Case: The Income Tax Officer, Distt. II (ii), Kanpur &amp; Others Vs. Mani Ram &amp; Others

1. In these appeals which have been heard together a common question of law arises for determination, that is, whether the expression "any person who has not hitherto been assessed" in Section 18A (3) of the Income-tax Act, 1922 (hereinafter called the Act) after the Income Tax Amendment Act (Act 67 of 1949) should be interpreted so as to include a person who has only been provisionally assessed under Section 23B of that Act.2. The respondents in these appeals are four persons - Mani Ram, Jagmohan, Kishandas, Bhagirathmal - partners of Shri Kishan Das, Dhankutti, Kanpur. They were members of a joint Hindu family carrying on business until they became divided in the middle of assessment year 1953-54. Thereafter they were carrying on the business in partnership. For the year 1953-54, the firm submitted a return showing loss. But in the next succeeding year 1954-55 it disclosed a profit and submitted a return. All the four partners filed returns individually on 27-9-1954 and they were provisionally assessed on their returns on 14-10-1954. But the regular assessment was made for this year only on 27-2-1958. The firm continued to make profits in the subsequent years 1955-56, 1956-57, 1957-58 and 1958-59 and the partners filed returns for their income for each of these years and were regularly assessed for these years under Section 23 sometime after 27-2-1953. The assessment order for 1958-59 was in fact made on 19-2-1959. It is not disputed that none of the four partners sent any estimate of the tax payable on their income as required by Section 18A of the Income Tax Act, 1922 or pay the tax in advance. Therefore, the Income-tax Officer, Kanpur while assessing them under Section 23 of the Act held that they were liable to pay interest under Section 18A (8) and determined the amount payable by each in respect of each of the years on the basis of the income found taxable in the regular assessment. In addition he applied the provisions of Section 18A (9) (b) and imposed a penalty for each year of assessment by virtue of Section 28 read with Section 18A (9) (b) of the Act. The four partners preferred appeals to the Appellate Assistant Commissioner on the ground that the levy of interest and penalty was unauthorised. But the appeals were dismissed. The partners applied in revision to the Commissioner of Income-tax under Section 33A (2), but the revision applications were dismissed. The respondents thereafter moved the Allahabad High Court for grant of a writ to quash the orders of the Income-tax Officer and of the Appellate Assistant Commissioner in appeal. The applications for writ were allowed by Mr. Justice S. C. Manchanda who held that Section 18A (3) could not apply to the facts of the case as there had been a provisional assessment under Section 23B in the year 1954. Against the decision of the Singe Judge the appellants preferred appeals before the Division Bench. These appeals were dismissed by a common judgment of the Allahabad High Court dated 25th March, 1963. The present appeals are brought to this Court by special leave from the judgment of the Allahabad High Court dated 25th March, 1963 in the batch of appeals affirming the judgment of the Single Judge dated 25th May, 1956, in C. W. M. No. 1591 of 1962 and the connected writ applications.3. It is necessary at this stage to set out the provisions of Sections 18A, 23 and 23B of the Income-tax Act, 1922 as they stood at the material(I) (a). 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, if that total income exceeded the maximum amount not chargeable to tax in his case by two thousand five hundred rupees. Such income-tax and super-tax shall be calculated at the rates in force for the financial year in which he is required to pay the tax, and shall bear to the total amount of income-tax and super-tax so calculated on the said total income the same preparation as the amount of such inclusions bears to his total income or, in cases where under the provisions of sub-section (1) of Section 17 both income-tax and super-tax are chargeable with reference to the total world income, shall bear to the total amount of income-tax and super-tax which would have been payable on his total world income of the said previous year had it been his total income the same proportion as the amount of such inclusions bears to his total world income.(2) * * * * *(3) Any person who has not hitherto been assessed shall, before the 15th day of March in each financial year, if his total income of the period which could be the previous year for an assessment for the financial year next following is likely to exceed the maximum amount not chargeable to tax in his case by two thousand five hundred rupees, send to the Income-tax Officer an estimate of the tax payable by him on that part of his income to which the provisions of Section 18 do not apply of the said previous year calculated in the manner laid down in sub-section (1), and shall pay the amount on such of the dates specified in that sub-sections as have not expired, by instalments which may be revised according to the proviso to sub-section (2).(4) * * * * *(5) * * * * *(6) Where in any year an assessee has paid tax under sub-section (2) or sub-section (3) on the basis of his own estimate, an the tax so paid is less than eighty per cent of the tax determined on the basis of the regular assessment, so far as such tax relates to income to which the provisions of Section 18 do not apply and so far as it is not due to variations in the rates of tax made by the Finance Act enacted for the year for which the regular assessment is made, simple interest at the rate of six per cent per annum from the 1st day of January in the financial year in which the tax was paid up to the date of the said regular assessment shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty per cent.* * * * ** * * * *(7) * * * * *(8) Where on making the regular assessment, the Income-tax Officer finds that no payment of tax has been made in accordance with the foregoing provisions of this Section, interest calculated in the manner laid down in sub-section ( 6) shall be added to the tax as determined on the basis of the regular assessment .(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) of sub-section (3) estimates of the tax payable by him which he knew or had reason to believe to be untrue, or(b) has without reasonable cause failed to comply with the provisions of sub-section (3), the assessee shall be deemed in the case referred to in clause (a), to have deliberately furnished inaccurate particulars of his income and in the case referred to in clause (b) to have failed to furnish the return of his total income; and the provisions of Section 28, so far as may be, shall apply accordingly.* * * * *(23) (1) If the Income-tax officer is satisfied without requiring the presence of the assessee or the production by him of any evidence that a return made under Section 22 is correct and complete, he shall assess the total income of the assessee, and shall determine the sum payable by him on the basis of such return.(2) If the Income-tax Officer is not satisfied without requiring the presence of the person who made the return or the production of evidence that a return made under Section 22 is correct and complete, he shall serve on such person a notice either to attend at the Income-tax Officers Office or to produce, or to cause to be there produced , any evidence on which such person may rely in support of the return.(3) On the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, the Income-tax Officer, after hearing such evidence as such person may produce and such other evidence as the Income-tax Officer may require, on specified points shall, by an order in writing assess the total income of the assessee and determine the sum payable by him on the basis of such assessment.(4) If any person fails to make the return required by any notice given under sub-section (2) of Section 22 and has not made a return or a revised return under sub-section (3) of the same Section or fails to comply with all the terms of a notice issued under sub-section (4) of the same section or, having made a return, fails to comply with the terms of a notice issue under sub-section (2) of this section, the Income-tax Officer shall make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment and, in the case of a firm, may refuse to register it or may cancel its registration if it is already registered.* * * * *23B. (1) The Income-tax Officer may, at any time after the receipt of a return made under Section 22 proceed to make in a summary manner, a provisional assessment of the tax payable by the assessee, on the basis of his return and the accounts and documents, if any, accompanying it, after giving due effect to (i) the allowance referred to in paragraph (b) of the proviso to clause (vi) of subsection (2) of Section 10, and (ii) any loss carried forward under sub-section (2) of Section 24.(2) A partner of a firm may be provisionally assessed under sub-section (1) in respect of his share in the firms income, profits and gains, if its return has been received, although the return of the partner himself may not have been received.(3) A firm may be provisionally assessed under sub-section (1) as if it were an unregistered firm, unless the firm fulfils such conditions as the Central Government may, by notification in the Official Gazette, specify in that behalf.(4) There shall be no right of appeal against a provisional assessment made under sub-section (1).(5) For the avoidance of doubt, it is hereby declared that the provisions of Section 45 (except the first proviso) and Section 46 apply in relation to any tax payable in pursuance of a provisional assessment made under sub-section (1) as if it were a regular assessment made under Section 23.(6) Income-tax paid or deemed to have been paid under Section 18 or Section 18A in respect of any income provisionally assessed under sub-section (1), shall be deemed to have been paid towards the provisional assessment.(7) After a regular assessment has been made under Section 23, any amount paid or deemed to have been paid towards a provisional assessment made under sub-section (1), shall be deemed to have been paid towards the regular assessment; and where the amount paid or deemed to have been paid towards the provisional assessment, exceeds the amount payable under the regular assessment, the excess shall be refunded to the assessee.(8) Nothing done or deferred by reason or in consequence of any provisional assessment made under this Section shall prejudice the determination on the merits of any issue which may arise in the course of the regular assessment under Section 23."

Reasoning:
We are unable to accept this argument as correct. It should be noticed that the Parliament introduced certain amendments in S. 18A of the Act consequential to the introduction of S. 23B of the Act. There is a reference to the provisional assessment made under Section 23B in sub-section (5) of Section 18A, but Parliament took no step to restrict the meaning of the word "assessed" in Section 18A (3) so as to exclude a reference to provisional assessment under Section 23B of the Act. If Parliament contemplated that Section 18A (3) should apply only in the case of a "regular assessment", there was no reason why it did not put some qualifying words or expressions before or after the word "assessed" in Section 18A (1). It is not possible to accept the submission of the appellants that Parliament in fact intended to bring about such a decision but only accidentally omitted to do so. On the other hand, the language of Section 18A (1) as it stands, can only lead to interpretation that the provisions contained in it would become applicable whenever a person has been assessed whatever be the nature of the assessment- whether it be a regular assessment or a provisionalare unable to accept this argument as correct. There is nothing in 1961 Act to suggest that Parliament intended to explain the meaning or clear up doubts about the meaning of the word "assessed" in Section 18A (3) of the earlier Act.