TMI Blog1973 (7) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... d an estimate of income on September 20, 1947, according to which no tax was payable because there was a loss. On December 18, 1948, the assessee submitted a return declaring an income of Rs. 7,752 plus share income from various partnership firms. On the basis of that return which was filed on December 18, 1948, the assessment was made on a total income of Rs. 54,369 on March 23, 1949. This assessment, it appears, was required to be reopened twice under section 34 of the Indian Income-tax Act, 1922. On the first occasion during reassessment proceeding the total income was determined at Rs. 94,802 on November 24, 1952, while on the second occasion the assessment was made on a total income of Rs. 2,38,440 on March 1, 1958. The assessee went in appeal and the final income as determined by the Commissioner of Income-tax under section 33A was Rs. 1,95,440. It was felt that the assessee had furnished the estimate of tax payable by him which he knew or had reason to believe to be untrue and, therefore, a notice under section 18A(9)(a) read with section 28(3) was issued to the assessee and the same was issued before the second reassessment was completed and after giving the assessee an opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion should be interpreted in the context of section 18A(9)(a) of the Act. The Tribunal, therefore, held that the initiation of proceedings under section 18A(9)(a) in the course of the proceedings under section 34 for second reassessment was in accordance with law and penalty was properly levied on the assessee. Therefore, at the instance of the assessee, the aforementioned question has been referred to this court. Section 18A(9), which calls for proper construction, so far as is material, runs thus: "18A. (9) If the Income-tax Officer, in the course of any proceedings in connection with the regular assessment, is satisfied that any assessee- (a) has furnished under sub-section (2) or sub-section (3) estimates of the tax payable by him which he knew or had reason to believe to be untrue, or ...... the assessee shall be deemed, in the case referred to in clause (a), to have deliberately furnished inaccurate particulars of his income ............ ..................and the provisions of section 28, so far as may be, shall apply accordingly." The real question that arises for our consideration is whether the expression "regular assessment" occurring in section 18A(9) wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er proceedings undertaken by the Income-tax Officer are proceedings to which the provisions of the Act shall, so far as may be, apply accordingly. It clearly means that the provisions of the Act which are made applicable to such de novo proceedings would include section 18A(9) of the Act, for, if the provisions of section 18A(9) are applicable to assessment proceedings that are initially undertaken under section 23 of the Act, we fail to understand as to why the said provisions should not apply to the assessment proceedings that are undertaken upon issuing a notice under section 34(1) which is deemed to be a notice under section 22(2) and the proceedings thereunder are de novo proceedings as if undertaken under section 23 of the Act. Looked at from this angle, it seems to us very clear that the expression "regular assessment" occurring in section 18A(9) of the Act would cover reassessment proceedings undertaken by the Income-tax Officer under section 34(1) of the Act, if the provisions of section 18A(9) are read in the context of the last portion of section 34(1). That the nature of the proceedings undertaken under section 34 is of the type as we have indicated above has been cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it be said that, if interest had ceased to run, the running of interest was revived when that order of assessment was set aside and a different terminus was fixed for the calculation of interest? It seems to us that what the legislature contemplated in using the expression 'the date of the assessment' was the factual date of the assessment and it was not considering the legality or the validity of the assessment made. It wanted to fix two termini for the calculation of interest. With regard to one terminus there was no difficulty: that was the date of payment of advance tax by the assessee. The other terminus had to be fixed and the other terminus was the date when the regular assessment was made. That terminus having been fixed, it could not be altered by any subsequent event or by the vicissitudes through which the assessment order might pass." In other words, the expression "the date of the assessment" (hereinafter called "regular assessment") came up for interpretation before this court and this court took the view that the date of regular assessment could be the date when the Income-tax Officer had initially made the assessment order under section 23 and that date was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the assessee in respect of the amount of advance tax and the purpose of using the expression "regular assessment" in those provisions obviously is as has been clearly stated in Sarangpur Cotton Manufacturing Co. v. Commissioner of Income-tax to indicate two termini of the period for which interest should become payable. That is not the purpose for which the expression "regular assessment" has been used in section 18A(9) of the Act. In section 18A(9) it is a question of levying the penalty on the assessee for having furnished estimates of the tax payable by him which he knew or had reason to believe to be untrue, which aspect, in a given case, could be brought home to the assessee only after proceedings under section 34(1) for reassessment are commenced; moreover, the extent to which the estimates furnished earlier have been below the actual tax liability can be ascertained only during the reassessment proceedings. It is in that context that one has to consider and interpret the expression "regular assessment" occurring in that provision. It is obvious that aspects which are relevant for levy of penal interest would be different from the aspects that would be taken into ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
