1968 (8) TMI 7 - SC - Income Tax

Since the respondents had been provisionally assessed, they were not persons who had not hither to been assessed - hence, respondents were not liable to submit an estimate under s. 18A (3) or pay the tax - Revenue's appeal dismissed

Summary

Issues Involved:
1. Interpretation of the phrase "any person who has not hitherto been assessed" in Section 18A(3) of the Income-tax Act, 1922.
2. Applicability of provisional assessment under Section 23B to Section 18A(3).
3. Legislative intent and subsequent amendments to the Income-tax Act.

Detailed Analysis:

1. Interpretation of the phrase "any person who has not hitherto been assessed" in Section 18A(3) of the Income-tax Act, 1922:
The primary issue in this case revolves around whether the phrase "any person who has not hitherto been assessed" in Section 18A(3) includes individuals who have been provisionally assessed under Section 23B. The respondents, who were partners in a business, had been provisionally assessed in the assessment year 1954-55 but not regularly assessed until February 27, 1958. They did not send any estimate of tax payable as required by Section 18A or pay the tax in advance, leading to the imposition of interest and penalties by the Income-tax Officer under Sections 18A(8) and 18A(9)(b).

2. Applicability of provisional assessment under Section 23B to Section 18A(3):
The appellants argued that a provisional assessment under Section 23B does not satisfy the requirements of Section 18A(1), which calls for tax to be based on the total income of the previous year. They contended that provisional assessment merely determines the tax payable based on the return filed, without a thorough assessment of total taxable income. However, the court held that even provisional assessment involves determining the total income, albeit provisionally. The court noted that the language of Section 18A(1) does not restrict the term "assessed" to regular assessments only. Thus, the term "assessed" in Section 18A(3) includes provisional assessments under Section 23B.

3. Legislative intent and subsequent amendments to the Income-tax Act:
The court examined the legislative history and amendments to the Act, noting that Section 18A was amended consequent to the introduction of Section 23B. Parliament did not restrict the meaning of "assessed" in Section 18A(3) to exclude provisional assessments. The court rejected the appellants' argument that the term "assessed" should be interpreted narrowly to mean only regular assessments, pointing out that the term is used without qualification in Section 18A(1).

The court also considered the language of Sections 210 and 212(3) of the Income-tax Act, 1961, which refer to regular assessments. The appellants argued that these sections should be treated as a Parliamentary exposition of Section 18A(3) of the earlier Act. However, the court held that a subsequent Act does not provide a useful guide to the interpretation of an earlier Act unless both laws are on the same subject and the earlier Act is ambiguous. The court found no ambiguity in Section 18A(3) and thus did not accept the appellants' argument.

Conclusion:
The court upheld the judgment of the Allahabad High Court, affirming that the phrase "any person who has not hitherto been assessed" in Section 18A(3) includes individuals who have been provisionally assessed under Section 23B. The appeals were dismissed with costs, and the judgment of the High Court dated March 25, 1963, was deemed correct.