TMI Blog2006 (3) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... e. - - - - - Dated:- 21-3-2006 - Judge(s) : P. VISHWANATHA SHETTY., N. KUMAR. JUDGMENT The judgment of the court was delivered by N. Kumar J.- At the instance of the assessee, the Income-tax Appellate Tribunal, Bangalore Bench, Bangalore, has referred the following questions of law for our opinion under section 256(1) of the Income-tax Act, 1961: "1. Whether, the Tribunal is right in law in holding that penalty under section 140A(3) for non-payment of tax on admitted income is leviable after holding that the assessee was prevented by reasonable cause for non-payment of the said tax? 2. Whether the Tribunal was right in holding that no lenience for assessees having reasonable cause for non-payment of self-assessment can be shown under law?" The relevant assessment year is 1983-84. The assessee filed a return of income declaring a total income of Rs. 1,94,530. The assessee paid advance tax on the due dates. However, the balance of Rs. 51,531 had not been paid within one month of filing of the return of income as required under section 140A of the Act. The Assessing Officer issued a show-cause notice on March 27, 1986, and on December 29, 1987, to which there was no r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the penalty is imposed and if he is able to show sufficient cause to the authority then, the authority has the discretion not to impose the penalty. Per contra, Sri M.V. Seshachala, learned counsel appearing for the Revenue, submitted that having regard to the language employed in section 140A, the payment of tax before furnishing the return is mandatory and failure to do so results in imposition of penalty and there is no discretion left in the authorities in the matter of imposition of penalty. In order to appreciate the rival contentions, it is necessary to look at section 140A which reads as under: "140A. Self assessment.-(1) Where any tax is payable on the basis of any return required to be furnished under section 139 or section 148, after taking into account the amount of tax, if any, already paid under any provision of this Act, the assessee shall be liable to pay such tax before furnishing the return and the return shall be accompanied by proof of payment of such tax. (2) After a regular assessment under section 143 or section 144 has been made, any amount paid under sub-section (1) shall be deemed to have been paid towards such regular assessment. (3) If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o him under law. If really the Income-tax Officer is bound in law without any discretion to levy penalty in every case where there is a failure of the assessee to pay the tax or part thereof as required under sub-section (1) to section 140A, the proviso, whereunder the assessee is entitled for a reasonable opportunity of being heard, would be redundant. The entire provision must be read harmoniously and reasonably. That apart, this being a taxing provision and a penal provision, the court has to give effect to a plausible interpretation which is in favour of the citizen, where two plausible views are permissible. Otherwise, this will lead to anomaly and hardship to the assessee. The very intendment of this particular self-assessment provision is to make the assessee pay the entire amount of tax based on the return filed by him within a particular time. This requirement is also clothed with a liability to penalty and this provision has been introduced for the first time in the year 1964. This provision must be construed fairly, reasonably and harmoniously. If so construed, we have no doubt in our mind that the Income-tax Officer is invested with this power of discretion to be used j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 140A(3), the following observations of the Minister of Finance in the Lok Sabha in his reply to the debate on the clause by clause consideration of the Finance Bill, 1964, have to be carefully borne in mind: "the amount of penalty is only the maximum that has been mentioned. The idea is, in cases where a man has assessed himself, he should remit the money along with the assessment. A time of one month is given ... I can certainly assure honourable Members that while the intention is that the money should be paid along with the assessment, the penalty of 50 per cent, is not something which is obligatory. It only gives the extent to which it can be imposed. I certainly agree to issue instructions to see that this should not be imposed unless other conditions are all adverse so far as collection is concerned, and some time should be given ... I can give the assurance that instructions will be issued to officers that wherever it is justifiable, no penalty should be imposed." In the light of the language employed in section 140A and the aforesaid judgments, it is clear that though section 140A uses the word "shall", the entire provision must be read harmoniously and r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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