COMMISSIONER OF INCOME TAX Vs. RAVI TALKIES

JUDGEMENT

(1.) THESE are references made by the Cuttack Bench of the Income-tax Appellate Tribunal under Section 256(1) of the I. F. Act at the instance of the revenue and the following common question has been referred for our opinion :

(2.) ASSESSEE is a firm, its principal business being the running of a cinematograph exhibition hall. The relevant years are 1968-69 and 1969-70. Admittedly, the assessee had taxable income for both the years. Returns for these years were due by 30th of June, 1968, and 30th of June, 1969. Notices for both the years were served on the assessee on February 19, 1970, for the first year under Section 148 and for the second year under Section 139(2) of the Act. It may be pointed out that for the first of the two years under consideration, notice was also issued under Section 148 of the Act, Return for the first year was filed on May 6, 1970, and for the second year on October 3, 1970. While making assessments for the two years, the ITO initiated proceedings under Section 271(1)(a) of the Act and, after hearing the assessee, imposed penalty.

(3.) THE reasons which we have already indicated to meet the Patna view are adequate enough not to follow the view of the Madhya Pradesh High Court. THE problem which has been highlighted in the Madhya Pradesh decision could conveniently be answered by treating the period preceding the notice under Section 139(2) as one ; and the period of default subsequent to the issue of notice under Section 139(2) as another. We agree that there would be no scope for two returns and, therefore, it would not be proper to hold that there would be two defaults. But the default starts initially when the period to make a return voluntarily runs out and no return is made. THEre is a further default when notice is issued under Sub-section (2) of Section 139 and there is no compliance. Default commences from the date when the assessee fails to make a return in terms of the obligation under Sub-section (1) and if such default is intercepted by a notice issued under Section 139(2) of the Act, the only way to deal with such a situation would be to allow the default for non-compliance under Section 139(1) of the Act, to run until the period when a notice under Sub-section (2) of Section 139 comes into the field and then yield to the provisions of default for non-compliance with notice under Section 139(2) of the Act. Such a view is in conformity with the legislative intention and meets the purpose of the scheme. We agree with and respectfully reiterate the well-accepted position in law that where there be any deficiency in a taxing statute, the provision should be interpreted in favour of the taxpayer. But it is equally well accepted in law that where the provision is clear, it is not open to the court to treat the situation as a case of ambiguity and read its own opinion into the legislation. We are, therefore, of the view that, in the facts of the case, the Tribunal went wrong in holding that the assessee's liability to be penalised had to be confined to the period of default in complying with the notice under Section 139(2) of the Act and the earlier default was wiped out when the notice under Section 139(2) is issued.