TMI Blog1969 (9) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... final assessment ? " The assessee by notice dated March 6, 1964, issued under section 139(2) of the Income-tax Act, 1961, hereinafter referred to as " the Act "), was required to file his return of income for the assessment year 1964-65, on or before the 15th of October, 1964. On October 13, 1964 the assessee asked for time for filling the return up to October 31, 1964. On the said application no order was passed by the Income-tax Officer. On October 17, 1964, the assessee was served with a notice issued by the Income-tax Officer under section 274 read with section 271(1)(a). The assessee filed his return only on February 6, 1965, showing an income of Rs. 57,697. The assessee had paid by way of advance tax a sum of Rs. 15,430; with his return he paid a sum of Rs. 3,627 under section 140A of the Act. By the assessment order made on March 3, 1965, the tax on the total income of the assessee was determined at Rs. 23,539.13. After adjusting the advance tax and the tax paid under section 140A, a notice of demand was issued to the assessee claiming the balance sum of Rs. 4,482.13. The assessee submitted his explanation for not filing the return on the due date. The Income-tax Officer w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the assessee, the penalty under section 271(1)(a)(i) has to be computed not on the amount of tax assessed but on the balance amount of tax payable as per the demand notice under section 156. He further contended that the Central Board of Direct Taxes, New Delhi, had issued a circular to the department to the effect that the net amount of tax payable by the assessee for the purposes of section 271(1)(a) is to be arrived at by excluding the tax deducted at source as well as the advance tax actually paid by the assessee under sections 207 to 219 of the Act, and that the said direction is binding on the department by virtue of section 119 of the Act. The learned counsel argued that the Income-tax Officer conceded before the Appellate Assistant Commissioner who has referred to the circular issued by the Central Board of Direct Taxes that the penalty had to be computed on the net amount of tax payable after giving deduction to the advance tax paid. The Circular issued by the Central Board of Direct Taxes under section 119 of the Act reads thus : " Circular No. 17(XLV- 1 8) of 1965 F. No. 58/35/64-IT(INV) dated 26-6-65 from CBDT. 2. On a represention made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted cannot give rise to a grievance which can be taken further in appeal. In the appeal memo, which was filed by the department the only ground taken was that the deletion of the item bv the Appellate Assistant Commissioner was erroneous. The said ground was obviously unsustainable, since there could be no error on the part of the Appellate Assistant Commissioner in accepting the concession which was made by the department before him. " The Income-tax Officer as stated earlier was bound by the Circular of the Central Board of Direct Taxes. The Income-tax Officer conceded before the Appellate Assistant Commissioner that the penalty has to be computed on the basis of the net tax only. When the Appellate Assistant Commissioner acted on the said contention, it cannot be said that the Income-tax Officer was aggrieved by the order of the Appllate Assistant Commissioner. Therefore, his appeal so far as it related to the deduction of the advance tax paid by the assessee was clearly unsustainable. We do not rest our opinion on the basis of the circular of the Central Board of Direct Taxes. On an interpretation of section 271(1) of the Act, we are of the opinion that the penalty amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in clause (a), in addition to the amount of the income-tax and super-tax, if any, payable by him, a sum not exceeding one and half times that amount..." (Underlining is ours.) The words " that amount " occurring in section 28(1) of the 1922 Act is clearly referable to the expression " the amount of the income-tax and super-tax payable by him ". In section 271 of the Act, instead of the words " that amount ", Parliament has used the words " the tax ". According to the Tribunal, the words " the tax " in section 271(1)(i) are not referable to the expression " the amount of tax if any payable by him ", but they relate to the tax hs defined in the Act. Section 2(43) defines the word " tax " to mean income-tax and super-tax chargeable under the provisions of the Act in relation to the assessment year. Before us, the learned counsel for the assessee, as well as the learned counsel for the Commissioner, submitted, that the words " the tax " occurring in clause (i) of section 271(1)(a) are referable to the amount of " the tax, if any, payable by him." The question is whether on a proper interpretation of clause (i) of section 271(1)(a), the expression " the amount of tax, if any, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ambiguous import ; standing alone, the word is not confinable to one single definite meaning, nor is there such single meaning when it is used in a legal sense. It is a descriptive word and its meaning can be determined only in the light of the situation and the circumstances of its use. The word it payable " has been held equivalent to, or synonymous with, " due (vide Corpus Juris Secundum, volume 70, page 202). If the intention of Parliament was to compute the penalty at the percentage provided on the basis of the income-tax chargeable under the Act in relation to the assessment year in question, it was not necessary to use the expression " the amount of tax, if any payable by him "; it would have been sufficient if section 271 had provided that the Income-tax Officer may direct that such person shall pay by way of penalty a sum equal to 2 per cent. of the tax for every month during which the default continued but not exceeding in the aggregate 50 per cent. of the tax. The expression " the amount of tax payable by him ", in our opinion, means the net amount of the tax demanded in the notice of demand under section 156 and not the income-tax chargeable on the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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