TaxTMI 
TaxTMI 
1972 (2) TMI 13
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....ars of his income. A penalty of Rs. 3,000 was imposed on the petitioner thereafter, by an order dated 12th March, 1965. On appeal by the petitioner, the Income-tax Appellate Tribunal, Bombay, affirmed this order. The petitioner sought a reference to the Madhya Pradesh High Court on the ground that section 297(2)(g) of the Income-tax Act, 1961, was not attracted, but that reference was also unsuccessful. Thereafter, the Additional Income-tax Commissioner, Bhopal, passed an order under section 288(4) of the Act on 26th February, 1971, disqualifying the petitioner from representing assessees before the income-tax authorities for a period of two years. The petitioner appealed to the Central Board of Direct Taxes, but his appeal was rejected by an order dated 21st September, 1971. The petitioner has now challenged the decision of the Additional Income-tax Commissioner, Bhopal, as affirmed by the Central Board of Direct Taxes on various grounds in this writ petition. Two main contentions have been raised on behalf of the petitioner to impugn the order disqualifying him. Firstly, it is submitted that section 288(4) of the Income-tax Act, 1961, is ultra vires of article 19 of the Consti....
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....oubted that this is a definite class. The second class is of persons against whom a penalty has been imposed under the Income-tax Act, 1961, other than a penalty provided for under clauses (i) and (ii) of sub-section (1) of section 271. As a class this is also not indefinite. The third class is of persons who have become insolvent. This is also a reasonable and definite class. The main submission made in this respect is that the second class is not definite in relation to the disqualification which has to be imposed. As far as dismissed Government servants are concerned, the disqualification is for all time. As far as insolvents are concerned, the disqualification is for the period of insolvency. But, as far as persons covered by clause (b) are concerned the disqualification is discretionary and no guidelines appear as to the extent of the disqualification to be imposed. It is submitted that there can be a number of penalties under the Act of 1961, some of a minor character and some of a serious character. For example, it is contended that a late payment of advance tax or a late payment of tax demanded after an assessment has been made can also be subjected to a penalty. For the....
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....ed on the various provisions of the two Acts to prevent an unjust operation of the law. Thus the petitioner should not be disqualified only by reason of the fact that his assessment for the year 1958-59 was completed after 31st March, 1962. Learned counsel's contention in this behalf is that it is open to the Income-tax Officer to complete the assessment within a short time or a long time, and it is a mere matter of chance whether he completes the assessment before 31st March, 1962, or after that date. The petitioner should not be additionally punished merely because of the late completion of the assessment. I, therefore, first of all propose to examine the case law which has been placed before me on the proper interpretation of section 297(2)(g) of the Income-tax Act, 1961. The leading judgment on the application of section 297(2)(g) is Jain Brothers v. Union of India. In that case a writ petition had been instituted under articles 226 and 227 of the Constitution to challenge the vires of section 297(2)(g) of the income-tax Act of 1961. The challenge was based on an alleged violation of article 14 on the ground that the provision created two sets of assessees and that classific....
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....court came to the view that in certain circumstances a larger penalty than could be imposed under the Act of 1922, could be imposed under the Act of 1961, in a case covered by section 297(2)(g) of that Act. Thus, this decision would support the view of the department that if the disqualification under section 288(4) is covered by section 297(2)(g) and is a penalty for the purpose of that provision it can be imposed on the petitioner. I shall deal presently with the question as to whether the disqualification is a penalty covered by section 297(2)(g). I have been referred to V. S. Malhotra v. Commissioner of Income-tax which was the case of the petitioner himself, as dealt with in the Madhya Pradesh High Court. It was held therein that section 297(2)(g) of the Act of 1961 enabled the penalty under section 271(1)(c) of that Act to be imposed in relation to the assessment year 1958-59. The afore-mentioned judgment of the Supreme Court was followed in this respect. I have also been referred to Kishanlal v. Commissioner of Income-tax, which is also a judgment of the Madhya Pradesh High Court, in which judgment it was held that the penalty mentioned in section 271(1) of the new Act of....
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....department, it is clear that the penalty has been imposed on the petitioner under the Act of 1961. He makes his submission as follows : The petitioner made a default under the Act of 1922. He concealed particulars of his income. This was an infringement of section 28(1)(c) of that Act. By the time the assessment was completed, the Indian Income-tax Act, 1922, had been repealed by section 297(1) of the Income-tax Act, 1961. Thereafter, the penalty could only be imposed under the prevailing law which was in force on the date of the completion of the assessment, i.e., the Act of 1961. By virtue of section 297(2)(g), the penalty had to be imposed under section 271(1)(c) for the same default which was mentioned in section 28(1)(c). After this penalty had been imposed, provisions of section 288(4) came into operation and the only question that had to be asked was : Is the petitioner a person against whom a penalty has been imposed under the Act of 1961 ? If the answer is yes, then the petitioner is a person covered by section 288(4) and the disqualification envisaged by that provision can be imposed on the petitioner. The basis of this entire submission is that the penalty has been im....
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....is contended that by extending the operation of the provisions of section 297(2)(g) of the Act of 1961, so as to apply to the disqualification contained in section 288(4) of the Act of 1961 also, an effect not contemplated by the statute is being achieved. The only intention was that the penalties envisaged in the Act of 1922 could be imposed with or without modifications as contained in the Act of 1961. But there was no intention also to bring about the imposition of a disqualification which was not in existence under the old Act. Another quotation from Commissioner of Sales Tax, U. P. v. Modi Sugar Mills Ltd. is also relied upon. It reads : " A legal fiction must be limited to the purposes for which it has been created and cannot be extended beyond its legitimate field. " It is contended that the legal fiction created by section 297(2)(g) only enables a penalty under the new Act to be imposed in corresponding fashion, e.g., for section 28(1)(c) of the old Act, the penalty under section 271(1)(c) can be applied, but the additional disqualifications contained elsewhere in the new Act were never intended to be within the field or operation of section 297(2)(g). Then refe....
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.... He has referred to Craies on Statute Law, 6th edition, page 86 : " In Simms v. Registrar of Probates, Lord Hobhouse, giving the advice of the Judicial Committee, said : ' Where there are two meanings, each adequately satisfying the meaning (of a statute), and great harshness is produced by one of them, that has a legitimate influence in inclining the mind to the other. " Further, another passage reads : " Therefore, if a too literal adherence to the words of the enactment appears to produce an absurdity or an injustice, it will be the duty of a court of construction to consider the state of the law at the time the Act was passed, with a view to ascertaining whether the language of the enactment is capable of any other fair interpretation, or whether it may not be desirable to put upon the language used a secondary, or restricted meaning, or perhaps to adopt a construction not quite strictly grammatical." He has also cited certain passages from Maxwell on the Interpretation of Statutes, 12th edition. I may quote the passage cited at page 204. It reads thus : " Quite often the judges rely on what they regard as a ' sensible' or ' common sense' interpretation in order ....
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....ection 297(2)(g) of the Act also applicable to section 288(4) merely by reason of the words " imposed under this Act " appearing in that clause, the effect is to make section 288(4) retrospective which is a construction which the court should lean against if possible. After giving my most anxious consideration to the submissions made in this behalf, I am of the view that the following words occurring in section 288(4), " on which a penalty has been imposed under this Act other than a penalty imposed on him under clauses (i) and (ii) of sub-section (1) of section 271 .......", mean a penalty which is imposed for an actual infringement of the Income-tax Act of 1961, and not a deemed infringement of that provision brought about by the fiction created in section 297(2)(g). At the time the petitioner concealed his income there was no Act of 1961. The most that could happen to the petitioner was that he could suffer the consequences provided for in the Act of 1922. By reason of the repeal of the Act of 1922, the penalty which could formerly be imposed under that Act, could be imposed under the Act of 1961. This is provided for by section 297(2)(g) ; but to carry this fiction further a....