TMI Blog1962 (10) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... missed four petitions under article 226 of the Constitution filed by them. Each of the appellants had filed two such petitions for the assessment years 1951-52 and 1952-53 in respect of which they were ordered to pay penal interest under section 18A(8) of the Income-tax Act. The High Court certified the cases as fit for appeal to this court and hence the present appeals. The facts are these Chockalingam and Meyyappan are the sons of one Meyyappa Chettiar. At first the assessment was on the Hindu Undivided family but by an order of the High Court dated December 5, 1949, a partial partition in the family was recognised from the assessment year 1940-41. It is not necessary to narrate the events that transpired after the decision of the High Court. The judgment of the High Court was given effect to after 1953 and the assessments for the years 1951-52 and 1952-53 made on the brothers as individuals were completed on July 11, 1953, and August 30, 1954, respectively, for the two years. The appellants had not paid advance tax according to their own estimate of the income for these two years and they were liable to penal interest under section 18A(8) of the Income-tax Act. The Incometax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been brought to his notice by an assessee. One of the provisions says that no such rectification shall be made, having the effect of enhancing an assessment or reducing the refund unless the Incometax Officer has given notice to the assessee of his intention so to do and has allowed him a reasonable opportunity of being heard. Section 18A which was inserted by the Income-tax (Amendment) Act, 1944 (11 of 1944), provides for advance payment of tax by an assessee. Sub-section (8) of that section says that where, on making the regular assessment, the Income-tax Officer finds that no payment of advance tax has been made in accordance with previous provisions of that section, interest calculated in the manner laid down in sub-section (6) shall be added to the tax as determined on the basis of the regular assessment. Sub-section (6) says that if in any year an assessee has paid advance tax under sub-section (2) or (3) on the basis of his own estimate and the tax so paid is less than eighty per cent. of 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 if it is not due to any variation in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section and that the writ jurisdiction was rightly not exercised by the High Court in favour of the appellants because even if notice has been given to them, penal interest would have had to be added in any event since the Income-tax Officer had no option. There is no doubt that the eight sub-section applied to the assessments of the two appellants. It is also indisputable that as they had made no advance payment of tax the Income-tax Officer was obliged under that sub-section to calculate the interest in the manner laid down in sub-section (6) and add it to the tax. It has now been ruled by this court recently in Gursahai Saigal v. Commissioner of Income-tax, (1)[1963] 48 I.T.R. (S.C.) 1 that sub-section (6) can be read with sub-section (8) in spite of certain difficulties of language in applying the provisions of the former sub-section to the latter. This court points out that the intention of section 18A is to charge interest whenever the taxpayer is in default in making an advance payment of tax, and that sub-section (6) must be read mutatis mutandis so as to advance the clear intention underlying sub-section (8) and not to defeat that intention. This being established, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (6) is applicable the discretion which is contemplated under the fifth proviso read with rule 48 is open not only in cases arising under subsection (2) and (3) of section 18A but also in cases arising under subsection (8). There is nothing to show that in applying sub-section (6) any of the provisos are to be left out. The eighth sub-section not doubt uses the word shall but in the context of sub-section (6) and the fifth proviso the word can only be read as mandatory if the relief under the proviso is not given. The circumstances which entitle an Incometax Officer to give relief in case arising under sub-section (2) and (3) may also be circumstances justifying relief in case arising under sub-section (8). It was ruled in Income-tax Officer, Madurai v. M. R. Vidyasagar )[1962] 44 I.T.R. 732(2) [1962] Supply 2 SCR 613 that the fifth proviso and rule 48 were intended to relieve against the rigour of the inflexible rule originally enacted in subsection (6). The effect of the introduction of the proviso mutatis mutandis affects sub-section (8) as well. All the sub-rules of rule 48 apply equally to a case of part payment and a case of no payment of advance tax. There may be as go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at least is clear : no tribunal, however informal, can be entitled to reach a decision against any person without giving to him some proper opportunity to put forward his case. It may well be that these Commissioners acted in good faith and with the best intentions, but that is not enough. A similar view was also expressed by this court in Sinha Govindji v. Deputy Chief Controller of Imports Exports (1962) 1 S. C. R. 540. It is more so in this case where the proviso to section 35 itself makes it incumbent upon the Income-tax Officer to give notice and a hearing to an assessee when the effect of the rectification would be the enhancement of the assessment. The learned counsel for the department raised the forlorn argument that the addition of penal interest is not enhancement of assessment as stated in the proviso. We do not see what else it could be. The word assessment is used in the proviso not as an equivalent of the tax calculated at the rate given in the Finance Act but the total amount which the assessee is required to pay. The proviso applies whenever the effect of the order is to touch the pocket of the assessee and in our opinion this was such a case. In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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