TMI Blog1975 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice, to which the petitioner replied on March 22, 1971, contending that inasmuch as on the assessment being completed he has paid the entire tax due, no penalty can be levied under section 140A(3). However, the Income-tax Officer levied a penalty of Rs. 800 against which the petitioner filed an appeal before the Appellate Assistant Commissioner which was dismissed. His appeal to the Tribunal also failed. Before the Tribunal, the petitioner appears to have raised a contention regarding the validity of the said sub-section (3) on the basis of the decision of the Madras High Court in A. M. Sali Maricar v. Income-tax Officer [1973] 90 ITR 116 (Mad). However, the Tribunal observed that they cannot go into the questions of constitutional validity of an enactment and overruled the petitioner's contention. Hence the present writ petition. The learned counsel for the petitioners mainly relied upon and adopted the reasoning contained in the decision of the Madras High Court in A. M. Sali Maricar v. Income-tax Officer [1973] 90 ITR 116 (Mad), wherein sub-section (3) was held to be confiscatory and violative of article 19(1)(f) of the Constitution of India and was accordingly struck ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Income-tax Officer may direct, and in the case of a continuing failure, such further amount or amounts as the Income-tax Officer may, from time to time, direct, so, however, that the total amount penalty does not exceed fifty per cent of the amount of such tax or part, as the case may be : Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard. " Sections 142 to 144 provide for assessment. It is thus clear that section 140A which provides for payment of tax due in accordance with the return of income filed by an assessee, within 30 days of the filing of the return is one of the modes/stages of collection of tax devised by Parliament in exercise of its power of taxation and the petitioners in fact do not question the competency of Parliament to so provide. The Madras High Court has also upheld the legislative competence of Parliament. The principle behind the said section is that if at the end of the year the assessee is liable to pay any tax according to his own estimate of his income, he shall pay the same within 30 days of the filing of the return. If an assessee is liable to pay advance tax, he would normall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on unprofitable and to secure to the State the compensation for damages or attempted evasions." Vide the decision in R. C. No. 64 of 1970, dated 24th November, 1971 (Commissioner of Income-tax v. Madurai Rajeswar [1977] 107 ITR 832 (AP) to which one of us (Chinnappa Reddy J.) was a party. A Bench of this court in the above decision and also Mathew J. in P. Ummali Umma v. Inspecting Assistant Commissioner of Income-tax [1967] 64 ITR 669 (Ker) repelled an attack on the basis of article 20 of the Constitution of India holding that since the proceedings for penalty are distinct from criminal prosecution, there is no scope for applying the theory of double jeopardy. In fact, penalty is held to be in the nature of additional tax and, therefore, totally different in character, object and effect from a criminal prosecution. In C. A. Abraham v. Income-tax Officer [1961] 41 ITR 425 (SC) the Supreme Court affirmed the character of penalty as additional tax. Even the provision for arrest for non-payment of taxes was held to be intended only as a measure of compelling payment and not as a punishment for any offence committed or for defaulting in payment. It was held no more than to be a mode fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion that only compensatory provisions in the nature of interest can be made. We may reproduce their conclusions in their own words [1973] 90 ITR 116, 134, 135 (Mad) : " To sum up : Tax due and payable under section 140A(1) of the Act is a civil debt. Any provision in the Act for enforcing payment of that debt would be valid. This provision for enforcing payment and recovery of the tax payable may include or impose anything compensatory for delayed payment or retention of the tax. It is not the nomenclature, which the legislature has used in the provision, that decides the issue as to whether the provision is compensatory or penal, but the substance of the provision. A power to levy penalty which is not compensatory is neither incidental nor ancillary to the power of recovery, and it is not inherent in the power to recover the tax payable. The levy of penalty could be sustained only in cases of concealment or evasion of taxes. Penalty for concealment or evasion is a punishment and intended as a deterrent against repetition of the same which is criminal or quasi-criminal in nature. Concealment of income or evasion of tax and non-payment of a tax ascertained or determined and paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, Chapter 22 provides for criminal prosecutions in case of several matters and not only for concealment and evasion of taxes. Penalties are also provided by Chapter 21 in the case of failure to furnish information regarding securities, etc., failure to furnish returns or to comply with notices, failure to give notice of discontinuance as required by section 176(3), for filing a false estimate or failure to pay advance tax, etc. We equally fail to understand as to how the said provision could be held to be confiscatory. What is due towards tax cannot be said to be the " property " of the assessee since it is a debt due to the State towards tax, even as per his own return. The mere fact that it is not quantified by the department on that date would not make it any the less the tax due under section 140A(1). It is not necessary that every provision conceived in the interest of the revenue, i.e., made to ensure proper payment of taxes should be compensatory only and that no penalties can be provided therefor. In our opinion, therefore, subsection (3) of section 140A does not in any manner infringe article 19(1)(f) of the Constitution of India and that it is not an unreasonable re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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