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TMI Blog1990 (9) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of civil contract works. The said orders of the ITO were taken in appeal by the assessees before the AAC of Income-tax with the preliminary objection that the penalties were levied without the previous approval of the IAC and as such proviso to clause (iii) of section 271(1) was violated. The AAC of Income-tax on one hand negatived such objection of the assessees, mentioning to the effect that the penalty orders, though did not mention the fact of having obtained approval of the IAC, the approval of the IAC was taken by the ITO vide letters dated 13-3-1985, and on the other he dismissed the appeals on the ground that he had no jurisdiction to hear the appeals since the appeals lay before the CIT(A). Aggrieved by the said orders of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atus of unregistered firm at Rs. 9,180 in the assessment year 1975-76 and at Rs. 46,223 in the assessment year 1977-78 which were assessed at Rs. 40,888 and Rs. 46,223 respectively. The said assessment was confirmed in appeal by the AAC. However, in second appeal it was reduced by the Tribunal and the asessed income was computed at Rs. 18,360 in the assessment year 1975-76 and at Rs. 44,104 in the assessment year 1977-78. Tax deducted at source was Rs. 1,878 in the assessment year 1975-76 and Rs. 9,245 in the assessment year 1977-78. Further, it may be noticed that the assessee, Shri Umeshchand K. Patel, declared total income of Rs. 1,130 in the status of individual in the assessment year 1977-78 and the tax deducted at source was at Rs. 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention that Explanation 3 to section 271(1) should be read along with section 271(1)(c) and it should not be interpreted in a manner as to expand the substantive provision contained in section 271(1)(c). It is argued by him that the assessees returned their income honestly and truly ; it was, however, not accepted, and the additions were made merely on the basis of estimates to the returned income. Such additions made on estimate basis, the learned counsel urged, should not constitute basis for levy of penalty. In support he placed reliance upon J.K. Jajoo v. CIT [1990] 181 ITR 410 (MP), CIT v. Prithipal Singh Co. [1990] 183 ITR 69 (Punj. Har.), CIT v. Harlal Mannulal [1989] 178 ITR 284 (MP) and CIT v. S.P. Viz Co Construction Co. (N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective submissions of the parties. We find no merit in the stand of the assessees that they honestly believed that in view of the tax deducted at source, it was not necessary for them to file the returns of income. No prudent man of reason would like to lose refund of tax. The assessees when suffered more TDS than the amount of tax according to them payable, it cannot be accepted that their indifference towards filing of returns of income was charitable to the revenue. Avoidance in filing the returns of income under these circumstances must be attributable to indirect motive of the assessees. Explanation 3 is meant for such assessees, which by virtue of Explanation 4 has gone to the extent of taking the entire tax on the total income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and effect of an Explanation has been considered by the Hon'ble Supreme Court in S. Sundaram v. V.R. Pattabiraman AIR 1985 SC 582. Objection of an Explanation to a statutory provision has been, inter alia, stated as under-- "(d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act, it can help or assist the Court in interpreting the true purport and intendment of the enactment." 7. We, therefore, find no merit in the contention of the leamed counsel for the assessees that Explanation 3 cannot be read beyond what is stated in section 271(1)(c). In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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