TaxTMI 
TaxTMI 
1958 (4) TMI 115
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....me-tax Officer, but he overruled their objections and purporting to act under section 35 and section 18A(8) of the Act he included in the assessments of the petitioners interest at six per cent. per annum for the relevant period., He also issued notices of demand under section 29 of the Act making the amounts payable by March 31, 1956. The contention of the petitioners is that the levy of interest on the tax to which they had been assessed is illegal and that the Income-tax Officer had not jurisdiction to make the levy. They have come to this court for the issue of an appropriate writ to quash the order of the Income-tax Officer requiring them to pay interest. I shall first summarise the contentions of Mr. Srinivasan, the learned advocate for the petitioners. The petitioners had not been previously assessed to income-tax, and so they are new assesses within the meaning of section 18A(3). The sub-section requires a new assessee to do two things: it requires him to send to the Income-tax Officer an estimate of the tax payable by him on that part of his income to which section 18 does not apply. Mark, he is requires to submit not a return of his income, but an estimate of the ta....
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....er can exercise his powers under section 35 of the Act to rectify a mistake that mistake must be apparent from the record of the assessment. This "record of the assessment" is only that part of the record which leads to the determination and ascertainment of the tax payable and no more. Again, before it can properly be said that a mistake is apparent from the record it musy be something very obvious and manifest. A mistake to establish which a very elaborate process of reasoning, and controversial reasoning at that, is called for cannot be said to be a mistake apparent from the record. An error in law or a wrong procedure adopted in the assessment proceedings would not be a mistake within the meaning of section 35: vide Commissioner of Income-tax v. O.RM. SM. SV. Sevugan [1955] 28 I.T.R. 156. Mistakes to discover which complicated processes of investigation and argument are required are outside the scope of section 35 of the Act. Besides, rule 11(1) of the Merged States (Taxation Concessions) order, 1949, runs: "The provisions of section 18A of the Indian Income-tax Act regarding the advance payment of tax shall not be applied in the year ending on the 31st day of March....
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....icer may in such cases impose a penalty of one and a half times the amount of the tax which the assessee would have avoided if his return had been accepted as correct. Sub-section (6) of section 28 gives a certain measure of protection to the assessee in so far as it directs that the Income-tax officer shall not impose any penalty under section 28 without the previous approval of the Inspecting Assistant Commissioner. All these provisions are in respect of persons who may be described to be old assessees. Sub-section (3) of section 18A applies to persons who may be described as new assessees, that is to say, persons who were not previously assessed to income-tax. Such persons are required to send to the Income-tax officer an estimate of the tax payable by them on that part of their income which falls outside the scope of section 18. And then they are required to pay that tax in appropriate instalments. sub- section (1) indicates what those instalments are. It goes without saying that just like old assessees, new assessees may also send false estimates. When that happened clause (a) of sub-section (9) of section 18A will apply and the new assessees too will be liable to pay a pen....
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....des for these categories of cases in respect of assessees old or new. So far as the liability to pay interest is concerned, that is separately provided for. Sub-section (6) provides for cases where there has been an under-estimated of the amount of tax payable and sub- section (8) provides for cases where there as been no payment of tax at all. So far as what we may call offences in connections with estimates are concerned they are provided for by sub-section(9). The liability to pay interest owing to the omission to pay tax is separately provided for by sub-sections (6) and (8). When no tax has been paid the sub-section (8) would apply; where only part of the tax has been paid the sub- section (6) would apply. A careful study of provisions of section 18A will, therefore, show that the contention of Mr. Srinivasan that for failure to pay advance tax a penalty can be levied is not correct. All that can be done in such a case is to charge interest. I hop I shall be in order if at this stage I make one observation. In some text books and in some decisions interest chargeable under sub-sections (6) and (8) is described as penal interest. I do not know how that phrase got into the di....
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.... for this in the regular appeal itself did not think it necessary that a separate right of appeal should be given to the assessee to appeal against the quantum of penal interest." The argument of Mr. Srinivasan that the "record" of the assessment means only those papers in which the final taxable income of the assessee is determined and the tax due thereon computed fails to take note of the fact that the word "assessment" is used in different senses in different places of the Act. The Privy Council has explained in Commissioner of Income-tax Bombay and Aden v. Khemchand Ramdas [1938] 6 I.T.R. 414 at 416 as follows: "One of the peculiarities of most Income-tax Acts is that the word 'assessment' is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the taxpayer. The Indian Income-tax Act is no exception in this respect." The contention of Mr. Srinivasan that the error which can be rectified under section 35 must be something obvious and must not be something to ascertain which a prolonged investigation particularly an ....