Bombay High Court
Patel Aluminium Pvt. Ltd. vs Miss K.M. Tawadia, Income-Tax Officer ... on 12 December, 1985
Equivalent citations: (1985)87BOMLR697, (1986)51CTR(BOM)322, [1987]165ITR99(BOM), [1986]25TAXMAN248(BOM)
JUDGMENT Bharucha, J.
1. The income-tax assessment of the petitioner for the assessment year 1977-78 was completed on April 19, 1978, and it was determined that the income was nil. For the assessment year 1979-80, the petitioners' previous year ended on June 30, 1978. The petitioners did not file a statement of, or pay any, advance tax on June 15, 1978, when the first instalment thereof became due because their income for the previous assessment year had been determined as nil. On June 29, 1979, the petitioners filed a return of income for the assessment year 1979-80 in the sum of Rs. 2,88,360. They filed a revised return on September 11, 1981, declaring their total income at Rs. 5,47,710. They paid tax on self-assessment basis on June 28, 1979 and again on the revised return on September 7, 1981. The petitioners' assessment for the assessment year was completed on December 11, 1981, and the total income was determined at Rs. 5,54,010. The assessment order concluded thus :
"Interest under section 217(1)(a) is charged. Penalty show-cause notice under section 273 is issued".
2. On December 9, 1981, the petitioners were served with a notice to show cause why a penalty under section 273 should not be imposed upon them.
3. This petition was filed on January 11, 1982, to quash the assessment order in so far as it charged interest under section 217(1)(a) and the notice dated December 9, 1981.
4. To appreciate the arguments, it is necessary to set out the relevant provisions of the Income-tax Act, 1961, they read thus :
"217. (1) Where, on making the regular assessment, the Income-tax Officer finds
(a) that any such person as is referred to in clause (a) of sub-section (1) of section 209A has not sent the statement referred to in that clause or the estimate in lieu of such statement referred to in sub-section (2) of that section; or ......
simple interest at the rate of fifteen per cent. per annum from the 1st day of April next following the financial year in which the advance tax was payable in accordance with the said sub-section (1) or sub-section (2) up to the date of the regular assessment shall be payable by the assessee upon the amount equal to the assessed tax as defined in sub-section (5) of section 215."
"273. (1) If the Income-tax Officer, in the course of any proceedings in connection with the regular assessment for any assessment year, is satisfied that any assessee - ...
(b) has without reasonable cause failed to furnish a statement of the advance tax payable by him in accordance with the provisions of clause (a) of sub-section (1) of section 209A, he may direct that such person shall, in addition to the amount of tax, if any, payable by him, pay by way of penalty a sum - ..."
"209A. (1) Every person shall, in each financial year, on or before the date on which the first instalment, or where he has not previously been assessed by way of regular assessment under this Act, on or 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 -
(a) where he has been previously assessed by way of regular assessment under this Act, a statement of advance tax payable by him computed in the manner laid down in clause (a) or, as the case may be, sub-clause (i) of clause (d) of sub-section (1) of section 209, or....
and shall pay such amount of advance tax, - "
"209. (1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows :
(a)(i) his total income of the latest previous year in respect of which he has been assessed by way of regular assessment shall first be ascertained;
(ii) the amount of capital gains and income referred to in sub-clause (ix) of clause (24) of section 2, if any, included in such total income shall be deducted therefrom, and on the balance, income-tax shall be calculated at the rates in force in the financial year;
(iii) the income-tax so calculated shall be reduced by the amount of income-tax which would be deductible during the said financial year in accordance with the provisions of sections 192 to 194, section 194, section 194C, section 194D and section 195 on any income (as computed before allowing any deductions admissible under this Act) on which tax is required to be deducted under the said sections and which has been taken into account in computing the said total income;
(iv) the net amount of income-tax calculated in accordance with sub-clause (iii) shall, subject to the provisions of clauses (c) and (d), be the advance tax payable."
"208. (1) Advance tax shall be payable during the financial year
(a) Where the total income, exclusive of capital gains (and income referred to in sub-clause (ix) of clause (24) of section 2,) of the assessee, referred to in sub-clause (i) of clause (a) of sub-section (1) of section 209, exceeds the amount specified in sub-section (2), or
(b) where it is payable by virtue of the provisions of section 209A." Section 208(2) prescribes the amount referred to in clause (a) of sub-section (1).
5. Interest under section 217(1)(a) is payable when the Income-tax Officer finds that a person who has been previously assessed by way of regular assessment has not sent the statement referred to in section 209A(1)(a). Section 273(1)(b) provides for the payment of a penalty where the Income-tax Officer finds that an assessee has without reasonable cause failed to furnish a statement of advance tax payable by him in accordance with the provisions of section 209A(1)(a). The failure to submit the statement called for by section 209A(1)(a) forms the basis both for the levy of interest under section 217(1)(a) and the levy of penalty under section 273(1)(b).
Section 209A(1)(a) requires that every person who has been previously assessed by way of regular assessment under the Act shall, in each financial year, on or before the date on which the first instalment of advance tax is due in his case, if his current income is likely to exceed the amount specified in section 208(2), send to the Income-tax Officer "a statement of advance tax payable by him computed in the manner laid down in" section 209(1)(a). The provisions of sub-clause (i) also call for the payment of that amount of advance tax. Section 209(1)(a) requires that an assessee's total income of the latest previous year in which he has been assessed by way of regular assessment shall first be ascertained, that certain deductions shall be made therefrom, and that the net amount of income-tax thereon as so computed shall be the advance tax payable.
6. The argument of Mr. Dwarkadas, learned counsel for the petitioners, is that the petitioners are not liable to pay interest under section 217(1)(a) or a penalty under section 273 because they were under no obligation to furnish to the Income-tax Officer the statement required by section 209A(1)(a). The petitioners had been assessed to nil income for the previous assessment year. A computation made under section 209(1)(a), therefore, did not make the petitioners liable to payment of advance tax. There being no advance tax payable by the petitioners, there was no obligation cast upon them by section 209A(1)(a) to send to the Income-tax Officer the statement contemplated thereby.
7. Mr. Jetly, learned counsel for the respondents, submitted that the petitioners were obliged to send to the Income-tax Officer a statement of advance tax payable by them computed in the manner laid down by section 209(1)(a) even if such computation showed that the amount payable was nil.
8. The question really boils down to an interpretation of the words "a statement of advance tax payable by him computed in the manner laid down in" section 209(1)(a).
9. Under section 209A(1)(a), the obligation of an assessee who has been previously regularly assessed to tax is to compute the advance tax payable by him in the manner provided by section 209(1)(a), to send a statement of such computation to the Income-tax Officer and to pay the amount so computed. The statement that the assessee is obliged to send is a statement of the computation of the advance tax payable by him, such computation to be made as provided by section 209(1)(a). If upon such computation being made, no advance tax is found to be payable, there is no "advance tax payable". There being no "advance tax payable", there is no obligation to send to the Income-tax Officer a statement of such computation.
10. It would appear that the object of sending the statement is to make known to the Income-tax Officer, the computation upon which the figure of advance tax has been arrived at. Where no advance tax payment is to be made, there is no purpose in sending to the Income-tax Officer the statement of its computation.
11. In this view of the matter, it must be held that the petitioners were not obliged to send to the Income-tax Officer, the statement referred to in section 209A(1)(a). They cannot, therefore, be made liable to pay interest under section 217(1)(a) or a penalty under section 273.
12. It appears that despite the interim order made in this writ petition on January 13, 1982, the respondents have recovered from the petitioners interest under section 217(1)(a) in the sum of Rs. 50,722. They have done so by this means : A notice of refund was issued to the petitioners on April 19, 1983, for the assessment year 1982-83 in the sum of Rs. 1,83,798. The refund order thereon, however, was only in the sum of Rs. 1,33,076. The amount deducted is the exact sum of Rs. 50,722. In the circumstances, it is necessary to order the respondents forthwith to pay to the petitioners the sum of Rs. 50,722.
13. The petition is made absolute in terms of prayer (a). The respondents are ordered and directed forthwith to pay to the petitioners the sum of Rs. 50,722. The respondents shall pay to the petitioners the costs of the petition.
14.Rule accordingly.