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TMI Blog1985 (8) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 ('the Act') before filing the return. That tax was paid on 22-8-1980. The ITO asked the assessee to show cause as to why it should not be penalised under section 140A(3). The assessee replied that it could not pay the tax earlier due to lack of funds. The ITO did not find the above explanation to be satisfactory. He imposed penalty under section 140A(3). The quantum of penalty was calculated by him at 2 per cent of the tax payable. However, he took the period of default to be 24 months, i.e., from 31-7-1978 to 22-8-1980. It is to be noted that the ITO proceeded on the basis that the default under section 140A(3) started from the date on which the filing of the return became due. 3. The assessee appealed to the Commissioner (Appeals) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) erred in his decision. According to him the Commissioner (Appeals) cancelled the penalty on a wrong view of the meaning of the section. In this connection, he referred to the decision in the case of CIT v. National Taj Traders [1980] 121 ITR 535 (SC) wherein it has been held that a casus omissus should not be readily inferred and for that purpose all the parts of a statute must be considered together. 5. Shri R.N. Bajoria, the learned representative for the assessee, drew our attention to the cross-objection filed by the assessee wherein a ground has been taken to the effect that the Commissioner (Appeals) should have cancelled the penalty on the ground that the explanation given by the assessee for not paying the tax earlier should hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 (SC) it is observed that the provision of a statute should not be interpreted in a way to produce startling results not intended by the Legislature. In the case of National Taj Traders it has been held that the Court can supply an omission in order to avoid a manifestly absurd result that could never have been intended by the Legislature. In the case of K.L. Varadarajan v. CIT [1975] 98 ITR 182 (SC), it has been observed that the Legislature cannot be taken to have intended to create an anomaly which, in our opinion, includes an omission. In other words, the Legislature would not create an omission in the provision of a statute. If the intention of the Legislature is otherwise clear, then an apparent omission can be modified and set right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (3) says that the penalty is to be calculated for every month during which the default continues. The question that is raised in this appeal is as to when the aforesaid default starts. For getting the answer to that question one should remember the history of section 140A which first came into the statute book with effect from 1-4-1964. Before that there was a penalty for not filing the return within the prescribed time. This is the penalty under section 271(1)(a) of the Act. The default under this section starts from the date from which the return becomes due and ends on the date on which the return is filed. Then section 140A comes into play. Once the return is filed, the default under section 140A(3) starts. It ends on the day when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was not correct in saying that the intention of the Legislature was not evident from the statute. As stated earlier the intention was clear, namely, to prevent the second mischief. All the rules of interpretation laid down by the Supreme Court in the aforesaid cases direct to interpret the provision under consideration in a way that it is workable ; in a way to prevent the mischief that was prevalent prior to the enactment ; in a way to give effect to the clear intention of the Legislature. We have no doubt in our mind as to that intention which we have already stated earlier. If both the sections 271(1)(a) and 140A are taken together, there is no discrimination of the type apprehended by the learned Commissioner (Appeals). Thus, we hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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