Calcutta High Court
Narain Das Paramanand Das vs Income-Tax Officer, 'E' Ward And Ors. on 17 July, 1974
Equivalent citations: [1979]117ITR174(CAL)
JUDGMENT Salil K. Roy Chowdhury, J.
1. This is an appeal from a judgment and order dated the 7th of February, 1972 [Narandas Paramanand Das v. Income-tax Officer ] by which the trial judge dismissed the petitioner's writ petition directed against three notices, two dated the 3rd of December, 1966, and 6th of March, 1968, issued by the respondent No. 1 under Section 274 read with Section 271 of the I.T. Act, 1961, and the third one being dated the 21st of February, 1968, issued under Section 274 read with Section 273 of the said Act. All the said notices were in respect of the assessment year 1963-64 for imposing penalty, calling upon the appellant, which is a partnership-firm, to show cause why penalty should not be imposed for not filing the return under Section 139(1) of the I.T. Act, 1961, and also for not filing an estimate of advance tax payable under Section 18A(3) of the Indian I.T. Act, 1922, or Section 212(3) of the I.T. Act, 1961, for the same assessment year.
2. The appellant argued only two points before the trial court. Firstly, that Section 22(3) of the Indian I.T. Act, 1922, is nothing but a proviso to Section 22(1)/22(2) of the said Act and as such if the return is filed before the assessment is complete then it cannot be said that the return is filed out of time. The said contention was advanced on the basis of the Supreme Court decision in CIT v. Kulu Valley Transport Co. P. Ltd. and S.C. Praskar v. Vasantsen Dwarkadas . The second point urged was that the penal interest was levied under Section 139 of the I.T. Act, 1961, the respondents cannot initiate proceeding under Section 271 for penalty inasmuch as it would amount to double jeopardy.
3. It is an admitted position in this case that the appellant filed the return for the assessment year 1963-64 on the 23rd of May, 1967, and thereafter a revised return was filed on the 14th of September, 1967. It is also admitted that the ITO has imposed interest for the said assessment year amounting to Rs. 87,020 under Section 139(1)(b), proviso to Clause (iii), and Rs. 510 under Section 215 of the said Act. The trial judge rejected both the contentions of the appellant relying on the Supreme Court decision in Gursahai Saigal v. CIT [1963] 48 ITR(SC) 1.
4. But before us Dr. Debi Pal appearing with Mr. Sanjoy Bhattacharjee for the appellant argued a completely new case which was not argued before the trial court at all. As the said question was purely a question of law as to the construction and interpretation of Sections 139(1) and 139(4) of the I.T. Act, 1961, we allowed the said point to be raised and both parties argued only on the said question and cited several Supreme Court decisions and decisions of other High Courts in India dealing with that aspect of the matter.
5. It is now purely a question of construction of Section 139(1), prov. (iii), and Section 139(4) of the 1961 Act and also Section 271(1)(a) of the said Act. For convenience I am setting out the said provisions hereunder ] "139. Return of income.--(1) Every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed--...
(b) in the case of every other person, before the 30th day of June of the assessment year:
Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing the return--......
(iii) up to any period falling beyond the dates mentioned in Clauses (i) and (ii), in which case, interest at nine per cent. per annum shall be payable from the 1st day of October or the 1st day of January, as the case may be, of the assessment year to the date of the furnishing of the return-
(a) in the case of a registered firm or an unregistered firm which has been assessed under Clause (b) of Section 183, on the amount of tax which would have been payable if the firm had been assessed as an unregistered firm; and
(b) in any other case, on the amount of tax payable on the total income, reduced by the advance tax, if any, paid or by any tax deducted at source, as the case may be..........
(4) Any person who has not furnished a return within the time allowed to him under Sub-section (1) or Sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of four assessment years from the end of the assessment year to which the return relates and the provisions of Sub-clause (iii) of the proviso to Sub-section (1) shall apply in every such case."
"271. Failure to furnish returns, comply with notices, concealment of income, etc.--(1) If the Income-tax Officer or the Appellate Assistant Commissioner, in the course of any proceedings under this Act, is satisfied that any person-
(a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under Sub-section (1) of Section 139 or by notice given under Sub-section (2) of Section 139 or Section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by Sub-section (1) of Section 139 or by such notice, as the case may be, or......
he may direct that such person shall pay by way of penalty,--........."
6. Dr. Debi Pal submitted that on an analysis of Clause (iii) of the proviso to Section 139(1) it is clear that-
(a) The ITO has the power and the discretion to extend the date for furnishing the return up to any time beyond the dates mentioned in Clauses (i) and (ii) of the proviso to Section 139(1).
(b) In the event, he extends the date for furnishing the return, the interest at 9% from 1st of October or 1st of January, as the case may be, up to the date of the furnishing of the return shall be charged. He further submitted that, in other words, the interest at 9% up to the date of the furnishing of the return cannot be charged unless the ITO in his discretion extends the date for furnishing the return. Clause (iii) specifically uses the expression "in which case" (i.e., in the case where the ITO in his discretion extends the date for furnishing the return up to any period falling beyond the dates mentioned in Clauses (i) and (ii) of the proviso to Section 139(1), interest shall be charged at 9% up to the date of filing of the return. Therefore, under the proviso to Section 139(1), interest cannot be charged unless the date for furnishing of the return is extended by the ITO. The ITO has no competence, jurisdiction and/or authority to impose interest under Clause (iii) unless he, in his discretion, extends the date for furnishing the return. This power of extending the date for furnishing the return on payment of interest can be exercised when procedural formality of an application having been made in the prescribed manner is complied with.
7. Dr. Pal contended that, in other words, the making of an application in the prescribed manner is a procedural formality which, if complied with, the power to extend the date for furnishing the return on payment of interest is to be exercised. Dr. Pal submitted that Section 139(4) gives a statutory right to an assessee to furnish the return for any previous year at any time within 4 years from the end of the assessment year and in such a case the provisions of Clause (iii) of the proviso to Section 139(1) shall be applied in every case. In other words, the entire provisions of Clause (iii) of the proviso to Section 139(1) apply. The substantive part of prov. (iii) is the power to extend the date of furnishing return on payment of interest. The ITO will have to exercise the power and such power can be exercised if the procedural formality of making an application is complied with. When prov. (iii) applies by reason of Section 139(4) it means that prov. (iii) shall apply mutatis mutandis with such changes as may be necessary. The procedural part of making an application in the prescribed manner cannot apply when the case falls under Section 139(4). Therefore, Dr. Pal submits, the ITO will exercise his substantive power given under the proviso to Section 139(1) of extending the date for furnishing the return on payment of interest without any application being made in the prescribed manner.
8. On the basis of the above argument Dr. Pal submits that the said notices are bad in law and should have been quashed and set aside as asked for in the writ petition by the appellant by the trial court. Dr. Pal further contends that none of the decisions cited by Mr. Balai Pal appearing for the respondents have considered the question from the aspect which has been submitted by Dr. Pal and as such cannot be said to have been correctly decided.
9. Dr. Pal relies on the well-settled principles of construction of taxing statutes that when the provision is ambiguous and is capable of two meanings, the construction beneficial to the citizen should be adopted. He relies on the Division Bench decision of this court in CIT v. Vegetable Products Ltd. , which was affirmed by the Supreme Court in . Dr. Pal submits that the construction put by him on the said Section 139(4) of the I.T. Act, 1961, is reasonable and should be applied and as such the notices must be held to be bad and illegal and should be set aside and quashed. Dr. Pal again stressed on the question that the Andhra Pradesh and Gujarat High Courts' decisions had hot considered the aspect of the matter from the angle which Dr. Pal had pressed before us and as such the said decisions could not be said to be good law and should not be followed by this court.
10. Mr. Balai Pal appearing for the respondent submits that the identical question which has been raised by the appellant before us has been fully considered by the Madras High Court, the Andhra Pradesh High Court and the Gujarat High Court and it has been uniformly held that the filing of return under Section 139(4) of the I.T. Act, 1961, cannot come within the meaning of the words "within the time allowed......by Sub-section (1) of Section 139" within the meaning of Clause (ii) of Section 271(1)(a) of the I.T. Act, 1961, and as such there is no bar to initiation of penalty proceedings against an assessee who has filed the return under Section 139(4) of the I.T. Act, 1961, and paid interest under prov. (iii) of Section 139(1) of the I.T. Act. He cited the Madras High Court decision in K.C. Vedadri v. CIT , a Division Bench decision of the Andhra Pradesh High Court in T. Venkata Krishnaiah and Co. v. CIT and the Division Bench decision of the Gujarat High Court in Addl. CIT v. Santosh Industries [1974] 93 ITR 563 (Guj). Mr. Pal placed the said three decisions before us and elaborately argued drawing our attention to various passages in those decisions where the identical question raised by the appellant was considered and it had been held that the time within which return of income might be filed under Section 139, Sub-s, (4), could not be projected in the Clause (ii) of Section 271(1) of the I.T. Act, 1961. In other words, where an assessee has failed to furnish return within the time allowed to him under Section 139, Sub-section (1), but has furnished it thereafter under Section 139(4) can be said to be guilty of default so as to attract the penalty under Section 271(1)(a) of the I.T. Act. Relying on those decisions very strongly Mr. Pal submitted that it should be held that there was no substance in this appeal as the construction sought to be put by Dr. Debi Pal on the said sections was not permissible and had been rejected by overwhelming judicial decisions of the said three High Courts referred to by him.
11. Therefore, Mr. Pal submitted that the appeal should be dismissed.
12. Considering the contentions of both the parties carefully, it appears to us that the interpretation sought to be put on the said Section 139(1), prov. (iii) thereto and Section 139(4), by Dr. Pal is not possible as that would go directly against the clear unambiguous wordings and intention of the said section. The decision of the Gujarat HighCourt in Addl. CIT v. Santosh Industries [1974] 93 ITR 563 (Guj) has covered the question raised by Dr. Pal, although not in that specific form in which Dr. Pal sought to raise before us. In the said decision of the Gujarat High Court [1974] 93 ITR 563 at 566, Bhagwati C.J. formulated the question raised before the Bench as follows:
"We will, therefore, proceed to discuss the question before us on the basis that the assessee failed to furnish the return within the time allowed to it under Section 139, Sub-section (1), but furnished it thereafter, within four years from the end of the assessment year 1961-62, as contemplated tinder Section 139, Sub-section (4). Can the assessee in such a case be said to be guilty of default so as to attract the penalty under Section 271(1)(a) ? The answer to the question turns primarily on the true interpretation of two sections of the new Act, Section 139 and Section 271(1)(a)."
13. The identical question is also raised before us, as the facts are also the same, that is, the appellant failed to furnish the return within the time allowed under Section 139(1), but filed the same under Section 139(4). Interest has been imposed under prov. (in) of Section 139(1) and penalty proceeding under Section 271(1)(a) has been started by issuing notices under the said section which have been impugned by the writ petition filed by the appellant. Dr. Pal's only ground on which the correctness of the said Division Bench judgment of the Gujarat High Court and other High Courts which have been referred to earlier dealing with the interpretation of the said relevant sections are challenged, is that the angle from which he is interpreting the said Section 139(4) of the I.T. Act, 1961, was not considered by the said High Courts and, therefore, the said decisions should not be followed by us.
14. Now, we have to examine whether the new angle of approach of Dr. Pal for interpreting the said Section 139(4) is permissible or possible having regard to the wordings and scheme of the said Section 139 of the I.T. Act.
15. Before proceeding further it will be convenient to notice some well-settled rules of construction of taxing statutes which have been noted with approval by the Supreme Court. In Rajputana Agencies Ltd. v. CIT , Gajendragadkar J., referring to the principles that fiscal statutes must be strictly construed, approved a passage from Maxwell on the Interpretation of Statutes, 10th edn., p. 284, which is as follows : "The tendency of modern decisions, upon the whole, is to narrow materially the difference between what is called a strict and beneficial construction." The said quotation appears at page 174 of referred to above.
16. Then again the Supreme Court, in dealing with the rules of construction of taxing statutes in CIT v. Shahzada Nand and Sons (Subba Rao J.) observed as follows:
"Before we advert to the said arguments, it will be convenient to notice the relevant rules of construction. The classic statement of Rowlatt J. in Cape Brandy Syndicate v. IRC [1921] 1 KB 64 at page 71 still holds the field. It reads : ' ......In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is ho equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied, one can only look fairly at the language used.' To this may be added a rider: in a case of reasonable doubt the construction most beneficial to the subject is to be adopted. But even so, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. ' The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the court as to what is just or expedient.' The expressed intention must guide the court. Another rule of construction which is relevant to the present enquiry is expressed in the maxim, generalia specialibus non derogant, which means that when there is a conflict between a general and a special provision, the latter shall prevail. The said principle has been stated in Craies on Statute Law, 5th edn., at page 205, thus:
'The rule is, that whenever there is a particular enactment and a general enactment in the same statute, and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply.' But this rule of construction is not of universal application. It is subject to the condition that there is nothing in the general provision, expressed or implied, indicating an intention to the contrary : see Maxwell on the Interpretation of Statutes, 11th edn., at pages 168-169. When the words of a section are clear, but its scope is sought to be curtained by construction, the approach suggested by Lord Coke in Heydon's case [1584] 3 Co Rep. 7b yields better results :
'To arrive at the real meaning, it is always necessary to get an exact conception of the aim, scope and object of the whole Act; to consider, according to Lord Coke : 1. What was the law before the Act was passed ;
2. What was the mischief or defect for which the law had not provided ;
3. What remedy Parliament has appointed ; and 4. The reason of the remedy'."
17. It will be convenient for us also to add a passage from Craies on Statutt Law, 7th edn., at page 115, which runs as follows :
"The rule, while valuable as a caution, cannot be taken as varying the ordinary rules for construing all statutes including taxing Acts. In Att.-Gen. v. Carlton Bank [1899] 2 QB 158, 164 (QB) Lord Russell of Killowen C J. said : ' I see no reason why any special canons of construction should be applied to any Act of Parliament, and I know of no authority for saying that a taxing Act is to be construed differently from any other Act. The duty of the court is, in my opinion, in all cases the same, whether the Act to be construed relates to taxation or to any other subject, viz., to give effect to the intention of the legislature, as that intention is to be gathered from the language employed, having regard to the content in connection with which it is employed. The court must no doubt ascertain the subject-matter to which the particular tax is by the statute intended to be applied, but when once that is ascertained, it is not open to the court to narrow or whittle down the operation of the Act by considerations of hardship or business convenience, or the like '. The burden is however of course on the Crown to show that the subject is within the provisions of the Act."
18. We with great respect also agree with the words of caution of Bhag-wati C.J. sounded in the said Gujarat High Court decision in Addl. CIT v. Santosh Industries [1974] 93 ITR 563 (Guj) at page 569 quoting the celebrated passage of Warrington L.J. in Barrell v. Fordree [1932] AC 676 at 682 (HL) which are as follows :
"The safer and more correct course of dealing with a question of construction is to take the words themselves and arrive, if possible, at their meaning without, in the first place, reference to cases,"
19. Keeping these principles in mind, if we now examine the provisions of Section 139 of the I.T. Act, 1961, it would appear that it is the first section in Chap. XIV of the I.T. Act, 1961, under the heading "Procedure for assessment". In Sub-section (1) it provides that any one who has an assessable income has to furnish a return of his income in the prescribed form and in the prescribed manner within the specified time mentioned in Clause (1), Sub-clauses (a) and (b), as the case may be. The said initial period for furnishing the return is the time allowed to all assessees under the said Act as a matter of statutory right. By the proviso to Section 139(1) power has been given to the ITO to exercise his discretion for extending the time for furnishing the return by an assessee on his application in the prescribed manner. Under provs. (i) and (ii) the ITO can extend the time at his discretion without charging interest. But the prov. (iii) gives power to the ITO to extend the time beyond the periods mentioned in provs. (i) and (ii) at his discretion, but if he grants such extension of time to furnish the return by the assessee he must charge interest at the rate prescribed therein from first of October or first of January, as the case may be, to the date of the furnishing of the return. Therefore, the prov. (iii) to Sub-section (1) of Section 139 contemplates, as Dr. Pal rightly contended, two parts : one an application by the assessee in the prescribed manner for extension of time to file his return beyond the periods mentioned in provs. (i) and (ii) and consideration of the said application by the ITO who has the power at his discretion to extend the time and the second part to charge interest on such extension being granted for the period mentioned in the said proviso.
20. In our view, it will be also useful to examine Section 139(2) and the proviso thereof. Under Sub-section (2), the ITO has the power to serve a notice upon a person who, in the opinion of the ITO, is assessable under the I.T. Act, requiring him to furnish within 30 days from the date of the service of the notice a return of his income during the previous year. The proviso to Sub-section (2) of Section 139 gives a right to a person on whom the ITO has served a notice under Sub-section (2) of Section 139 to make an application in the prescribed manner before the ITO to extend the date for furnishing of the said return. If the original date fixed or the extended dates fall beyond the 30th of September, or 31st of December of the assessment year, as the case may be, the ITO, if he extends the time, must also impose the interest under the prov. (iii) to Sub-section (1) of Section 139 of the said Act. Therefore, it is quite clear from the provisions of Sub-section (1) and Sub-section (2) of Section 139, that the imposition of interest is mandatory if the extension granted by the ITO at his discretion on the application of the assessee beyond the period provided both in prov. (iii) of Section 139(1) and proviso to Sub-section (2) of Section 139. It may be noted that the said proviso to Sub-section (2) of Section 139 also contemplates extension of time beyond the original period of 30 days fixed by the notice served by the ITO under Sub-section (2) of Section 139. The wordings are :
"Provided that on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for the furnishing of the return, and when the date for furnishing the return, whether fixed originally or on extension, falls beyond the 30th day of September, or, as the case may be, the 31st day of December of the assessment year, the provisions of Sub-clause (iii) of the proviso to Sub-section (1) shall apply."
21. It is clear from the said two sub-sections, that is, Sub-sections (1) and (2) of Section 139, after the initial period within which the return can be furnished by the assessee, the ITO has a discretion to extend the time on the application of the assessee in the prescribed manner for a period without charging interest and it is mandatory for the ITO to charge interest if the extension is beyond the periods provided in the said sub-sections.
22. Now, if the wordings of Sub-section (4) of Section 139 are examined in the background of Sub-sections (1) and (2) of Section 139 which have been set out before, it is clear that the assessee has an independent statutory right without applying for extension of time for furnishing his return or, without filing the return within the time extended by the ITO either under the proviso to Sub-section (1) or under the proviso to Sub-section (2) to file his return at any time before the end of four years from the end of the relevant assessment year. In such cases, the assessee is liable to pay interest at the statutory rate as provided in prov. (iii) to Sub-section (1) of Section 139. In such cases, the ITO is bound to accept the return and process the same but has no jurisdiction or power to exempt the assessee from payment of interest as the provision of the said Sub-section (4) is that the prov. (iii) to Sub-section (1) of Section 139 shall apply in every such case. That being the clear wordings in the provisions of the said sections, can it be now said that if an assessee files his return under Section 139(4) of the I.T. Act, 1961, he is liable to pay interest only on the basis of extension of time by the ITO within the meaning of prov. (iii) of Sub-section (1) of Section 139 of the said Act. Dr. Pal's argument that such an interpretation of Section 139(4) is possible and if it is so, the said interpretation being beneficial to the assessee should be accepted according to the well-settled principles of interpretation of taxing statute as laid down in the Supreme Court decision in CIT v. Vegetable Products Ltd. referred to before, cannot be accepted.
23. If we now test the construction sought to be put by Dr. Pal on Section 139(4) of the I.T. Act, 1961, it appears that such a construction is not possible having regard to the wordings of the said section and the scheme thereof as that would render the provision empowering the ITO to extend the time for furnishing the return by an assessee under prov. (iii) to Sub-section (1) of Section 139 or under the proviso to Sub-section (2) of Section 139 useless and redundant, as according to the interpretation of Dr. Pal, an assessee can file his return at any time within the four years prescribed under Sub-section (4) of Section 139 without applying for extension of time before the ITO on payment of interest under prov. (iii) to Sub-section (1) of Section 139 of the I.T. Act, 1961. In other words, even if an assessee has been refused extension of time on his application by the ITO either under the proviso to Sub-section (1) of Section 139 or under the proviso to Sub-section (2) of Section 139, he can immediately or within the prescribed period of four years, file his return under Section 139(4) of the I.T. Act paying interest and thereby assume a position as if the ITO has granted him extension of time although in fact it has been rejected. That seems to be an absurdity and renders prov. (iii) to Sub-section (1) of Section 139 redundant and nugatory. Further, from the scheme of the said Section 139(1), (2) and (4) it is quite clear that the assessee is given, firstly, a statutory period for filing his return either voluntarily or on being served with a notice by the ITO under Sub-section (2) of Section 139 and thereafter further time can be granted by the ITO on the application of the assessee in the prescribed manner without charging interest and thereafter interest must be charged if the time is extended by the ITO on the application of the assessee in the prescribed manner beyond the specified period. Whereas in Sub-section (4) of Section 139 an assessee who has not furnished his return within Sub-section (1) or Sub-section (2) of Section 139 has a further statutory right to file his return within four years mentioned in Sub-section (4) of Section 139. But in every such case interest is chargeable on the basis of prov. (iii) to Sub-section (1) of Section 139. The time granted under Sub-section (4) has got nothing to do with any application in the prescribed manner by the assessee for extension of his time to file the return beyond the time allowed under Sub-section (1) or Sub-section (2) of Section 139 because the opening words of Sub-section (4) make it clear that it only applies to an assessee who has not furnished his return within the time allowed to him under Sub-section (1) and Sub-section (2) of Section 139. So, it contemplates two types of persons, one who has not made any application for extension of time in the prescribed manner before the ITO for filing his return either under Sub-section (1) or Sub-section (2) of Section 139 and another who after making such application for extension of time before the ITO either refused or obtaining an extension which was granted by the ITO exercising his discretion, has not filed the return within the extended time. Therefore, it leaves no doubt and there is no ambiguity that Sub-section (4) only contemplates a person who does not come under Sub-section (1) or Sub-section (2) and independently of the said two sections or after exhausting the said section, files his return within the period of four years prescribed in Sub-section (4) of Section 139. So, it is not possible or permissible to put the construction, that, as if it is only on the basis of granting extension of time by the ITO, interest can be charged under prov. (iii) to Sub-section (1) of Section 139 of the I.T. Act, 1961. Sub-section (4) seems to be an independent provision where the ITO has no discretion or power to extend the time as there is no application in the prescribed manner for extension of time to file the return by the assessee. Therefore, only the provision for statutory liability to pay interest as provided under prov. (iii) to Sub-section (1) of Section 139 is applicable. The provision seems to be quite clear and unambiguous as no other interpretation is possible as that would render the power of the ITO to extend the time for furnishing the return on the application in the prescribed manner by an assessee meaningless and redundant. Further, that would amount to an assessee getting indirectly what he could not get directly, that is, getting an extension of time to file his return beyond the periods under Sub-section (1) or Sub-section (2), as the case may be, without making an application before the ITO in the prescribed manner. That is an absurdity which is not warranted by the wordings of the said sections and such an interpretation would render the provision of Sub-section (1) or Sub-section (2) for extension of time beyond the specified period on the application of the assessee in the prescribed manner by the ITO at his discretion wholly unnecessary. And that interpretation would give a right to an assessee to file his return at any time within the four years as prescribed under Sub-section (4) of Section 139 by payment of interest only, as if the time has been allowed by the ITO although there was no application for the same in the prescribed manner or such an application has been rejected by the ITO exercising his discretionary power. Therefore, such a construction is not warranted by the wordings and the scheme of the said Sub-sections (1), (2) and (4) of Section 139 of the I.T. Act, 1961. The only interpretation possible is that an assessee, who has not filed his return within the time allowed either originally or within the extensions under Sub-section (1) or Sub-section (2) of Section 139 is given a statutory period of four years to file his return and imposition of interest as prescribed in prov. (iii) to Sub-section (1) of Section 139 is made compulsory.
24. We cannot but come to the conclusion that the whole intention and object of the legislature was to give a defaulter-assessee the last opportunity to furnish his return within four years from the end of the assessment year to which the return relates without applying for extension of time to file such return either under the proviso to Sub-section (1) of Section 139 or under the proviso to Sub-section (2) of Section 139, as the case may be, or even in cases where the assessee having obtained extensions under the said provisos has not filed his return within the extended time and also in case where such extension has been refused by the ITO to file the return within the four years. But he must pay the interest at the rate specified for the period between the date on which he should have furnished his return and the date on which he filed the return under Section 139(4) of the I.T. Act, 1961. So, it appears that the provision of Section 139(4) simply gives a statutory period for filing a return to an assessee who has not availed himself of the provision under Sub-section (1) or Sub-section (2) of Section 139 and must pay the interest at the rate and for the period as provided in prov. (iii) to Sub-section (1) of Section 139. The section has got nothing to do with an application for extension of time to furnish the return by the assessee or exercise of the discretionary power for granting or refusing the same by the ITO. The legislature had no intention whatsoever to make Sub-section (4) of Section 139 a proviso to Sub-section (1) or Sub-section (2) of Section 139. If that would have been the intention the legislature could have said so clearly instead of enacting a separate and distinct sub-section, being Sub-section (4) of Section 139. In our view, the rate of interest and the period for which 'the interest is payable as provided under prov. (iii) to Sub-section (1) of Section 139 is made applicable to all cases of filing of return under Sub-section (4) of Section 139 as a matter of course. That seems to be the clear and specific provision of Section 139(4) by applying the well-known rules of construction. That being the position we are unable to accept the contention of Dr. Pal that interest has been imposed by the statute on the basis that time has been allowed by the ITO as under the prov. (iii) to Sub-section (1) of Section 139 of the I.T. Act, 1961. Further, it is clear from the pro vision of Sub-section (1) of Section 271 of the I.T. Act, 1961, that the appellant, prima facie, comes within the said provision as it has not filed its return as required under Sub-section (1) of Section 139 of the I.T. Act and as such the respondents had jurisdiction to issue the said notices which are challenged in the writ petition.
25. In that view of the matter there is no merit or substance in the contentions of the appellant.
26. We also agree with the decision of the Division Bench of the Gujarat High Court in Addl. CIT v. Santosh Industries [1974] 93 ITR 563, referred to earlier, where after considering all other relevant decisions, Bhagwati C.J. finally concluded and observed at page 581 of the said report as follows:
"We must interpret the language employed by the legislature in its contextual setting having regard to the purpose which the legislature had in mind and, if we do so, it is clear that the second clause of Section 271(1)(a) applies where a person fails to furnish a return of income within the time allowed strictly under Sub-section (1) or Sub-section (2) of Section 139 and filing of return after the expiration of such time but before the expiration of four years from the end of the assessment year under Section 139, Sub-section (4), does not save him from penalty for the default contemplated under the second clause of Section 271(1)(a). "
27. We entirely agree with the reasonings in the said decision of the Gujarat High Court where the identical question was raised as to the interpretation of Section 139(4) of the I.T. Act, 1961.
28. It is true that the point of view which Dr. Pal sought to argue before us for interpreting Sub-section (4) of Section 139 of the I.T. Act, 1961, was not presented before the Gujarat High Court. But in our view the same question was involved in a different form, and whether the imposition of interest under prov. (iii) to Sub-section (1), of Section 139, made any difference as to the liability of the assessee who had filed his return under Sub-section (4) of Section 139 was not directly dealt with. But it must be held to be indirectly overruled by the final observation which we have quoted before. The new angle from which Dr. Pal asked us to interpret the said section, as we have noted before, makes no difference to the construction of the provisions of the said Sub-section (4) of Section 139 as we have observed before.
29. In the result, the appeal is dismissed. No order as to costs.
Sankar Prasad Mitra, C.J.
30. I agree.