TMI Blog1956 (8) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... nce under section 66(1) of the Act, the share of the assessee would become liable to a corresponding revision. The assessee became liable to pay tax in advance under the provisions of section 18A of the Act, notices having been issued to him under sub-section (1) of section 18A in each of the years with which we are concerned in these proceedings. Ramaswami Aiyar purported to avail himself of the right conferred on an assessee by sub-section (2) of section 18A. With reference to the assessment year 1946-47 he lodged a revised estimate of his income on 15th March, 1946. It was mistakenly assumed at one stage that it was only lodged on 20th March, 1946. He estimated the income for the relevant account year at ₹ 45,000. For the assessment year 1948-49 he estimated his income, again at ₹ 45,000. That estimate was furnished on 15th March, 1948. The actual income on which the assessee was finally assessed in each of the assessment years exceeded these estimates by very much more than the tolerance permitted by sub-section (6) of section 18A, the difference being much more pronounced in the assessment year 1948-49 than in 1946-47. The assessee, therefore, became liable to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Writ Petition No. 748 of 1954 related to the assessment year 1946-47. We shall first set out the relevant portions of section 18A of the Act. The relevant portion of sub-section (1)(a) of section 18A runs: In the case of income in respect of which provision is not made under section 18 for deduction of income-tax at the time of payment, the Income-tax Officer may, on or after the 1st day of April, in any financial year, by order in writing, require an assessee to pay quarterly to the credit of the Central Government on the 15th day of June, 15th day of September, 15th day of December and 15th day of March in that year, respectively, an amount equal to one-quarter of the income-tax and super-tax payable on so much of such income as is included in his total income of the latest previous year in respect of which he has been assessed......... (the rest of clause (a) of sub-section (1) with its provisos and clause (b) of sub-section (1) are omitted.) Sub-section (2) of section 18A runs: If any assessee who is required to pay tax by an order under sub- section (1) estimates at any time before the last instalment is due that the part of his income to which that sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It may be desirable also to set out at this stage the provisions of sub-section (10)(a) of section 18A which runs: If any assessee does not pay on the specified dates any instalment of tax that he is required to pay under sub-section (1) and does not, before the date on which any such instalment as is not paid becomes due, send under sub-section (2) an estimate or a revised estimate of the tax payable by him, he shall be deemed to be an assessee in default in respect of such instalment or instalments. We shall set out later the provisions of rule 48 of the Income-tax Rules, prescribing the cases and the circumstances under which an Income-tax Officer could reduce or waive the interest payable by an assessee under the provisions of section 18A(6). Those rules regulated the exercise of the discretion vested in the Income-tax Officer by the last proviso to section 18A(6). The first contention of the learned counsel for the petitioner was, that in the circumstances of this case the Income-tax Officer had no jurisdiction at all to levy any interest under sub-section (6) of section 18A. The learned counsel for the petitioner pointed out that, in each of the two assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces specified in the section. That obviously cannot be viewed as a statutory penalty imposed on the Government. Though the liability to pay interest is occasioned by some default of the assessee, either the failure to pay the instalments due on the due dates, or an underestimate of the income beyond the permitted margin when the provisions of sub-section (2) of section 18A are availed of by the assessee, that does not necessarily establish that the liability to pay interest is a penalty. No doubt section 18A provides for the payment of income-tax in advance. None-the-less it should be clear that the liability of the assessee to pay interest, which section 18A created, is based on the principle, that monies lawfully due to the Government were withheld by the assessee, in other words in its essence it is compensatory. If more than what was lawfully due to the Government was collected from the assessee, a liability is placed on the Government to pay interest on that excess. Thus there appears to be no basis at all for viewing the statutory liability to pay interest, even limited in its application to an assessee, as a statutory penalty for which the Act provided. The scheme of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question. That Ramaswami Aiyar was liable to assessment only in the status of a Hindu undivided family was not in dispute at any time. When the assessments were completed after the death of Ramaswami Aiyar, the family continued to be undivided; only there was a change in the karta. The petitioner became the karta. Where a Hindu undivided family is the assessee, we see no scope for applying the provisions of section 24B of the Act. A Hindu undivided family continues to exist as one of the legal entities or units recognised and specifically provided for by the Income-tax Act, despite changes in its composition including the change in its karta, by death or otherwise. The liability imposed by sub-section (6) of section 18A is on the assessee. The assessee in the present case was a Hindu undivided family. That Ramaswami Aiyar ceased to be the karta on his death did not affect the continuance of that Hindu undivided family, which was the assessee throughout. Nor did the fact that the petitioner became the karta of that family, alter the position; the Hindu undivided family was still the assessee. The Income-tax Officer had jurisdiction to deal with that assessee, the Hindu undivided fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p and be succeeded by another member of the family-there is no question of the succeeding manager tracing his managership through his predecessor, or being the legal representative of the ex-manager. If the analogy of the Civil Procedure Code has to be invoked, the case of the Hindu undivided family under the Income-tax Act is more akin to a trust represented by the trustee for the time being. In this illustration, when a trustee who represents the trust which is a party to an action ceases to hold the office by death, resignation or removal, the succeeding trustee, when he comes on record does so not as the legal representative of the previous trustee, but under order XXII, rule 10, of the Civil Procedure Code as on a devolution of interest. It is that analogy and that ratio that seems to us to be apposite to the case, and we cannot accede to the proposition, that in the assessment of a Hindu undivided family, the death or resignation of a manager is on a par with the death of an individual assessee as to attract section 24B of the Act. The fact that the Income-tax Act refused to regard a mere severance of status in a Hindu undivided family as putting an end to a joint family, mig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment completed before 1st April, 1952. The assessment for 1946-47 was completed on 28th November, 1950, and that for 1948-49 was completed on 28th February, 1951. The learned counsel for the petitioner pointed out that the assessment to interest claimed under sub-section (6) was finalised only on 12th April, 1954, before which date the petitioner applied to the Income-tax Officer to exercise his discretion to waive any interest the assessee had become liable to pay under sub-section (6) of section 18A. The application to the Inspecting Assistant Commissioner was even later. We are unable to accept the contention of the learned counsel for the respondent, that the statutory power conferred by the last proviso to sub-section (6) could be exercised only before the Income-tax Officer completes the assessment for a given assessment year. The proviso does not confer any statutory right on an assessee to a remission, in full or in part, of the interest payable under the terms of sub-section (6). Even independent of the proviso, the right of the Government to remit in full or in part any tax or other sum that has lawfully accrued due cannot be denied. That however is not a statutory p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Assistant Commissioner. Clause (5) of rule 48 empowers in effect the Inspecting Assistant Commissioner to give directions to the Income-tax Officer in any case. The expression in any case would also include cases for which specific provision is made in clauses (1) to (4) of rule 48. Let us take an illustrative example. An assessee applies to an Income-tax Officer to waive the interest on the ground specified in clause (1). The Income-tax Officer refuses to waive the interest. It is open to the Inspecting Assistant Commissioner, with or without an application from the assessee, to give directions to the Income-tax Officer even in such a case that the interest due from the assessee should be waived. That in our opinion is the true scope of clause (5) of rule 48. The power can on the language of rule 48(5) be exercised even after the assessment is completed. The power vested in the Inspecting Assistant Commissioner to control the exercise of the discretion entrusted by the Act to the Income-tax Officer could not have been intended to be defeated by the Income-tax Officer completing the assessment before the Inspecting Assistant Commissioner has even had an opportunity to deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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