TMI Blog2004 (12) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 143(3), i.e. , on 9th September, 1997, the Assessing Officer raised a demand of Rs. 20,20,310. This demand remained unpaid. The assessee issued two post-dated cheques - one for Rs. 10,00,000 and the other for the balance amount of Rs. 20,20,310. These cheques were payable on 5th November, 1999 and 26th November, 1999 respectively. However, these cheques could also not be honoured, and the assessee sought more time for payment of taxes as the assessee was making efforts to sell some property for paying the taxes. In the meantime, and exhausted by assessee s repeated failures to meet the deadlines for payment of admitted tax liabilities, the Assessing Officer proceeded to impose penalty under section 221 for assessee being an assessee in default in respect of the said self-assessment tax. The penalty was thus, in effect, imposed for non-payment of the admitted tax liability. Subsequent to the imposition of this penalty, the assessee has paid amounts aggregating to Rs. 5,23,333 out of his box office collections, but that aspect of the matter is not really relevant in the context of issue requiring our adjudication in this appeal. Coming back to the penalty order imposing p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment tax liability, in a situation where such self-assessment tax liability itself remains unpaid. In the case before us, the self assessment tax liability has remained unpaid and, by way of the penalty in question, the assessee is being penalized for non-payment of such a self assessment tax liability. But then Commissioner (Appeals) s interpretation of the above legal provision is that unless the assessee pays the self assessment tax liability itself, even his grievance even against the imposition of penalty for such a non-payment cannot even be entertained. 5. Hon ble Supreme Court, in the case of K.P. Varghese v. ITO [1981] 131 ITR 597 1 , has held that the task of interpretation is not a mechanical task and, quoted with approval, Justice Hand s observation that "it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning". Their Lordships observed as follows : ". . . The task of interpretation of a statutory enactment is not a mechanical task. It is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in construction of the statutes. Their Lordships then observed as follows : ". . . Vide Courtis v. Stovin [1889] 22 QBD 513, and in particular, the following observations of Fry, LJ : The only alternative construction offered to us would lead to the result that the plain intentions of the legislature has entirely failed by the reason of slight in exactitude in the language of the section. If we were to adopt this construction, we should be construing the Act in order to defeat its object rather than with a view to carry its object into effect. Vide also Craies on Statute Law, page 90, and Maxwell on the interpretation of Statutes, Tenth Edition, pp. 236, 237. A statute is designed observed Lord Dunedin in Whitney v. IRC [1925] 10 Tax Cases 88, to be workable, and the interpretation thereof by a Court should be so as to secure that object, unless crucial omission or clear direction makes that end unattainable ." Here again the emphasis of the Hon ble Supreme Court was on an interpretation which make the statute workable, rather than making it redundant, and on an interpretation which advances the object of the provision rather than defeats the same. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of a disputed liability cannot be admitted unless the assessee pays the undisputed tax liability". This clearly proceeds on the premises that the disputed tax and undisputed tax pertain to the same set of or related set of proceedings. However, when it comes to the maintainability of an appeal against penalty under section 221, in our considered view, the payment of taxes in the assessment proceedings is not really relevant. It is so for the reason that the proceedings under section 221 are wholly distinct and separate from the assessment proceedings and these proceedings belong to a different genus altogether. It is a different kind of dispute on as to whether the assessee has good and sufficient reasons for not paying the taxes. The adjudication on the correctness of levy of penalty under section 221 has nothing to do with the quantum assessment proceedings or even penalties imposable for concealment of income and furnishing of inaccurate particulars. 9. In our considered view, it is nothing short of an absurdity to demand, as a precondition for determination of correctness of penalty for non-payment of admitted taxes, that the admitted taxes be paid by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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