Calcutta High Court
West Bengal State Electricity Board vs Deputy Commissioner Of Income-Tax on 14 September, 2000
Equivalent citations: [2001]248ITR152(CAL)
JUDGMENT
1. There will be an order in terms of prayer (a) of the petition.
2. We have heard learned counsel on the proposed points of law. Since the hearing has taken some time and since we have been excellently assisted by both sides we would like to give a short background as to why we propose to entertain this appeal.
3. The first question relates to the interest for delayed deposit of tax deducted at source. Section 201(1A) is involved. It is said that the Assessing Officer, for all the assessment years excepting only one, wrongly passed orders in this regard as, by Notification No. S. O. 1536, dated April 10, 1989, the jurisdiction in that regard had gone over to the Income-tax Officer (TDS) with effect from May 8, 1989.
4. The aggregate amount of interest exceeds Rs. 3 crores. On the merits, the assessee was not successful. The point was also taken for the first time only before the Tribunal. We first thought that the point of jurisdiction does not involve a substantial question of law but only a petty, or a hole-picking one.
5. Section 260A{1) reads as follows :
"(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law."
6. We are of the opinion that the phrase "a substantial question of law" means any question of law which affects the substance of the case. If the High Court is satisfied that the question is one of law, and if decided in favour of the prospective appellant will substantially affect the tax liability, or some other matter of substance in the case, then the High Court is compelled to entertain the appeal. It cannot entertain appeals only on points of law which are somehow thought by it to be sufficiently serious.
7. Therefore, we entertain the appeal on this point.
8. The second point relates to whether the levy under Section 201(1A) is compulsorily to be made at the specified rate. At present, the said Subsection reads as follows :
"(1A) Without prejudice to the provisions of Sub-section (1), if any such person, principal officer or company as is referred to in that subsection does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at fifteen per cent, per annum on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid."
9. There are decisions of the Bombay and the Kerala High Courts that the word "shall" is mandatory. It was argued that because an appellate provision is there, from this Sub-section in Section 246(1)0). the word "shall" cannot be mandatory, because then the appellate provision will be, partly at least, useless.
10. There are many parts of the Income-tax Act where the word "shall" has not been given an inflexible mandatory meaning. We wish to examine this question upon a fuller and fairer consideration of the entirety of the Act. We were persuaded to entertain the appeal on this point, on the following dictum of Lord Coke given in the Lincoln College's case .. . "the office of a good expositor of an act of Parliament, is to make construction on all parts together, and not of one part only by itself".
11. The third issue related to natural justice. For the assessment year 1985-86 only, the correct officer had exercised jurisdiction. But he had not heard the assessee. The assessee was, however, fully heard in appeal. We were still minded to entertain the appeal because of the various authorities quoted in the case of Hindustan Pilkingston Glass Works Ltd. v. Superintendent of Central Excise [1978] 2 ELT 229 (Cal) at paragraphs 13 to 17. If the first authority does not hear the assessee, the assessee loses a chance of being able to persuade the first authority to hold in its favour.
12. The order and observations are without prejudice. The following questions shall be heard in appeal :
Common to all the five assessment years from 1983-84 to 1987-88 :
"1. Whether on a proper interpretation of Sections 201(1A) and 246(1)(i) of the Income-tax Act, 1961, read in the context of the entire Act, the charging of interest under the former section can be regarded as automatic and/or mandatory ?
2. Whether, having regard to the character of the West Bengal State Electricity Board and the nature of its statutory functions as well as the state of its finances during the relevant period of time, the imposition on it of the further financial burdens amounting to a total sum of Rs. 3,38,40,858 was so opposed to fairness and justice, as not to be supportable in law ?"
Cummon to the four assessment years 1983-84, 1984-85, 1986-87 and 1987-88 ;
"3. Whether on a proper interpretation of the provisions of the Act and the Notification No. S. O. 1536, dated April 10, 1989. the orders passed by the Deputy Commissioner of Income-tax. Special Range-I. Calcutta, were without jurisdiction, and thus nullities and, consequently, were all the subsequent proceedings in respect thereof also ?"
For the assessment year 1985-86 :
"4. Whether the order passed by the Income-tax Appellate Tribunal, on the appeal before it, without finding in favour of the assessee on the point of denial of hearing before the first officer, is valid in law ?"
13. Let the legible copies of all relevant papers in informal paper books be filed before this court within four months after reopening after the puja vacation.
14. All parlies and all others concerned to act on a signed xerox copy of this order on the usual undertakings.