TMI Blog1991 (5) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee pleaded that the assessee filed an appeal against the assessment and after giving effect of the appellate order, the income came down to below taxable limit and consequently there was no liability to pay the tax at all and, therefore, the question of paying self-assessment tax under section 140A(1) did not arise. He, therefore, pleaded for the dropping of the proceedings. This explanation was rejected by the ITO on the ground that for the purpose of section 140A(3) what was relevant to see was whether any tax liability arose on the income returned and not what the effect would be after the appeal was decided. Since on the date when the return was filed, there was a liability to pay tax of Rs. 9,290 and as that was not paid, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e particularly if the object of enacting. Section 140A was kept in view which was only to collect the tax due from the assessee along with the return of income. On this plea, it was submitted that the penalty levied ought to have been cancelled. 4. The Departmental Representative objected to the cancellation of penalty on the ground that under the provisions of section 140A, there was a liability subsisting on the date when the return was filed and, therefore, failure to deposit the tax as required under section 140A attracted the imposition of penalty. Penalty imposed being reasonable, should not be interfered with. 5. We are unable to agree with the contention advanced on behalf of the revenue and sustain the imposition of this pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come but were not paying any taxes due thereon and the taxes were being paid only after the assessments were made after long delays and that too after protracted litigations. In this process the taxes due to the Government were being withheld and with that money the assessees were even carrying on business at the cost of the exchequer. To avoid this unhealthy practice and to ensure early and expeditious collection of taxes on the admitted incomes, this procedure of self-assessment was introduced whereby the tax due on the basis of the return must be paid along with the return and the return shall be accompanied by the proof of payment of such tax. Failure to comply with this provision was no doubt made punishable. What is, therefore, to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any tax much less self-assessment tax and to levy penalty for any alleged default in not depositing the tax would be the very anti-thesis of the object of selfassessment tax. Therefore, when the Legislature used the words "tax payable" on the basis of any return, it only means tax payable on the basis of a correct return and not an incorrect return. This is a well recognised principle of Interpretation of Statutes. Punishments can be imposed only if the circumstances of the case fall clearly within the words of the enactment. This is based upon the principle of construction of words "in bonam partem". The leading case of this principle of 'in bonam partem' was decided in R. v. Ilulme [1870] L.R. 5 Q.B. 377. In this case the Statute provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit was highly inflated and did not relate to the year under appeal but related to several other years and since it is correct in law only to take the income relatable to this year and if by taking that income alone, there was no liability to pay tax at all, the question of paying self-assessment tax on the basis of such a wrong return does not simply arise and to levy a penalty for not paying the tax not due on the basis of a wrong return was itself unjust and unfair and is not required by law nor can it be said that the law requires payment of taxes in such circumstances. We are, therefore, of the opinion that the authorities below were not justified in confirming the levy of tax when there was no liability to tax at all. Merely on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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