9911796707
TMI Blog1972 (12) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... rns. At that stage, the petitioners filed writ petitions before this court challenging the validity of the said directions. The said writ petitions were admitted and stay of the assessment proceedings had also been granted. Thereafter, the Finance (No. 2) Act of 1967 came to be passed and sections 1 and 46 of that Act are as under : " 1. Short title commencement-(1) This Act may be called the Finance (No. 2) Act, 1967. (2) Save as otherwise provided in this Act, sections 2 to 36 and 44 to 46 shall be deemed to have come into force on the 1st day of April, 1967." " 46. Recover of tax on income voluntarily disclosed.- Notwithstanding anything contained in section 68 of the Finance Act, 1965 (X of 1965),-- (a) any income-tax which is payable by a person on the amount of income declared by him under the provisions of subsection (1) of that section but has not been paid within the period referred to therein (such tax being hereafter in this section referred to as the outstanding tax) shall be deemed to be tax due from the declarant on the date next following the expiry of the said period under a notice of demand issued under section 156 of the Income-tax Act, and the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, 1965, to March 31, 1967. The petitioners further contended that proceedings for recovery of the tax due on the amount voluntarily disclosed under section 68 of the Finance Act, 1965, could not have been initiated prior to March 31, 1967, when section 46 of the Finance (No. 2) Act, 1967, came into force and interest also could not have been recovered from the petitioners for the period prior to March 31, 1967. In substance, what the petitioners contend is that section 46 of the Finance (No. 2) Act of 1967, which came into force on April 1, 1967, cannot be invoked for collecting interest for the period anterior to April 1, 1967. The respondent, however, states that the contention of the petitioners proceeds on a misconception of the true scope of section 68 of the Finance Act of 1965 and section 46 of the Finance (No. 2) Act of 1967 that section 46 is intended to apply to all those cases where the declarant has not paid the admitted tax, and that the petitioners being defaulters in respect of the tax due on their voluntary disclosure, they will have to pay interest under section 46 from the date of default till the date of payment and not from the date on which section 46 came in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not been given retrospective effect for any period anterior to April 1, 1967. But, that will be so even if it came into force on August 5, 1967. If such a construction as is suggested by the petitioner is adopted, it will practically defeat the very object of bringing in the deeming clause in section 46. It is a well-settled rule of interpretation that in construing the scope of a legal fiction it would be proper and even necessary to assume all those facts on which alone the fiction can operate and that a construction which defeats the very object sought to be achieved by the legislature must, if possible, be avoided. As observed by Lord Asquith of Bishopstone in East End Dwellings Co. Ltd. Finsbury Borough Council : " If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine certain state of affairs ; it does not say that having done so, you must ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r question was considered by the Supreme Court. The Income-tax Act of 1922 was not made applicable to the former State of Rajasthan. By section 2 of the Finance Act of 1950, a charge of income-tax and super-tax was levied at specified rate "for the year beginning on the first day of April, 1950" and it was made applicable to the whole of India except the State of Jammu and Kashmir. The assessee, a person carrying on business in Rajasthan, filed a writ of mandamus for a direction to the Union of India not to take any action under the Indian Income-tax Act, 1922, for the assessment or levy of income-tax on the income which accrued or arose to him or was received by him prior to 1st April, 1950, on the ground that such income was not liable to be charged "under the provisions of any law validly in force in Rajasthan". The High Court accepted the petition and issued a writ. The Supreme Court held that under proviso (1)(b) to section 2(14) of the Indian Income-tax Act, 1922, the whole of the territory of India including Rajasthan was to be deemed taxable territory for the purpose of section 4A as regards any period before or after 31st March, 1950, that the assessee being a "resident" i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date immediately following the expiry of the above-mentioned period of six months will be deemed to be tax due from the declarant under the provisions of the Income-tax Act and will be recoverable from the declarant in the same manner as any other arrear income-tax demand. Accordingly, the declarant will also be liable to pay simple interest at 6 per cent. per annum, under the terms of section 220(2) of the Income-tax Act, for the period of default in the payment of the arrear tax, and also be liable for the imposition of a penalty under section 221 of that Act for continuing default......". The learned counsel for the petitioner states that the legislature should have some motive in fixing April 1, 1967, as the date when section 46 should come to force while some other provisions of that Act have been come into force on August 5, 1967. But, this may be due to the fact that sections 2 to 36 and 45 and 46 deal with direct taxes and as such they should operate only from the commencement of the financial year, and, therefore, they have been made to operate with effect from April 1, 1967. From that circumstance alone it is not possible to assume that the legislature intended to limit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
