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1. Interpretation of whether a person failing to comply with section 18A(3) can be penalized under section 28(1) of the Income-tax Act. Detailed Analysis: The judgment by the Punjab & Haryana High Court involved two references under section 66 of the Indian Income-tax Act, addressing the common issue of whether a person not complying with section 18A(3) could face penalties under section 28(1) of the Act. The case concerned two individuals who, although not previously assessed for income tax, voluntarily submitted income returns under section 18A. The Income-tax authorities imposed penalties due to the late submission of these returns after March 13. The Appellate Tribunal referred the question to the High Court for interpretation. The judgment analyzed section 18A(9) of the Income-tax Act, which splits into two parts. The first part deals with penalties for furnishing untrue tax estimates, linking it to section 28(1)(c) regarding deliberate inaccuracies in income particulars. It was established that contraventions of section 18A(9)(a) could lead to punishment under section 28(1)(c). However, the second part of section 18A(9) posed challenges. It stated that failure to comply with section 18A(3) would be deemed as failing to furnish total income returns, potentially invoking section 28 penalties. The judgment scrutinized the conditions under which section 28 penalties could be imposed, emphasizing that failure to furnish total income returns must align with specific notice requirements under section 22 or section 34. Furthermore, the judgment delved into statutory interpretation principles, emphasizing that liability to punishment should only arise under explicitly enumerated circumstances. It highlighted the need for strict construction of tax-related statutes and preferred interpretations favoring taxpayers in case of doubt. Reference was made to a legal precedent emphasizing the courts' role in not stretching statutory language to broaden the scope of taxation. Ultimately, the Court concluded that the legislative language was inadequate to penalize non-compliance with section 18A(3) under section 28. In conclusion, the High Court, through a detailed analysis and application of statutory interpretation principles, ruled that a person failing to comply with section 18A(3) could not be penalized under section 28 of the Income-tax Act. The judgment provided a comprehensive explanation of the legal provisions involved and established a precedent for future cases involving similar issues of statutory interpretation and tax penalties.
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