TaxTMI 
TaxTMI 
TaxTMI 
2004 (2) TMI 3
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....ere partners of a firm carrying on business under the name and style of M/s. Kailash Nath and Associates. Apart from the three appellants, two other persons were partners and one of them Shri Kailash Nath was the managing partner in terms of the partnership deed dated April 1, 1983. For the assessment year 1988-89, return of income was to be filed on or before July 31, 1988, but was in fact filed on March 20, 1991. Assessment under section 143(3) of the Act was completed on August 26,1991. Proceedings for late submission of return were initiated against the appellants under section 271(1)(a) of the Act and penalty was imposed. Proceedings in terms of section 276CC of the Act were also initiated and a complaint was filed before the concerned court. As noted above, cognizance was taken and process was issued. Writ applications were filed challenging the legality of the proceedings. By the impugned judgment the High Court dismissed the writ petitions. The points which were mooted before the High Court were reiterated in the present appeals. Mr. G.C. Sharma, learned senior counsel appearing for the appellants, urged the following points for consideration: 1. The expression "to furnis....
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....r contra, learned counsel appearing for the respondents submitted that the High Court was justified in its conclusions in dismissing the writ petitions. The decision in Kulu Valley's case [1970] 77 ITR 518 (SC) has no application to the facts of the present case and in fact it was rendered in a different set up. Sub-sections (1) and (4) of section 139 deal with different situations and it cannot be said that a return filed in terms of section 139(4) would mean compliance with the requirements indicated in sub-section (1) of section 139. It is further submitted that section 278E raises a presumption which is a rebutable one and the factual aspects raised by the appellants can be placed for consideration in the proceedings before the learned CJM. Since the fate of the appeals revolves round the scope and ambit of section 276CC in the background of sub-sections (1) and (4) of section 139, it would be appropriate to quote the aforesaid provisions, as they stood at the relevant point of time: "276CC. Failure to furnish returns of income.--If a person wilfully fails to furnish in due time the return of income which he is required to furnish under sub-section (1) of section 139 or by no....
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.... be chargeable in accordance with the provisions of sub-section (8). (1A) Notwithstanding anything contained in sub-section (1), no person need furnish under that sub-section a return of his income or the income of any other person in respect of whose total income he is assessable under this Act, if his income or, as the case may be, the income of such other person during the previous year consisted only of income chargeable under the head 'Salaries' or of income chargeable under that head and also income of the nature referred to in anyone or more of clauses (i) to (ix) of sub-section (1) of section 80L and the following conditions are fulfilled, namely:-- (a) where he or such other person was employed during the previous year by a company, he or such other person was at no time during the previous year a director of the company or a beneficial owner of shares in the company (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) carrying not less than twenty per cent. of the voting power; (b) his income or the income of such other person under the head 'Salaries', exclusive of the value of all benefits or amenities not ....
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....n for any previous year at any time before the end of the period specified in clause (b), and the provisions of sub-section (8) shall apply in every such case; (b) the period referred to in clause (a) shall be (i) where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year; (ii) where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of the assessment year; (iii) where the return relates to a previous year relevant to any other assessment year, two years from the end of such assessment year. (4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under this Act without giving effect to the provisions of section....
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....sses could be carried forward to the subsequent years and set off, even though suo motu return is not filed within time prescribed under section 22(1) of the old Act. The decision was rendered in a conceptually different situation and has no relevance so far as the present dispute is concerned. The basic issue in Kulu Valley's case [1970] 77 ITR 518 (SC) was determination of loss on the basis of the return filed under section 22(1) or 22(3) of the old Act. In the Act, section 80 deals specifically with the situation. The original section 80 in the Act reads as under: "Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed under section 139, 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) of section 74." By the Taxation Laws (Amendment) Act, 1984, with effect from April 1, 1985, the words "under section 139" were substituted by the words "within the time allowed under sub-section (1) of section 139 or within such further time as may be allowed by the Income-tax Officer". As a result of the amendment of section 139(3) by the Taxation Laws....
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....in the four comers of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the Legislature. "An intention to produce an unreasonable result", said Danckwerts L.J. in Artemiou v. Procopiou [1966] 1 QB 878 (CA), "is not to be imputed to a statute if there is some other construction available". Where to apply words literally would" defeat the obvious intention of the legislation and produce a wholly unreasonable result", we must "do some violence to the words" and so achieve that obvious intention and produce a rational construction. (per Lord Reid in Luke v. IRC [1963] AC 557 (HL); [1964] 54 ITR 692 (HL)) where at AC page 577 he also observed: "This is not a new problem, though our standard of drafti....
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....-section (2) of section 139. There is no condonation of the said infraction, even if a return is filed in terms of sub-section (4). Accepting such a plea would mean that a person who has not filed a return within the due time as prescribed under sub-section (1) or (2) of section 139 would get benefit by filing the return under section 139(4) much later. This cannot certainly be the legislative intent. Another plea which was urged with some amount of vehemence was that the provisions of section 276CC are applicable only when there is discovery of the failure regarding evasion of tax. It was submitted that since the return under sub-section (4) of section 139 was filed before the discovery of any evasion, the provision has no application. The case at hand cannot be covered by the expression "in any other case". This argument though attractive has no substance. The provision consists of two parts. The first relates to the infractions warranting penal consequences and the second, the measure of punishment. The second part in turn envisages two situations. The first situation is where there is discovery of the failure involving the evasion of tax of a particular amount. For the said i....