax under s. 140A.
31. Number of cases were cited at Bar in support of their respective contentions. These are Cheldas Khushaldas Patel & Ors. vs. CIT (supra), Durga Cotton Ginning & Pressing Factory vs. CIT (1994) 117 CTR (Guj) 144 : (1994) 211 ITR 210 (Guj), Vinaychandra C. Patel vs. CIT (1994) 121 CTR (Guj) 160 : (1994) 211 ITR 232 (Guj), Jugal Kishore Chandak vs. CIT (1988) 69 CTR (MP) 81 : (1988) 170 ITR 93 (MP), M.P. Agrl. Corpn. vs. CIT (1988) 68 CTR (MP) 161 : (1988) 171 ITR 576 (MP) and A.C. Gopinath Menon vs. CIT (1988) 73 CTR (Ker) 185 : (1988) 173 ITR 404 (Ker).
In Jugal Kishore Chandak’s case, the Madhya Pradesh High Court took the view that as notice under s. 148 was issued on 2nd July, 1975, which was served on assessee on 9th July, 1975, but tax was paid only on 8th Feb., 1980, the CIT was justified in rejecting the application for waiver of interest, because amount of tax on income disclosed was not paid before issue of notice under s. 148. We also find from the report that the CIT has waived penalty levied under s. 271(1)(a) for the late filing of return. Obviously the decision has proceeded on the footing that tax required to be paid in terms of s. 273A(1)(c) is to be paid prior to issue of notice under s. 139(2) or s. 148. The case does not deal with the question with which we are concerned, viz., whether the tax is to be paid in terms of s. 140A of the Act, in order to fall within the scope of s. 273A(1)(c). Moreover, with great respect, we are unable to persuade ourselves to the conclusion reached in that case. No date on which disclosure of income was made appears from the report. We presume that it must have been made before issuance of notice under s. 139(2) or 148, because CIT has waived penalty under s. 271(1)(a). A disclosure of income prior to issuance of notice under s. 139(2) or 148 is also a condition precedent for reduction or waiver of penalty under s. 271(1)(a). Such condition being common for exercise of power under s. 273A(1)(a) or (c), it cannot but be held that such condition was fulfilled for both clauses. If that be so, there could be no occasion for issue of notice under s. 139(2) or 148 during proceedings pending on such disclosure and even if a notice is issued, thereafter, it cannot result in stultifying the provision of statute. Taking any view otherwise would mean that after the assessee has voluntarily disclosed truly and fully his income before issuance of notice under s. 139(2) or 148, the assessing authority can effectively foreclose the jurisdiction of CIT to exercise power under s. 273A(1)(c) by issuing a futile notice under s. 139(2) or 148.
32. We are unable to persuade ourselves to agree that amount of tax on income so disclosed by the person has to be paid before issue of notice under s. 139(2) or 148. True and full disclosure of income before issuance of notice under s. 139(2) or 148 is sine qua non for exercise of power under s. 273A(1)(c). Unless that condition is fulfilled, power cannot be exercised at all under s. 273A(1). Once that condition is fulfilled, issuance of notice under s. 139(2) or 148 during pendency of proceedings on such disclosure is not envisaged and even if by mistake the assessing authority issues a notice under s. 139(2) or s. 148, it does not have the effect of nullifying the consequence of making disclosure that has been made prior to such issuance. The provision on its plain reading does not specify any time limit, within which tax on such disclosed income has to be paid on income so disclosed, which is prior to issuance of notice. As we have already discussed above for reaching our conclusion that condition of s. 140A as it stood from time to time additional words cannot be read into the provision. M.P. Agrl. Corpn.’s case (supra) is of little applicability to the present case. It was a case in which assessee has in fact made payment of admitted tax within thirty days of filing return for the asst. yr. 1973-74 but by inadvertent mistake of the clerk the challan showed deposit against the dues of asst. yr. 1974-75 which also was deposited. The Court quashed the order of CIT refusing to grant benefit under s. 273A(1) because of too technical view taken by it in not ignoring the technical clerical mistake when in fact all conditions of cl. (c) were complied with.
In A.C. Gopinath Menon’s case, the assessee has filed return on 23rd Nov., 1978. The Court held that disclosure in the instant case was made through medium of a return. So in this case no question of issuing a notice under s. 139(2) or s. 148 of the Act can arise. Yet the view of CIT that assessee failed to pay the tax on income so disclosed prior to issue of notice under s. 139(2) or s. 148 (In this case along with the return) was endorsed as justified in law. No discussion for endorsing the view we find in report. Once it is held that there was no occasion for breach of condition of making disclosure before issuance of notice under s. 139(2) or 148 stood satisfied, now the conclusion that tax is to be paid along with return is reached to satisfy the test of paying tax before issuance of notice, assuming it to be so. The expression in the section nowhere suggest that prior to issuance of notice means along with return. As we have noticed, even under s. 140A, prior to 1st April, 1976 tax was not required to be paid along with return but could be paid within 30 days of return. In that event no question of paying tax along with return could be treated as condition precedent. This will, in our opinion, be against any canon of principle of construction to read the condition of cl. (c) differently for different period, without there being any amendment in the provision itself. For the reasons already discussed while considering Jugal Kishore case, this case also in our opinion, does not assist in considering the question that has been raised before us, viz., reading the provisions of s. 140A into cl. (c) of s. 273A(1).
In Durga Cotton Ginning & Pressing Factory’s case (supra) the assessee had filed return of asst. yrs. 1975-76, 1976-77, 1977-78 and 1978-79 beyond time specified. Penalty for late filing of return under s. 271(1)(a) was levied for asst. yrs. 1976-77, 1977-78 and 1978-79. Penalty under s. 273(b) and interest under s. 139(8) r/w s. 217 was also levied for all the four years. On being called upon to consider the case for reduction or waiver of penalties under ss. 271(1)(a) and 273 and amount of interest, the CIT reduced the penalties under s. 271(1)(a) to 50%. However, regarding penalty under s. 273(b) and interest under s. 139(8)/217 the relief was refused on the ground that tax on income disclosed has not been paid. The Court granted relief on the ground that once the CIT held in first part of the order that all the conditions under s. 273A has been fulfilled, it was improper on his part to reject the application of petitioners for waiver of penalty under s. 273 (b) and s. 139(8)/217 on the ground that condition under s. 273A were not satisfied. From the report it is not clear when the amount of tax on voluntarily disclosed income was paid. Nor there is any reference to the conditions under cl. (c) of s. 273A(1). This case, therefore, is of little assistance in resolving the issue raised before us.
Lastly learned counsel for the petitioner referred to another decision of this Court in Vinaychandra C. Patel vs. CIT (supra). In a bunch of petitions filed before the Court the common features were that the petitioners had applied to the CIT under s. 273A of the IT Act for waiver or reduction of penalty and interest which had become payable because of late filing of returns and late payment of tax. Regarding penalty for late filing of returns the CIT was satisfied that all conditions for waiver have been satisfied, penalties for late filing was waived. However, while considering the question regarding relief in the matter of interest he held that as the tax due was not paid prior to the making of disclosure interest did not deserve to be waived. The Court held as under : “The question which arises for consideration is whether the two common conditions which are applicable to all the three clauses, viz., (a), (b) and (c), can be said to have been satisfied in respect of both the claims, viz., the claim of waiver of penalty and the claim of waiver of interest. The two conditions are that : (i) the assessee should have co-operated in any enquiry relating to the assessment of his income, and (ii) the assessee should have paid or made satisfactory arrangements for payment of tax or interest payable in consequence of an order passed in respect of the relevant assessment year. Thus, the condition regarding payment was common both for the purpose of waiver of penalty and for the purpose of waiver of interest. Whereas for the purpose of payment of penalty, the CIT came to the conclusion that the condition for payment of tax was satisfied, with respect to the waiver of interest, he came to the conclusion that the very same condition was not satisfied. Obviously, that discloses non-application of mind because the two things are so inconsistent that they cannot stand together.”
It appears that issue about interplay of cl. (c) applicable only to case of cl. (iii) and general clause applicable to all cls. (a), (b) and (c) was not raised before the Court and there is no discussion on the construction of cl. (c) vis-a-vis general clause and requirement under s. 140A. Though on facts the conclusion arrived at by the Court impliedly supports the petitioner but it does not directly deal with the issue raised before us.
33. We are also mindful of the fact that the provision with which we are concerned is beneficial in nature for giving the errant but co-operative person relief in given cases. The power is not confined to s. 273A(1), but as we have seen the wide powers to do justice in appropriate cases, irrespective of condition mentioned in s. 273A(1) exist under the statute. This is yet another reason which persuades us not to take a view which restricts the operation of such beneficial provision beyond the expressed frontiers. Wanchoo, J. speaking for the Court in Jivabhai Purshottam vs. Chhagan Viarson Sons AIR 1961 SC 1491 said— “Moreover, the Amending Act being a piece of beneficent legislation meant for the protection of tenants, if there is any doubt about the meaning of sub-s. (2A) the doubt should be resolved in favour of the tenant for whose benefit the Amendment Act has been passed.” Again the apex Court in Jnan Ranjan Sen Gupta & Sons vs. Arun Kumar Bose AIR 1975 SC 1994 while
construing s. 2(5) of the Calcutta Thika Tenancy Act, 1949 ruled— “It is a piece of beneficial legislation conferring certain rights upon the tenants. In dealing with such a provision of law we cannot read into the definition something which is not already there and the introduction of which will lead to imposing a restriction upon the rights of this class of tenants by judicial interpretation.” The principle aptly governs the present case. Clearly s. 273A is a piece of beneficial legislation for the benefit of assessees, who have defaulted but are co- operative. By reading in the provision conditions of payment of tax on disclosed income as per s. 140A which is not there in the provision will be restricting the scope of operation of the provision by judicial interpretation. A situation which in our opinion is clearly ruled out by well established canon of construction, viewed from any angle.
34. We, therefore, hold that on plain reading of the provision of cl. (c) of s. 273A(1), which is unambiguous in its terms, it cannot be said that payment of tax on the income disclosed is required to be made within the time prescribed under s. 140A or before the commencement of enquiry in assessment. Such payment, if made at any time before the CIT is to consider the reduction or waiver of amount of interest payable under ss. 139(8), 215 or 217 or penalty under s. 273 fulfils the conditions of cl. (c) and consideration cannot be denied merely on the ground that payment of tax on amount of income disclosed by such person was not paid in accordance with s. 140A of the Act. However, we make clear that delay and the extent of delay in making payment of admitted amount of tax is a relevant factor that can be taken into consideration while exercising discretion to reduce or waive the amount of interest or penalty under s. 273A(1)(iii), but it is far from saying that such a case in which though admitted amount of tax has been paid, but because the same was not paid in terms of s. 140A, the case does not fall within the scope of s. 273A. Ordinarily, we would have quashed the orders and sent the matters back to CIT for purpose of passing fresh orders in accordance with law. But this is a matter more than fifteen years old. Amounts involved are not substantial and fact that CIT has found that all other conditions, which are common to all the clauses have also been satisfied while waiving the penalty under s. 271(1) (a), we think it proper to put an end to this litigation by modifying the impugned orders to the extent it relates to rejection of application for waiver or reduction of interest under ss. 139(8) and 217 and penalty under s. 273(b). Keeping in view that charge of interest is compensatory in nature for withholding the amount which was due, and the conduct of assessee in withholding the admitted amount of tax on voluntarily disclosed income, payment of which was due under the provision of IT Act as on the date when return was filed within 30 days of filing of such returns, even thereafter until after passing of assessment order, interest under s. 139(8) is reduced by 50% in respect of each assessment year in question. However, interest under s. 217 which is for overlapping period and penalty under s. 273(b) are waived for each relevant assessment year.
Rule made absolute as indicated above. No order as to costs.
[Citation : 218 ITR 392]
