TaxTMI 
TaxTMI 
2011 (2) TMI 303
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....) vide letter dated 11.8.1988. The return was filed by the assessee on 6.11.1990 declaring an income of Rs. 48,64,920.00 for the relevant assessment year. 3. It is during the assessment proceedings while scrutinizing the return that the AO noticed that the assessee had not paid the sales tax within time. The assessee‟s stand was that the sales tax in the sum of Rs. 1,24,058.00 on 11.8.1988 and Rs. 18,63,682.00 was paid on 11.8.1988 while sales tax amounting to Rs. 17,680.00 was paid on 8.9.1988 . The assessee, thus, contended that the amount should be considered to have been paid within time allowed for filing of return and thus none of these amounts should be disallowed under Section 43B of the Income Tax Act, 1961 (hereinafter referred to as the „IT Act‟). This plea was, however, not accepted by the AO, who disallowed the amount and added the same to the income of the assessee along with other additions vide order dated 27.3.1991. 4. The respondent/assessee filed an appeal before the Commissioner of Income Tax (Appeals), [in short „CIT(A)], who confirmed the order of the AO on 5.3.1992. The order of the CIT (A) is predicated on the reaso....
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....e on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return: Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid during the previous year on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36." .... .... .... .... .... .... .... .... .... Section 139 (1) 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-- (a) in the case of every person whose total income, or the total income o....
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....visions of this Act shall apply accordingly ; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded." 6.1 We have also extracted relevant portion of Section 80 of the IT Act, even though it was not relied upon before the authorities below, since arguments were advanced before us based on the said provision. "Section 80 80. Submission of return for losses.--Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed within the time allowed under sub-section (1) of section 139 or within such further time as may be allowed by the Assessing Officer, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A." 7. It is the plea of the appellant/department that since Section 43B of the IT Act starts with a non-obstante clause as per scheme of that Section the deductions allowable under the IT Act are permissible only in computing the income under Section 28 of the IT Act of the previous year in which such sum is actuall....
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....ly paid the amount within the dates specified for filing of the return as per the main proviso of Section 139(1) of the IT Act. 10. To support the aforesaid interpretation learned counsel also referred to the provisions of Section 80 of the IT Act providing for submission of return for losses to contend that where the legislature wanted the benefit to be extended not only to a return filed within the time allowed under sub-section (1) of Section 139 of the IT Act or within such further time as may be allowed by the AO a specific provision has been made as in case of Section 80 of the IT Act. Thus, it has been specifically stipulated "in pursuance of a return filed within time allowed under sub-section (1) of Section 139 or within such further time as may be allowed by the Assessing Officer". To appreciate the submission we asked learned counsel to set forth as to how these provisions stood at different intervals of time. The provision as it stood at different periods of time shows that the phraseology "or within such further time as may be allowed by the Assessing Officer" did not exist till 1.4.1985 when it was so introduced and continued so till 31.3.1989. From 1.4.1989....
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....m payable by the assessee by way of tax or duty under any law for the time being in force (irrespective of whether such tax or duty is disputed or not) or any sum payable by the assessee as an employer by way of contribution to any provident fund, or superannuation fund or gratuity fund or any other fund for the welfare of employees shall be allowed only in computing the income of that previous year in which such sum is actually paid by him." 14. In view of the aforesaid it was observed as under: "Section 43B was, therefore, clearly aimed at curbing the activities of those taxpayers, who did not discharge their statutory liability of payment of excise duty, employer‟s contribution to provident fund, etc., for long periods of time but claimed deductions in that regard from their income on the ground that the liability to pay these amounts had been incurred by them in the relevant previous year. It was to stop this mischief that section 43B was inserted. It was clearly not realised that the language in which section 43B was worded, would cause hardship to those taxpayers who had paid sales tax within the statutory period prescribed for this payment, although the pa....
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....e of the words „any sum payable‟. The interpretation given to these words is that the amount payable in a particular year should also be statutorily payable under the relevant statute in the same year. Thus, the sales tax in respect of sales made in the last quarter was held to be totally outside the purview of section 43B since the same is not statutorily payable in the financial year to which it relates. This is against the legislative intent and, therefore, by way of inserting an Explanation, it has been clarified that the words „any sum payable‟, shall mean any sum, liability for which has been incurred by the taxpayer during the previous year irrespective of the date by which such sum is statutorily payable . . ." 15. It was, thus, observed as under: "Therefore, in the well known words of Judge Learned Hand, one cannot make a fortress out of the dictionary; and should remember that statutes have some purpose and object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning. In the case of R. B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570, this court said that one should apply the rule of reasonable in....
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.... may, in his discretion, allow. The assessee being a limited company, under normal circumstances the time to furnish a return under section 139(1) of the Act would be before the expiry of four months from the end of the previous year, i.e., July 31, 1985. However, under the proviso to section 139(1) of the Act an Assessing Officer is granted discretion to extend the date for furnishing the return on an application made in the prescribed manner. Therefore, the scheme of the Act envisages that the due date is either the one stated under clause (a) or clause (b) of sub-section (1) of section 139 of the Act, or the extended date which may be fixed on exercise of discretion by the Assessing Officer on an application moved by an assessee under the proviso. However, as to what is the effect in a case where an application is made in time before the Assessing Officer under the proviso to sub-section (1) of section 139 of the Act, and where such application is not dealt with by the Assessing Officer, i.e., it is neither rejected nor granted, is no longer res integra." 19. The Calcutta High Court in Amin Chand Payarelal Vs. Inspecting Assistant Commissioner of Income Tax Range-1 (Ce....
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....er contrary to and/or inconsistent with the provisions of the Income-tax Act and the allegations in the writ petition are otherwise unwarranted and uncalled for. " On the basis of the submissions, it was observed as under: "With all anxiety, this court has heard the arguments advanced on behalf of the respective parties. Undisputedly, the petitioner has paid all income-tax dues and the grievance of the petitioner is only against the imposition of penalty and the notice of demand in this behalf The question to be decided in this writ petition is as to whether the steps taken by the respondents to impose penalty are without jurisdiction or not. Regard being had to the facts of this case and applying the test laid down by the Supreme Court, this court finds that the Inspecting Assistant Commissioner of Income-tax has no jurisdiction to impose penalty. Time is already extended to file the return and the assessed amount being paid should be deemed to have been paid within the extended time and there cannot be any further demand for penalty in the manner sought to be done in the instant case." 20. Learned counsel for the Department also referred to the judgement in Orissa....
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....r its payment and prior to the filing of the income tax return were prevented from claiming legitimate deductions in respect of tax paid by them. This resulted in the first proviso to eliminate unintended consequences. 24. The principles for applying the mischief rule was set out in CIT, Madhya Pradesh & Bhopal Vs. Sodra Devi (1957) 32 ITR 615 (SC) wherein it was observed as under: "22. ....we must of necessity have resort to the state of the law before the enactment of the provisions; the mischief and defect for which the law did not provide; the remedy which the legislature resolved and appointed to cure the defect and; the true reason of the remedy...." 25. The judgement in Amin Chand Payarelal case (supra) explains the effect of extension of date for furnishing of return under proviso (iii) to Section 139(1) of the IT Act. Thus, what the assessee was required to do up to a particular date under Section 139(1) of the IT Act is permitted to be done by a subsequent date. It is in view thereof it was held that penalty could not be imposed if the assessee had paid all the income tax dues. 26. If we apply the aforesaid principles we find that t....