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TMI Blog1994 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, 1961 (for short, "the Act"), in its true, correct perspective it is necessary first of all to have a look at a few relevant facts of the case as they broadly emerge from various complaints. Accordingly, respondent No. 1 firm in each of these petitions, appears to be a registered partnership firm operating in various towns in the State of Gujarat, and the rest of the respondents are just its partners carrying on the business of the concerned firm collectively and were in charge of and responsible to the firm for the conduct of its business. It further appears from all these complaints that the respondent-firm and its partners were answerable and liable for any default or contravention of any provisions of the Act and the Rules made thereunder that may be committed by the firm by virtue of section 278B of the Act. It further appears that in due course, the respondent-firm furnished the income-tax returns for the relevant assessment year, declaring the various amounts received by it, as stated in detail in the complaints. On scrutinising the said returns of the firms, it is alleged that the respondents had accepted loans and/or deposits of various amounts from var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment for a term which may extend to two years and shall also be liable to fine equal to the amount of such deposit. On the basis of the clear language employed in the aforesaid provi sions. Mr. Naik submitted that the interpretation of section 276DD made by the Andhra Pradesh High Court in the case of ITO v. Lakshmi Enterprises [1990] 185 ITR 595, with utmost respect, cannot be said to be legal and proper. Mr. Naik further submitted that once we find that section 276DD is not capable of any other interpretation save and except, the plain, unambiguous and natural meaning flowing out of it, the amount of fine shall have to be enhanced so as to be equal to the amount of loans or deposits in question. Mr. Naik, on the basis of these submissions, finally urged that the present group of criminal revision applications accordingly deserve to be allowed, quashing and setting aside the impugned orders of sentence, replacing them by appropriate orders enhancing the sentences, as warranted by the said sections 276DD and 276E of the Act. Countering the above submissions of Mr. Naik, Mr. K. H. Kaji, learned counsel appearing for the respondent-accused, submitted that the learned magistrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to leave the matter regarding imposition of fine to the discretion of the court, it cannot be construed that the Legislature would have intended to curtail that discretion by prescribing a minimum amount of fine when the fine is proposed to be imposed. . . . " Mr. Kaji, on the basis of the aforesaid submissions, vehemently contended that the provision contained in section 276DD as regards the punishment clearly vests unfettered discretion in the learned magistrate to impose any substantive sentence of imprisonment and any amount of fine, which according to him is just and proper. Mr. Kaji further submitted that the expression "shall also be liable to fine equal to the amount of such loan or deposit" is required to be split up into two parts in order to appreciate its real connotation in its proper perspective. Mr. Kaji further submitted that the term "liable" is indeed quite wide and vests discretion in the concerned court to pass any just fair and appropriate order of fine. Making good this submission Mr. Kaji has invited the attention of this court to the various dictionary meanings as well as the interpretation of the said term "liable" made by the various courts. With a view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said expression "equal to the amount of such loan or deposit" cannot be read in any other way, but as "up to" the amount of such loan or deposit. Mr. Kaji further submitted that to read the expression in question otherwise than without splitting the same, as suggested by him, would be simply contradiction in terms likely to perpetrate injustice to the accused. Mr. Kaji further submitted that it is in this light only that the aforesaid judgment of the Andhra Pradesh High Court is required to be appreciated and accepted as binding. According to Mr. Kaji, once this position is accepted, by no stretch of imagination, it can be said that the learned magistrate was not vested with the discretion to impose a fine which he has imposed on the accused while they pleaded guilty. In the alternative, Mr. Kaji further submitted that by now it is indeed quite a settled legal position that in any case where the court finds that the language of a taxing provision is ambiguous and capable of more meanings than one then the court has to adopt that interpretation which favours the assessee, more particularly so where the provision relates to the imposition of penalty. Mr. Kaji further submitted that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty provided in the expression "shall also be liable up to, the amount of such loan or deposit" then perhaps, there was no alterna tive left with this court but to hold that the Legislature did vest some discretion in the trial court while awarding the sentence of fine. Not only that, but the Legislature in its place, if it intended the meaning " up to" will have surely and unhesitantly employed the term "up to" instead of "equal to". But that is precisely not done. It cannot be argued and assumed that Parliament was unaware of the meanings of "equal to" and "up to" to commit any error in selecting "equal to" in the place of "up to' while drafting section 276DD of the Act. That takes us to the next contention of Mr. Kaji regarding interpre tation of the word "liable". Had indeed there been any difficulty on the part of this court to understand the correct import of the phrase "shall also be liable to pay then in that case, in order to derive the just meaning, this court would have surely entered into the exercise of split ting the said section 276DD of the Act. However, in the opinion of this court, the phrase itself is so crystal clear on the face of it that it does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a person "C" son, then "A" is father of "C". If it is in the context of brother "D", then "A" is brother of "D" and if it is in the context of "E", friend, then "A" is friend of "E", so on and so forth. Thus, what is the meaning, relationship of a particular phrase, word or expression ultimately depends upon how that particular word or phrase is related to other particular words, phrases or expressions in the context in which it is used. Similarly, the meaning and interpretation of the word "liable" in different dictionaries and rulings of the High Court in the appropriate context and relation are in their respective places quite good but the said meaning cannot be mechanically stretched and applied while interpreting section 276DD of the Act, wherein the context is altogether different. Accordingly, thereby the court when it is called upon to interpret a particular term, has to interpret it in the context of the entire phrase, expression, in which it is used. The translated and piecemeal reading of the term "liable" divorced of the context and fictitious assumption to split expression and give a different view is just impermissible, unfair and not done. In this view of the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppears that it can be a firm and firm only which can be saddled with the ultimate responsibility for the payment of the fine under section 276DD of the Act, more particularly in view of the phrase "equal to" used in section 276DD of the Act. In +,his view of the matter, to the extent the learned magistrate has inflicted various amounts of fine upon the partners also, over and above the firm, the same to the said extent being ex facie illegal, requires to be quashed and set aside. So far as the partnership firm is concerned, in view of the interpretation placed by this court on the expression "shall also be liable to fine 'equal to' loan or deposit", the partnership firm shall have to pay the fine "equal to" the amount of the alleged loan or deposit in question received by it, for which all the partners jointly and severally are liable for the same. In all these cases, since the amount of deposit in question was accepted long back in the year 1985-86, and accordingly in case for whatever reason the firm does not exist and is defunct, in such an eventuality, the partners or the proprietors will be jointly and severally liable to pay the fine and in default to undergo simple imprisonm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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