Full Judgment Text
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PETITIONER:
INCOME TAX OFFICER, DISTT. II(ii),KANPUR ANDOTHERS
Vs.
RESPONDENT:
SHRI MANI RAM ETC.
DATE OF JUDGMENT:
20/08/1968
BENCH:
RAMASWAMI, V.
BENCH:
RAMASWAMI, V.
SHAH, J.C.
GROVER, A.N.
CITATION:
1969 AIR 543 1969 SCR (1) 724
ACT:
Indian Income-tax Act 1922, s. 18A(3)--Word ’assessed’ in
section whether confined to regular assessment or includes
provisional assessment-Relevance of corresponding provision
in Indian Income Tax Act 1961 for construing earlier Act.
HEADNOTE:
The respondents flied returns for the year 1953-54 and
they were provisionally assessed on 14-10-1954, and regular
assessment was. made on 27-2-58. For the next four
succeeding years the respondents filed returns, and for all
the years the regular assessments under s. 23 of the Income
Tax Act, 1922 were made after 27-2-58. SinCe no estimate
of the tax payable on their income as required by s. 18A was
seat nor the in advance paid, the Income Tax Officer while
assessing them under s. 23 held that they were liable to pay
interest under s. 18A(8) and in addition he applied the
provisions of s. 18A(9)(b) and imposed a penalty for
each year of assessment by virtue of s. 28 read with s.
18A(9)(b). The respondents preferred appeals to the
Appellate Assistant Commissioner on the ground that the levy
of interest and penalty ’was unauthorised. The appeals were
dismissed, and the respondents went :in revision, which was
also dismissed. Thereupon, the respondents filed writ
petitions in the High Court to quash the order and
succeeded. The High Court held that s. 18(3) of the Act did
not apply to the facts of the case as there had been a
provisional assessment under s. 23B of the Act in 1954. In
appeals to this Court, by the Revenue the question for
consideration was whether the expression "any person who has
not hitherto been assessed" in s. 18A(3) of the Indian
Income-Tax Act, 1922 after the all Income Tax Amendment Act
67 of 1949 should be interpreted so as to ’include a person
who has only been provisionally assessed under s. 23B ,of
that Act.
HELD :--The appeals must be dismissed. Even when the tax is
provisionally assessed, there necessarily has to be a
determination of the total income of the assessee. The only
difference is that under section 23 the total income is
determined after the Income Tax Officer has satisfied
himself fully about the correctness of the return fled by
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taking steps, if necessary, under sections 22(4) and 23(2)
of the Act. In the case of a provisional assessment under
section 23B. of the Act, the powers under sections 22(4) and
23(2) of the Act are not to be exercised and the Income Tax
Officer has to determine the tax on the basis of the return
filed by the assessee after taking into consideration the
accounts and documents available, if any, and after giving
effect to certain allowances and losses. In other words,
what the Income Tax Officer has to do is to assess
provisionally the total income of the assessee and
thereafter he has to determine the tax payable on the basis
of that provisionally assessed income. [731 A-D]
It is important to notice that in section 18A(1) the
expression "assessed" is used without any qualification or
restriction as to whether the assessment should be a regular
assessment or any other type of assessment
725
under the Act. It is also manifest that in section 18A sub-
section (5) the two expressions "provisional assessment" and
"regular assessment" are expressly mentioned. The
expression "regular assessment" is also repeatedly used in
s. 18A, sub. s. 6, 7, 8 and 9. There is therefore, no
warrant for restricting the meaning of the word "assessed"
in section 18A(1) so as to include only a "regular
assessment" under section 23 of the Act. There is no reason
why Parliament did not add the word "regularly" in the sub-
section so as to qualify the word "assessed". Since there
is no such qualification, the word "assessed" in section
18A(3) should be read in its ordinary sense as including
every kind of assessment including a provisional assessment
under section 23B of the Act. [732 A-C]
There is nothing in the 1961 Act to suggest that Parliament
intended to explain the meaning or clear up doubts about the
meaning of the word "assessee" in section 18A(3) of the
earlier Act. Generally speaking a subsequent Act of
Parliament affords no useful guide to the meaning of another
Act which came into existence. before the later one was ever
framed. Under special circumstances, the law does however
admit of a subsequent Act to be resorted to for this purpose
but the conditions under which the later Act may be resorted
for the interpretation of the earlier Act are strict; both
must be laws on the same subject and the part of the earlier
Act which it is sought to construe must be ambiguous and
capable of different meanings. [733 F-H]
Kirkness (Inspector of Taxes) v. John Hudson & Co. Ltd.,
[1955] A.C. 696; In re MacManasway, [1951] A.C. 161 and
Inland Revenue Commissioners v. Dowdall, O’Mahonay & Co.
Ltd., [1952] A.C. 4431, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 314 to 322
of 1966
Appeals by special leave from the judgment and order dated
April 25, 1963 of the Allahabad High Court in Special
Appeals Nos. 662, 663, 679, 664, 665, 667, 666, 669 and 671
of 1962 respectively.
S.K. Aiyer and R.N. Sachthey, for the appellant (in all the
appeals. )
J.P. Goyal, Sobhag Mal Jain and P.N. Pachauri, for the
respondents (in all the appeals ).
The Judgment of the Court was delivered by
Ramaswami, J. In these appeals which have been heard
together a common question of law arises for determination,
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that is, whether the. expression "any person who has not
hitherto been assessed" in section 18A(3) of the Income Tax
Act, 1922 (hereinafter called the Act) after the Income Tax
Amendment Act (Act 67 of 1949) should be interpreted so as
to include a person who has only been provisionally assessed
under section 23B of that Act.
The respondents in these appeals are four persons--Mani
Ram, Jagmohan, Kishandas, Bhagirathmal--partners of Shri
726
Kishan Das, DhankUtti, Kanpur. They were members of a joint
Hindu farmily carrying on business until they became divided
in the middle of assessment year 1953-54. Thereafter they
were carrying on the business in partnership. For the year
1953-54, the firm submitted a return showing loss. But in
the next succeeding year 1954-55 it disclosed a profit and
submitted a return. All the four partners filed returns
individually on 27-9-1954 and they were provisionally
assessed on their returns on 14-10-1954. But the regular
assessment was made for this year only on 27-2-1958.
The ,firm continued to make profits in the subsequent years
1955-56, 1956-57, 1957-58 and 1958-59 and the partners filed
returns for their income for each of these years and were
regularly assessed for these years under s. 23 sometime
after 27-2-1958. The assessment order for 1958-59 was in
fact made on 19-2-1959. It is not disputed that none of the
four partners sent any estimate of the tax payable on their
income as required by section 18A of the Income Tax Act,
1922 or pay the tax in advance. Therefore, the Income Tax
Officer, Kanpur while assessing them under section 23 of the
Act held that they were liable to pay interest under section
18A(8) and determined the amount payable by each in respect
of each of the years on the basis of the income found
taxable in the regular assessment. In addition, he applied
the provisions of section 18A(9)(b) and imposed a penalty
for each year of assessment by virtue of section 28 read
with section 18A(9) (b) of the Act. The four partners
preferred appeals to the Appellate Assistant Commissioner on
the ground that the levy of interest and penalty was
unauthorised. But the appeals were dismissed. The partners
applied in revision to the Commissioner of Income Tax under
section 33A(2), but the revision applications were
dismissed. The respondents thereafter moved the Allahabad
High Court for grant of a writ to quash the orders of the
Income Tax Officer and of the Appellate Assistant
Commissioner in appeal. The applications for writ were
allowed by Mr. Justice S.C. Manchanda who held that section
18A(3) could not apply to the facts of the case as there had
been a provisional assessment under section 23B in the year
1954. Against the decision of the Single Judge the
appellants preferred appeals before the Division Bench.
These appeals were dismissed by a common judgment of the
Allahabad High Court dated 25th March, 1963. The present
appeals are brought to this Court by special leave from the
judgment of the Allahabad High Court dated 25th March, 1963
in the batch of appeals affirming the judgment of the Single
Judge dated 25th May, 1956 in C.W.M. No. 1591 of. 1962 and
the connected writ applications.
It is necessary at this stage to set out the provisions of
seetions 18A, 23 and 23B of the Income Tax Act, 1922 as they
stood at the material time:
727
"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,
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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 onequarter 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 preparation 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 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 world income.
(2)
(3) Any person who has not hitherto been assessed shall,
before the 15th day of March in each financial year, if his
total income of the period which could 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 subsections
as have not expired, by installments which may be revised
according to the proviso to sub-section (2).
(4)
(5)
Sup. C.I/68--16
728
(6) Where in any year an assessee has paid tax
under sub-section (2) or sub-section (3) on
the basis his own estimate, and the tax so
paid is less than eighty per cent of the tax
determined on the basis of the regular
assessment, so far as such tax relates to
income to which the provisions of section 18
do., not apply and so far as it is not due to
variations in the rates of tax made by the
Finance Act enacted for the year for which the
regular assessment is made, simple interest at
the rate of Six per cent per annum from the 1
st day of January in the financial year in
which the tax was paid up to the date of the
Said regular assessment shall be payable by
the assessee upon the amount by which the tax
so paid falls short of the said eighty per
cent.
(7)
(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
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determined on the basis of the regular
assessment.
(9 ) If the Income Tax Officer, in the course
of any proceedings in connection with the
regular assessment, is satisfied that any
assessee-
(a) has furnished under sub-section (2) of
subsection (3 ) estimates, of the tax payable
by him which he knew or had reason to believe
to be untrue, or
(b) has without reasonable cause failed to
comply with the provisions. of sub-section
(3), the assessee shall be deemed, in the case
referred to in clause (a), to have
deliberately furnished inaccurate particulars
of his income, and in the case referred to in
clause (b) to have failed to furnish the
return of his total income; and the provisions
of section 28, so far as may ;be, shall apply
accordingly.
23. (1) If the Income Tax Officer is
satisfied without requiring the presence of
the assessee or the production by him of any
evidence that a return made under section 22
is correct and complete, he shall assess the
total income of the assessee, and shall
determine the sum payable by him on. the basis
of such return.
729
(2) If the Income Tax Officer is not satisfied
without requiring the presence of the person
who made the return or the production of
evidence that a return made under section 22
is correct and complete, he shall serve on
such person a notice either to attend at the
Income Tax Officer’s Office or to produce, or
to cause to be there produced, any evidence on
which such person may rely in support of the
return..
(3 ) On the day specified in the notice issued
under sub-section (2), or as soon afterwards
as may be, the Income Tax Officer, after
hearing such evidence as such person may
produce and such Other evidence as the Income
Tax Officer may require, on specified points
shall, by an order in writing, assess the
total income of the assessee and determine the
sum payable by him on the basis of such
assessment.
(4) If any person fails to make the return
required by any notice given under sub-section
(2) of section 22 and has not made a return or
a revised return under sub-section (3) of the
same section or fails to comply with all the
terms of a notice iSsued under sub-section (4)
of the same section or, having made a return,
fails to comply with all the terms of a notice
issued under sub-section (2) of this
section, the Income Tax Officer shall make the
assessment to the best of his judgment and
determine the sum payable by the assessee on
the basis of such assessment and, in the case
of a firm, may refuse to register it or may
cancel its registration if it is already
registered.
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23B (1 ) The Income Tax Officer may, at any
time after the receipt of a return made under
section 22 proceed to make in a summary
manner, a provisional assessment of the tax
payable by the assessee, on the basis of his
return and the accounts and documents, if any,
accompanying it, after giving due effect to
(i) the allowance referred to in paragraph (b)
of the proviso to clause (vi) of sub-section
(2) of section 10, and (ii) any loss carried
forward under sub-section (2) of section 24.
(2) A partner of a firm may be provisionally
assessed under sub-section ( 1 ) in respect
of his share in the firm’s income, profits and
gains; if its return has been received,
although the return of the parroter himself
may not have been received,
730
(3) A firm may be provisionally assessed under
sub-section (1) as if it were an unregistered
firm, unless the firm fulfils such conditions
as the Central Government may, by notification
in the official Gazette, specify in that
behalf.
(4) There shall be no right of appeal against
a provisional assessment made under sub-
section (1).
(5) For the avoidance of doubt, it is hereby
declared that the provisions of section 45
(except the first proviso) and section 46
apply in relation to any tax payable in
pursuance of a provisional assessment made
under sub-section (1) as if it were a regular
assessment made under section 23.
(6) Income-tax paid or deemed to have been
paid under section 18 or section 18A in
respect of any income provisionally assessed
under sub-section (1), shall be deemed to have
been paid towards the provisional assessment.
(7) After a regular assessment has been made
under section 23, any amount paid or deemed to
have been paid towards a provisional
assessment made under sub-section (1), shall
be deemed to have been paid towards the
regular assessment; and where the amount paid
or deemed to have been paid towards the
provisional assessment, exceeds the amount
payable under the regular assessment, the
excess shall be refunded to the assessee.
( 8 ) Nothing done or deferred by reason or
in consequence of any provisional assessment
made under this section shall prejudice the
determination on the merits, of any issue
which may arise in the course of the regular
assessment under section 23".
It was argued on behalf of the appellants that a mere
provisional assessment under section 23B of the Act will not
satisfy the requirements of section 18A(1) of the Act
because the language of section 18A(1) shows that the
provisions of that subsection only apply when the amount of
tax to be deposited in advance is determined on the basis of
the assessee’s total income of previous year to which he has
been assessed. It was contended that in the case of a
provisional assessment under section 23B of the Act, there
is no computation of the total income of the previous year
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and that under section 23B of the Act all that is done is to
determine provisionally the income-tax payable on the
731
basis of the return filed without properly going through the
process of assessing the total taxable income. It is not
possible to accept this argument because even when the tax
is provisionally assessed, there necessarily has to be a
determination of the total income of the assessee. The only
difference is that under section 23 the total income is
determined after the Income Tax Officer has satisfied
himself fully about the correctness of the return flied by
taking steps, if necessary, under sections 22(4) and 23(2)
of the Act. In the case of a provisional assessment under
section 23B of the Act, the powers under sections 22(4) and
23(2) of the Act are not to be exercised and the Income Tax
Officer has to determine the tax on the basis of the return
filed by the assessee after taking into consideration the
accounts and documents available, if any, and after giving
effect to certain allowances and losses. In other words,
what the Income Tax Officer has to do is to assess
provisionally the total income of the assessee and
thereafter he has to determine the tax payable on the basis
of that provisionally assessed income.
The argument was next stressed that section 18A(1) was
introduced into the Act when section 23B did not exist at
all and consequently no inference should be drawn that the
word "assessed" used in section 18A(1) was meant to cover a
provisional ’ assessment under section 23B of the Act also.
In other words, the argument of the appellants was that when
the word "assessed" was used in section 18A(1) of the Act
Parliament could not have contemplated that this word would
cover a case of provisional assessment as no section
relating to provisional assessment existed in the Act at
that time. We are unable to accept this argument as
correct. It should be noticed that the Parliament
introduced certain amendments in section 18A of the Act
consequential to the introduction of section 23B of the Act.
There is a reference to the provisional assessment made
under section 23B in sub-section (5) of section 18A, but
Parliament took no step to restrict the meaning of the word
"assessed" in. section 18A(3) so as to exclude a reference
to provisional assessment under section 23B of the Act. If
Parliament contemplated that section 18A(3) should apply
only in the case of a "regular assessment", there was no
reason why it did not put ’some qualifying words or
expressions before or after the word ,"assessed" in section
18A( 1 ). It is not possible to accept the submission of
the appellants that Parliament in fact intended to bring
about such a decision but only accidentally omitted to do
so. On the other hand, the language of section 18A( 1 ) as
it stands, can only lead to interpretation that the
provisions contained in it Would become applicable whenever
a person has been assessed whatever be the nature of the
assessment--whether it be a regular assessment or a
provisional assessment.
732
It is important to notice that in section 18A ( 1 ) the
expression "assessed" is used without any qualification or
restriction as to whether the assessment should be a
regular assessment or any other type of assessment under the
Act. It is also manifest that in section 18A sub-section
(5) the two expressions "provisional assessment" and
"regular assessment" are expressly mentioned. The expression
"regular assessment" is also repeatedly used in section 18A,
sub-section 6, 7, 8 and 9. We see, therefore, no warrant
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for restricting the meaning of the word "assessed" in
section 18A(1) so as to include only a "regular assessment"
under section 23 of the Act. There is no reason why
Parliament did not add the word "regularly" in the sub-
section so as to qualify the word "assessed". Since there
is no such qualification. the word "assessed" in section
18A(3) should be read in its ordinary sense as including
every kind of assessment including a provisional
assessment under section 23B of the Act.
In the last place, counsel on behalf of the appellants
referred to the language of sections 210 and 212(3) of the
Income Tax Act, 1961 which state:
"210. Order by Income Tax Officer :--(1) Where
a person has been previously assessed by way
of regular assessment under this Act or under
the Indian Income Tax Act, 1922 ( 11 of 1922
), the Income Tax Officer may, on or after the
1st day of April in the financial year, by
order in writing, require him to pay to the
credit of the Central Government advance tax
determined in accordance with the provisions
of sections 207, 208 and 209.
(2) The notice of demand issued under section
156 in pursuance of such order shall specify
the installments in which the advance tax is
payable under section 211.
(3) If, after the making of an order by the
Income Tax Officer under this section and
before the 15th day of. February. of the
Financial year tax is paid by the assessee
under section 140-A or a regular assessment or
a provisional assessment under section 141 of
the assessee or of the registered firm of
which he is a partner is made in respect of a
previous year later than that referred to in
the order of the Income Tax Officer, the
Income Tax Officer may make an amended order
queering the assessee to pay in one
installment on the specified date. or in equal
instalments on the specified dates. if more
than one, falling after the date of the
amended order, the advance tax computed on the
basis
733
of the total income on which tax has been paid
under section 140-A or in respect of which the
regular assessment or, the provisional
assessment aforesaid has been made as reduced
by the amount, if any, paid in accordance with
the original order
213. Estimate by assessee,-( 1 ) ........
(3 ) Any person who has not previously been
assessed by way of regular assessment under
this Act or under the Indian Income Tax Act,
1922 (11 of 1922) shall, before the first day
of March in each financial your, if his total
income exclusive of capital gains of the
period which would be the previous year for
the immediately following assessment year is
likely to exceed the maximum amount not
chargeable to income-tax in his case by two
thousand five hundred rupees, send to the
Income Tax Officer-
(i) an estimate of the total income exclusive
of capital gains of the said previous year;
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(ii) an estimate of the advance tax payable by
him calculated in the manner laid down in
section 209: and shall pay such amount as
accords with his estimate, on such of the
dates specified in section 211 as have not
expired, by instalments which may be revised
according to sub-section (2)".
The argument was that these sections apply to a case of a
regular assessment and the enactment of these sections
should be’ treated as a Parliamentary exposition of section
18A(3) of the earlier Act as referring only to a case of
regular assessment.We are unable to accept this argument as
correct. There is nothing in 1961 Act to suggest that
Parliament intended to explain the meaning or clear up
doubts about the meaning of the word "assessed" in section
18A(3) of the earlier Act. Generally speaking, a subsequent
Act of Parliament affords no useful guide to the meaning of
another Act which came into existence before the later one
was ever framed. Under special circumstances, the law does
however admit of a subsequent Act to be resorted to for this
purpose but the conditions under which the later Act may be
resorted for the interpretation of the earlier Act are
strict; both must be laws on the same subject and the part
of the earlier Act which it is sought to construe must be
ambiguous and capable of different meanings. For example,
in Kirkness (Inspector of Taxes) v. John Hudson & Co.
Ltd.(1) it was held by the
(1) [1955] A.C. 696.
734
House of Lords that the ordinary meaning of the word "sale"
importing a consensual relation is to be attributed to the
use of it in the context of section 17(1)(a) of the Act of
1945. Since there was no ambiguity in the section, it was
not permissible to seek guidance in its construction from
later Finance Acts, although it was directed by Parliament
to be construed as one with them. At page 714 of the Report
Viscount Simonds states:
"I have looked at the later Acts to which the
Attorney General referred to in order to
satisfy myself that they do not contain a
restrospective declaration as to the meaning
of the earlier Act. They clearly do not, and
I do not think that it has been contended that
they do. At the highest it can be said that
they may proceed upon an erroneous assumption
that the word "sold" in section 17(1)(a) of
the Income Tax Act, 1945, has a meaning which
I hold it has not. This may be so and, if so,
it is an excellent example of the proposition
to which reference was made in the report of
the Committee of the Privy Council in In re
MacManasway(1) and again by my noble and
learned friend Lord Radcliffe in Inland
Revenue Commissioners v. Dowdall, O’Mahoney
& Co. Ltd. (2) that the beliefs or assumptions
of those who frame Acts of Parliament cannot
make the law".
For the reasons expressed above, we hold that the judgment
of the High Court dated 25th March, 1963 is right and these
appeals must be dismissed with costs. One set of hearing
fee.
Y.P. Appeals dismissed.
(1) [1951] A.C. 16L (2) [1952] A.C. 401.
735
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