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TMI Blog2008 (9) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Sections 234A and 234B of the Act of the Act are ultravires to the extent both the provisions charge interest for the same period making the petitioner liable to interest @ 48 per cent. 2. Assessment Years in question are 1991-92, 1992-93 and 1993-94, the respective accounting periods being financial years ended on 31.3.1991, 31.3.1992 and 31.3.1993 respectively. Respondent No.1 (hereinafter referred to as 'the respondent authority') is the Assessing Officer having jurisdiction over the petitioner assessee. Assessment orders for the three years in question were passed by the Assessing Officer and while calculating total amount payable by the petitioner assessee interest under sections 234A, 234B and 234C of the Act was charged by the respondent authority. Pursuant to assessments framed on 14.3.1995 for the three years under consideration notices of demand at Exhibits E1, E2, and E3 were issued on 28.3. 1995. It is these notices of demand which are under challenge on merits apart from the challenge to constitutional validity of provisions of sections 234A and 234B of the Act. 3. The prayers made in the petition read as under: "12. In the premises aforesaid, the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of tax but according to the department the interest is payable not up to the date of paying off of the tax but even thereafter till the date of filing of the return of income. (ii) In respect of charging of interest under section 234B, the department has charged the interest on interest whereas the petitioner contends to the contrary. (iii) According to the department for some part of common period 48% interest is payable under the Act which means interest becomes chargeable for some part of the period both under section 234A and under section 234B whereas according to the petitioner, the interest is not to be charged for any part of the period under both these sections simultaneously, which means no part of the dues will suffer more than 24% of interest." 6. In relation to the challenge to constitutional validity of the two sections the submission, in the alternative, is that in the event the interpretation placed by the petitioner on the provisions of Sections 234A and 234B of the Act is not accepted, then the provision of section 234A of the Act to the extent the interest runs even after payment of tax falls foul of Article 14 of the Constitution of India as being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special reference to observations at page No. 71 of the report. 9. It was further submitted that once one High Court had interpreted a provision the said judgment must normally be followed by other High Courts considering that Income Tax Act is an All India Statute. For this purpose reliance was placed on a decision of this Court in case of CIT Vs. Deepak Family Trust (No.1), (1995) 211 ITR 575, wherein earlier decisions of Bombay High Court were referred to. Emphasis was laid on the case of Maneklal Chunilal (1953) 24 ITR 375 (Bom) to contend that so far this principle was consistently followed by this High Court holding that it would be a wise judicial policy and practice not to take a different view even if the High Court is of the opinion that a different view of the matter should be taken. 10. In support of the submissions made as to why provisions of sections 234A and 234B of the Act should be read as contended by the petitioner following decisions were cited to emphasise the principles of interpretation laid down by the Apex Court. (i) R. B. Jodha Mal Kuthiala v. CIT. (1971) 82 ITR 570 (SC); (ii) K.P. Varghese v. Income Tax Officer (1981) 131 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be ultra vires the Constitution. That in the instant case insofar as section 234A of the Act is concerned the same be held to be ultra vires the Constitution to the extent the provision requires an assessee to pay interest even after the tax has been paid before filing of the return. Similarly in relation to section 234B of the Act, it was submitted that when the said provision, as read by respondent authority, charges interest for the same period for which interest had already been charged under section 234A of the Act, the said provision was unreasonable and had to be struck down. Alternatively, the provision be read down so as to ensure that an assessee is not called upon to pay double interest for the same period. 14. It was therefore urged that the interest charged under the two provisions to the extent there was overcharging in each year be held to be bad in law and/or ultra vires the Constitution. 15. An incidental contention was also raised based on provisions of sections 59 to 61 of the Indian Contract Act, 1872 to submit that the respondent authority had erred in law in not treating the amount of tax paid as tax and appropriating the same towards interest and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Union of India [1998] 232 ITR 62 with special reference to observations at page Nos. 70 and 71, as well as judgment of Bombay High Court in the case of Umesh S. Bangera v. Union of India (2004) 268 ITR 405 with special reference to observations at page Nos. 409, 410 and 411. It was submitted that the provisions of sections 234A and 234B of the Act being compensatory in nature for breach of civil obligation cannot be termed to be unreasonable as the provisions accord uniform treatment to similarly situated persons and have eliminated the subjective discretion of the Taxing Authority and thus obviated arbitrariness. That the safeguard provided in the statute itself cannot be termed to be penal in nature and thereby unconstitutional. 19. Responding to the contention that interest was being charged for the same period over again, the learned Counsel pointed out that both the defaults under section 234A and 234B of the Act are in respect of separate civil obligations and therefore cannot be held to be either bad in law or unconstitutional. 20. Lastly, it was contended that in absence of any contract between the petitioner and the respondent authority, the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act is in relation to liability to pay interest for default in late furnishing of return or non furnishing of return, while section 234B of the Act pertains to liability to pay interest for default in payment of advance tax. However, in both the provisions interest is payable on the amount which is the difference between the amount of tax payable on the total income as determined under section 143(1) of the Act or on regular assessment as reduced by the advance tax paid, deducted at source, or collected at source. 23. Therefore, one has to consider what is the meaning of advance tax, tax deducted at source and tax collected at source. The definition of the term 'advance tax' appears in section 2(1) to mean advance tax payable in accordance with provisions of Chapter XVIIC. Before adverting to Chapter XVIIC of the Act, a look at section 4 of the Act would be helpful. The said provision deals with Charge of income tax and provides that income tax shall be charged for any Assessment Year at the prescribed rates in accordance with and subject to the provisions of the Act in respect of the total income of the previous year of every person. Sub-section (2) of Section 4 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Year in question and such liability has to be discharged either by way of having tax deducted at source or collected at source, or making payment by way of advance tax in accordance with the provisions of sections 208 to 219 of the Act. 26. Section 208 of the Act stipulates that advance tax shall be payable during a Financial Year in every case where the amount of such tax payable by the assessee during that Financial Year, as computed in accordance with the provisions of Chapter XVII of the Act, is one thousand five hundred rupees or more (at the relevant point of time). It is not the case of the petitioner-assessee that the tax payable during any of the three years in question was less than one thousand five hundred rupees. Therefore, statutorily liability was cast on the petitioner assessee to pay advance tax during the Financial Year as provided by the legislative scheme considered hereinbefore. In the circumstances, it is not necessary to deal with the mode and manner by which advance tax is to be computed or the point of time when the payment is to be made. However, section 211 of the Act lays down the limit with the corresponding date on which an instalment of advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 4 of the Act, but should be yet treated differently, i.e. different from other assessees who have complied with the law. 29. As noted hereinbefore even for the purpose of computing interest under section 234A of the Act, the difference of the amount on which interest becomes payable has to be worked out by deducting the advance tax paid including any tax deducted or collected at source from the tax on the total income determined at the time of assessment. The default of filing of return of income beyond the prescribed date is also admitted. Therefore, it is not possible to accept the contention of the petitioner assessee that the amount paid beyond the Financial Year should be deducted from the tax on the total income as determined on regular assessment. This has to be so considering the definition of the term 'advance tax' as appearing in section 2 of the Act which categorically stipulates that 'advance tax' means the advance tax payable in accordance with the provisions of Chapter XVII-C of the Act. Even if contextual interpretation is adopted considering the opening portion of section 2 of the Act which states 'unless the context otherwise requires', the contention raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date and short fall in advance tax, by providing for computing interest separately for both the defaults. Therefore, merely because some amount is paid beyond the Financial Year but before the return is filed the assessee cannot plead that the assessee is not liable to pay interest under section 234A of the Act. Nor can the assessee be given credit for such payment made beyond the Financial Year for the purpose of computing interest under section 234B of the Act for the default in payments of advance tax. 32. Thus considering the legislative intent which unfolds on a conjoint reading of the aforesaid provisions it is not possible to agree with the petitioner that the petitioner had not incurred any liability to pay interest either under section 234A or under section 234B of the Act. The petitioner also cannot contend that there is any overlapping of the period for which the petitioner cannot be made liable for paying interest under both the provisions considering the fact that both the defaults are independent of each other. The doctrine of double jeopardy envisaged by Article 20(2) of the Constitution of India or section 300 of the Code of Criminal Procedure, 1973 can have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso cannot carry the case of the petitioner any further in light of the statutory scheme laid down by the Act. It is true that the Court must interpret the provisions of the statute upon ascertaining the object of the legislation through the medium or authoritative forms in which it is expressed. It is settled law that the Court should, while interpreting provisions of the statute, assign its ordinary meaning. It is also a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless such construction leads to some absurdity or unless there is something in the context or in the object of the statute to suggest to the contrary. Another salutary principle of construction is that when the words of the statute are clear, plain and unambiguous then the Court is bound to give effect to that meaning, irrespective of the consequences. Applying the aforesaid principles also it is not possible to accept the contentions raised by the petitioner. 35. Insofar as the contention regarding the provisions being ultra vires the Constitution no case is made out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell-known exceptions to it. In cases where a decision is sub silentio, per incuriam, obiter dicta or based on a concession or takes a view which it is impossible to arrive at or there is another view in the field or there is a subsequent amendment of the statute or reversal or implied overruling of the decision by a High Court or some such or similar infirmity is manifestly perceivable in the decision, a different view can be taken by the High Court. This is clearly borne out from the decision of this Court in Arvind Boards and Paper Products Ltd. v. CIT [1982] 137 ITR 635, which had also taken into consideration the Bombay decision in the case of Maneklal Chunilal and Sons Ltd. v. CIT [1953] 24 ITR 375(Bom) as well as CIT v. Deepak Family Transit (No.1) (1995) 211 ITR 575 (Guj). Hence, in light of the legislative scheme considered hereinbefore the Court, despite highest esteem and respect, is unable to agree with the opinion expressed by the High Court of Delhi in the case of Dr. Prannoy Roy [2002] 254 ITR 755. 38. In the circumstances, on none of the grounds pleaded in the petition or at the time of hearing, the petition merits acceptance. The petition is acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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