PARSHOTTAM NAGINDAS Vs. ADWALPALKAR B R

JUDGEMENT

(1.) THE petitioners who are carrying on the business of manufacture and sale of art silk cloth in Surat in the name and style of M/s Parshottamdas Nagindas as firm, filed returns of income for the asst. yrs. 1973 74, 1974 75 and 1975 76 on 18th March, 1976, 31st March, 1976 and 31st March, 1976 respectively. The returns were filed though after the prescribed period under S. 139 in the case of each assessment year, but prior to issuance of notice under Sub S. (2) of S. 139 or under S. 148 of the Act. The petition relates to the asst. yrs. 1974 75 and 1975 76. The assessment of income for the asst. year 1974 75 was made on 28th Aug., 1976 and that of asst. year 1975 76 on 19th Nov., 1976. Apart from levy of penalty under S. 271(1)(a) for late filing of returns, the ITO also levied interest under S. 139(8) and 217 of the IT Act, 1961 and levied penalty under S. 273(b) of the Act. The petitioners filed an application on 11th Jan., 1979 under S. 273A(1) of the Act of 1961 for waiving of reducing the penalty levied under S. 271(1)(a) and 273(b) and for interest charged under S. 139(8) and under S. 217 of the Act. So far as levy of penalty under S. 271(1)(a) is concerned, the CIT found that the requisite conditions laid down in S. 273A(1) were fulfilled and, therefore, penalties levied under S. 271(1)(a) for all the three assessment years including asst. yrs. 1974 75 and 1975 76 were reduced to nil. However, while considering the prayer for waiver or reduction of interest charged under S. 139(8) and 217 of the Act and waiver of penalty under s. 273(b), the prayer was declined that though the assessee had made full and true disclosure of the income before issuing to him a notice under S. 139(2) and/or under S. 148 of the Act, the assessee had not paid tax on income disclosed in its return in accordance with the provisions of S. 140A, he cannot be said to have fulfilled the condition under cl. (c) of S. 273A(1) regarding payment of tax on the income returned in accordance with the provisions of S. 140A within the time stipulated therefor and, therefore, the assessee is not entitled to benefit of the provisions under S. 273A(1) in respect of interest under ss. 139(8) and 217; and penalty under S. 273(b). It is not in dispute that the assessee had paid the entire amount of income tax together with interest under S. 139(8) and 217 of the Act before submitting the application under S. 273A(1).

(2.) THE assessee's contention was that what is required under the Act is payment of tax on the income disclosed before considering the application and it is not the condition that such tax should have been paid in accordance with S. 140A of the Act.

(3.) THE short question that arises for our consideration is what is point of time at which the assessee must have paid tax on the income so disclosed by him, so as to fulfil the conditions of cl. (c) of S. 273A(1). While it was contended by the assessee that as no time has been prescribed within which the tax ought to have been paid on the income disclosed by the assessee for the purpose of invoking provisions of S. 273A, it is sufficient that the tax actually has been paid before consideration of case under the provisions of S. 273A. The requirement of payment of s. 140A cannot be read into the aforesaid provision, in the absence of any reference to the provision of requirement of making payment within the prescribed time. The contention of the Revenue is that the requirement of paying the tax on the admitted income disclosed in accordance with the provisions of S. 140A is inherent in the scheme of the statute and it is only if the payment of admitted tax has been made before the commencement of assessment proceedings in accordance with the provisions of S. 140A, results in the fulfilment of condition of cl. (c) without which an application for reduction or waiver of the amount of interest paid or payable by the assessee under sub s. (8) of S. 139 or S. 217 or penalty imposed under S. 273(b) cannot be considered.