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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 ..... .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 petitioner prays that : 1. this Hon'ble Court be pleased to call for the records of the proceedings, look into them and issue a writ of certiorari or any other appropriate writ, order or direction quashing the demand notices at Exhibits E1, E2 and E3. 2. this Hon'ble Court be pleased to issue a writ of mandamus or any other appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmon 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 irrational, arbitrary and the provision cannot be justified for any imaginable reasons. Similarly in relation to section 234B of the Act it was submitted by the learned Counsel, again in the alternative, that where the interest is payable under both the provisions viz. sections 234A and 234B of the Act there would be double charging of interest and hence section 234B of the Act should be read down to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ITR 597(SC); (iii) CIT v. Gangadhar Banerjee And Co. P. Ltd. (1965) 57 ITR 176(SC); (iv) CIT v. J. H. Gotla (1985)156 ITR 323(SC); (v) Commissioner of Gift Tax v. Smt. C. D. R. Laxmidevi (1996) 220 ITR 50 (Guj) 11. The propositions canvassed on basis of the aforesaid decisions were that while interpreting a taxing statute the provision has to be interpreted reasonably and in consonance with justice even though it may be true that equitable considerations are irrelevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 thus charging interest on an amount which in fact had already been paid as tax. For this purpose attention was invited to certain challans of payment to point out that the said challans specifically denoted that the amount paid under the said challans was towards tax and not interest. That in fact both the respondent authority and the assessee had understood the said aspect of the matter in same sense as could be seen from the final part of the respective assessment orders where the respondent authority had directed to give credit for prepaid tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Indian Contract Act cannot be pressed into service by the petitioner and even otherwise as held by the Apex Court in the case of I.C.D.S. Ltd. v. Smithaben H. Patel, AIR 1999 SC 1036, the provisions can apply only in a case where there are different debts whereas in the present case there are no different debts. 21. For the purpose of appreciating the contentions raised it is necessary to consider the provisions of sections 234A and 234B of the Act. The relevant extracts relatable to the Assessment Years in question read as under: "234A. Interest for defaults in furnishing r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted 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 lays down that in respect of income chargeable under sub-section (1) income tax shall be deducted at source or paid in advance, where it is so deductible or payable under any provision of the Act. Therefore, the scheme that emerges is that income tax is chargeable for any Assessment year in relation to total income of the previous year and such income tax is payable by the mode of deduction at source or by the mode of payment in advance as prescribed. Previous year in relation to any Assessment Year has been defined under sub-section (2) of section 3 to mean the period which begins with the date i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner-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 tax is due and the amount which is to be paid as advance tax. Even on this count, the petitioner-assessee has not stated that any payment as such had been made. In fact in the petition itself there is an indication that interest levied under section 234C of the Act by the respondent authority is not disputed by the petitioner as averred in paragraph No.2 of the petition. Section 234C of the Act relates to liability to pay interest for deferment of advance tax, viz. where there is short fall in payment of advance tax considering the prescribed percentage which is payable on each of the due dates commencing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner 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 raised by the petitioner does not merit acceptance; the context and setting of the aforesaid provisions do not even prima facie indicate that any other view, like the one canvassed by the petitioner is possible. 30. Coming to section 234B of the Act, the said provision directly deals with payment of interest for defaults in payment of advance tax. In fact the provision itself fastens liability to pay interest on the basis of liability to pay advance tax under section 208 of the Act and failure to pay such tax or where the advance tax paid by the assessee under the provisions of section 210 is less than the prescribed pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 no application in these proceedings. The defaults, and not offences, are not one : non-filing or late filing of return and non-payment or short payment of advance tax cannot be equated. The period for which the liability to pay interest arises has to be computed in accordance with the termini fixed by each of the provisions viz. sections 234A and 234B of the Act. The contention that if the statutory provision results in an absurdity or mischief not intended by Legislature the Court should import words so as to make sense out of the provisions also does not merit acceptance considering the fact that on a plain reading of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction 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 by the petitioner. It is true that the nature of the levy is compensatory in character but from that it is not possible to come to the conclusion that there is any arbitrariness or unreasonableness which would warrant striking down the provision. Even otherwise, the position in law is well settled. A taxing statute enjoys a greater latitude. An inference in regard to contravention of Article 14 of the Constitution would, however, ordinarily be drawn if the provision seeks to impose on the same class of persons similarly situated a burden which leads to inequality. That is not the case here. As already recorded hereinbefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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