TaxTMI 
TaxTMI 
1962 (10) TMI 48
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....sessment was on the Hindu Undivided family but by an order of the High Court dated December 5, 1949, a partial partition in the family was recognised from the assessment year 1940-41. It is not necessary to narrate the events that transpired after the decision of the High Court. The judgment of the High Court was given effect to after 1953 and the assessments for the years 1951-52 and 1952-53 made on the brothers as individuals were completed on July 11, 1953, and August 30, 1954, respectively, for the two years. The appellants had not paid advance tax according to their own estimate of the income for these two years and they were liable to penal interest under section 18A(8) of the Income-tax Act. The Income-tax Officer, Karaikudi, overlooked this fact and did not add penal interest to the tax leviable. In 1956 the Income-tax Officer started proceedings under section 35 of the Income-tax Act for the rectification of the assessment. No notice was sent to either brother and the Income-tax Officer ordered the levy of penal interest as follows : I. On Chockalingam 1951-52 Rs. 13,391-7-0 1952-53 Rs. 8,281 II. On Meyyappan ....
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.... the Income-tax Officer finds that no payment of advance tax has been made in accordance with previous provisions of that section, interest calculated in the manner laid down in sub-section (6) shall be added to the tax as determined on the basis of the regular assessment. Sub-section (6) says that if in any year an assessee has paid advance tax under sub-section (2) or (3) on the basis of his own estimate and the tax so paid is less than eighty per cent. of tax determined on the basis of the regular assessment, so far as such tax relates to income to which the provisions of section 18 do not apply, and if it is not due to any variation in the rate of tax, simple interest at the rate of six per cent. per annum from the 1st day of January in the year in which the tax was paid up to the date of the said regular assessment, is payable by the assessee on the amount by which the tax paid falls short of the eighty per cent. A number of provisos are added to sub-section (6) and the fifth proviso says : "Provided further that in such cases and under such circumstances as may be prescribed, the Income-tax Officer may reduce or waive the interest payable by the assessee." 6. "Pre....
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....e the interest in the manner laid down in sub-section (6) and add it to the tax. It has now been ruled by this court recently in Gursahai Saigal v. Commissioner of Income-tax, (1)[1963] 48 I.T.R. (S.C.) 1 that sub-section (6) can be read with sub-section (8) in spite of certain difficulties of language in applying the provisions of the former sub-section to the latter. This court points out that the intention of section 18A is to charge interest whenever the taxpayer is in default in making an advance payment of tax, and that sub-section (6) must be read mutatis mutandis so as to advance the clear intention underlying sub-section (8) and not to defeat that intention. This being established, the question is whether sub-section (6) must be read with all its provisos. The argument here is that according to the terms of sub-section (8) only the "manner" of calculation can be taken from sub-section(6) and the fifth proviso does not lay down any "manner of calculation." The fifth proviso says that in certain circumstances and in certain cases the Income-tax Officer may reduce or waive interest payable by the assessee. The proviso operates after the amount of tax is determined and cuts ac....
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....r the proviso is not given. The circumstances which entitle an Incometax Officer to give relief in case arising under sub-section (2) and (3) may also be circumstances justifying relief in case arising under sub-section (8). It was ruled in Income-tax Officer, Madurai v. M. R. Vidyasagar )[1962] 44 I.T.R. 732(2) [1962] Supply 2 SCR 613 that the fifth proviso and rule 48 were intended to relieve against the rigour of the inflexible rule originally enacted in subsection (6). The effect of the introduction of the proviso mutatis mutandis affects sub-section (8) as well. All the sub-rules of rule 48 apply equally to a case of part payment and a case of no payment of advance tax. There may be as good a justification for not paying the advance tax wholly as for not paying it partly. The present case is an apt illustration because the order of the High Court was passed in 1947 and effect to it was given by the Tribunal 1950. The compromise with the income-tax department in relation to the back years took place in 1952 and the assessments for 1947-48 and 1949-50 were only completed on the last day of March, 1953. It is thus apparent that for the assessment years 1951-52 and 1952-53 the app....