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TMI Blog1978 (2) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Appellate Assistant Commissioner disposed of the appeals by a consolidated order. One of the points agitated before the Appellate Assistant Commissioner was whether the representative assessee was liable to pay interest under section 217(1) of the Income-tax Act, 1961. for non-payment of advance tax in accordance with the provisions of section 212(3) of the said Act. The Appellate Assistant Commissioner came to the conclusion that as the Income-tax Act, 1961, became law only on the 1st April, 1962, it did not confer any authority for levying interest for omission to file an estimate and pay advance tax during the financial years 1959-60 and 1960-61. Accordingly, he remitted the payment of such interest. From this decision of the Appellate Assistant Commissioner the revenue preferred a further appeal to the Income-tax Appellate Tribunal. In the appeal, the revenue contended that there was no right of appeal against the levy of interest under section 217 of the Act and, therefore, the interest levied could not be remitted in appeal. It was contended further that the Appellate Assistant Commissioner in any event erred in holding that no interest was leviable under the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may direct that the assessee shall pay simple interest at six per cent. per annum, in the case referred to in clause (a) for the period during which the payment was deficient on the difference between the amount paid in each such instalment and the amount which should have been paid having regard to the aggregate tax actually paid under this section during the year, and in the case referred to in clause (b) for the period during which the payment of tax was wrongly deferred on the amount of which the payment was so deferred .............. Section 28(1)--Proviso (c) : " No penalty shall be imposed under this sub-section upon any person assemble under section 42 as the agent of a person not resident in the taxable territories for failure to furnish the return required under section 22 unless a notice under subsection (2) of that section or under section 34 has been served on him. " " Section 42. Income deemed to accrue or arise within the taxable territories.--(1) All income, profits or gains accruing or arising, whether directly or indirectly, through or from any business connection in the taxable territories, or through or from any property in the taxable territories, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the prescribed manner and setting forth such other particulars as may be prescribed. .." " 160. Representative assessee.--(1) For the purposes of this Act, 'representative assessee' means-- (i) in respect of the income of a non-resident specified in clause (i) of sub-section (1) of section 9, the agent of the non-resident, including a person who is treated as an agent under section 163 ; (ii) in respect of the income of a minor, lunatic or idiot, the guardian or manager who is entitled to receive or is in receipt of such income on behalf of such minor, lunatic or idiot ; (iii) in respect of income which the Court of Wards, the Administrator-General, the Official Trustee or any receiver or manager (including any person, whatever his designation, who in fact manages property on behalf of another) appointed by or under any order of a court, receives or is entitled to receive, on behalf or for the benefit of any person, such Court of Wards, Administrator-General, Official Trustee, receiver or manager ; (iv) in respect of income which a trustee appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise (including any w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) No person shall be treated as the agent of a non-resident unless he had had an opportunity of being heard by the Income-tax Officer as to his liability to be treated as such." " 212.(3).--Any person who has not previously been assessed by way of regular assessment under this Act or under the Indian Income-tax Act, 192 (XI of 1922), shall, in each financial year, before the date on which the last instalment of advance tax is due in his case under sub-section (1) of section 211, if his current income is likely to exceed the amount specified in sub-section (2) of section 208, send to the Income-tax Officer an estimate of -- (i) the current income, and (ii) the advance tax payable by him on the current income calculated in the manner laid down in section 209, and shall pay such amount of advance tax as accords with his estimate on such of the dates applicable in his case nder section 211 as have not expired, by instalments which may be revised according to subsection (2)." " 271(3)(c).--No penalty shall be imposed under sub-section (1) upon any person assessable under clause (i) of sub-section (1) of section 160, read with section 161, as the agent of a non-resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be regarded as an agent under section 163 before the commencement of the assessment year so that he could be called upon to pay advance tax under section 210. A Single Bench of the Bombay High Court in disposing of the application did not agree with the contention that agents appointed before the commencement of the assessment year cannot be subjected to the liability to pay advance taxes as representative assessees. It was noted that the liability of a statutory agent as a representative assessee was defined by section 161. It being the accepted position that the nonresident would have been liable to pay advance tax if he was directly assessed, it necessarily followed that the agent as his representative assessee was also liable to pay tax in advance in the like manner and to the same extent. (c) H. L. Sud, Income-tax Officer v. Tata Engineering Locomotive Co. Ltd. [1969] 71 ITR 457 (SC). The facts in this case before the Supreme Court were that a notice was issued by the Income-tax Officer to the respondent, an Indian company, in respect of each of the assessment years from 1955-56 to 1961-62, under section 43 of the Indian Income-tax Act, 1922, intimating that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to pay interest thereon for nonpayment thereof under all circumstances. But the Income-tax Officer was conferred power under this rule to waive such interest if such waiver was called for in the facts and circumstances. Dr. Debi Pal, learned counsel for the assessee, has contended that in order to hold the representative assessee liable to pay advance tax it must first he held that the non-resident was liable to pay advance tax and that finding not having been arrived at there was no question of holding the representative assessee liable for advance tax. Dr. Pal contended further that the statute in any event should not be given retrospective effect. The liability of the representative assessee must be held to arise from the point of time when he is treated as a representative assessee by the Income-tax Officer and not earlier. An opportunity had to be given to the person who was going to be treated as representative assessee. It was only after giving him such opportunity the Income-tax Officer can make an order recording that he would be treated as a representative assessee. Therefore, the liability of such an assessee cannot be determined retrospectively. He also faintly ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer that the representative assessee had failed to submit an estimate of the non-resident's income in accordance with the provisions of section 18A(3) and to make advance payment of tax. Accordingly, after a notice under section 28(3), the Income-tax Officer imposed a penalty. On appeal the Appellate Assistant Commissioner vacated the order of penalty. On further appeal the Tribunal revised the decision of the Appellate Assistant Commissioner and held that the penalty was imposable. The question referred to the High Court was whether in the facts and circumstances penalty should be legally imposed on the agent of the non-resident under section 18A(9) read with section 28(1). The High Court held that if an assessee did not comply with the provisions of section 18A(3), he would be deemed to have failed to make a return and would also be deemed that the assessee was served with a notice under section 22 of the Act and, therefore, was required to make a return and the question of making a return could not arise under section 18A. The agent of a non-resident, however, could not be held liable to any penalty for not filing a return except where he failed to make a return in spite of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a penal statute, which saddles a person with liability or puts a person in jeopardy, should not be given a retrospective effect unless the statute expressly professes to be so : see Maxwell on the Interpretation of Statutes, 12th Edn., page 215. Rule 40 of the Income-tax Rules cannot impart a greater retrospective effect to the sections. There may be cases where a person can be prospectively treated as a representative assessee of a non-resident in the assessment year concerned and held liable to pay advance tax on behalf of the non-resident, and yet there may be other circumstances which he may successfully plead for waiver or reduction of interest levied for non-payment of such advance tax. It appears to us that it would lead to many anomalous situations if section 161 is given a fully retrospective operation. Unless a person is treated as a representative assessee, he can neither file a return nor pay any advance tax on estimate on behalf of the non-resident. Even if a person apprehends that he may in future be treated as the representative of a non-resident, all he can do is to retain moneys payable by him to the non-resident on an estimate basis. He cannot pay any advance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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