TMI Blog2001 (7) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... the only lapse on the part of the assessee tax deductor was that he did not take into account the increase in surcharge, effected vide Finance (Second Amendment) Ordinance, 1990 promulgated on 15-10-1990, which resulted in a surcharge on TDS @15 per cent in the case of companies, as against 8 per cent surcharge in force upto that point of time. The assessee's case is that it was simply an inadvertent error on the part of the assessee which was solely attributable to the fact that the person responsible for TDS work missed this increase in surcharge rate. The assessee has stated that it was a bona fide mistake and that there were no, and could not have been any, mala fides in this marginal short deduction of tax at source. in view of the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividends paid to the corporate share-holders, inasmuch as the surcharge rate was applied @ 8 per cent as against 15% applicable rate. in the backdrop of this fact, let us take a look at the consequences of such a short deduction of tax at source. Of course, the first and foremost consequence is that the tax deductor has to make good the shortfall in tax deduction and the tax deductor also has to compensate the revenue by way of interest for the period of late realization of this tax to the revenue authorities. These provisions, contained in section 201(1) and 201(1A), are set out in Chapter XVIIB titled as 'Collection and Recovery of Tax'. The next set of consequences are contained in section 271C and section 276B, covered by Chapter XXI - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute that by the virtue of section 201(1) the tax deductor is to be deemed to be an assessee in default to the extent of amount of non-deduction or short deduction of tax is concerned. In view of these discussions, imposition of penalty under section 221(1), in case of an assessee being treated as an assessee in default under section 201, seems to be prima facie according to the scheme of the Act, but the question that stares at our face then is that if the assessee has already been penalised, by way of penalty under section 271C for short deduction of tax at source, what for he is being penalised by way of penalty section 221 which, in such a situation, is de facto a penalty for short deduction of tax at source because that is the only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of article 20(2), of the Constitution of India, as also of section 26 of General Clauses Act, to the penalty proceedings under the Income-tax Act. As pointed out by Justice G.P. Singh in his 'Principles of Statutory Interpretation' (6th Edition 1997 reprint - 'Laws defining offences and penalties' at page 410, relevant portion at page 411), it is also noteworthy that opening words of section 26 lay emphasis upon 'identity of act or omission constituting an offence' and not on 'identity of offences' per se. It is also settled in law that the expression 'enactment' applies not only to a complete act but also to various provisions in an Act, as held in the case of Abdul Aziz v. State of Uttar Pradesh AIR 1958 All. 109 at 111. The words 'enac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pse of short deduction of tax at source. 6. That takes us to the question that in case only one penalty, i.e. either under section 221(1) or under section 271C, is imposable for the default of short deduction of tax at source, under which section can such a penalty be imposed. 7. We find that section 271C was inserted in the Income-tax Act with effect from 1st April 1989, by the virtue of Direct-tax Amendment Act, 1987, and that the Central Board of Direct-taxes, vide Circular No. 551, dated 23-1-1990, explained the insertion of this section in following words: "165 Under the old provisions of Chapter XXI of the Income-tax Act, no penalty was provided for failure to deduct tax at source. This default, however, attracted prosecution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 221(1). Since for our purposes it is not necessary to go further into this aspect of the matter, we leave it at that. 9. Let us now take a look at the legal position after the insertion of section 271C, i.e., with effect from 1st April, 1989. We have already noticed that section 271C is a specific provision dealing with assessee's failure of non deduction, or short deduction, of tax at source. It is fairly well settled in law that general provisions do not override specific provisions, as aptly described by the maxim 'generalia specialibus non derogant'. A special provision normally excludes the- operation of a general provision and we are of the view that such a principle governs the instant case also. In the case of South India Corpn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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