THE COMMISSIONER OF INCOME-TAX, WEST BENGAL I, CALCUTTA versus M/S. VEGETABLES PRODUCTS LTD.

Citation: [1973] 3 S.C.R. 448 · Decided: 29-01-1973 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

THE COMMISSIONER OF INCOME-TAX, WEST BENGAL I, 
CALCUTTA 
v. 
MIS. VEGETABLES PRODUCTS LTD. 
A 
January 29, 1973 
B. 
[K. S. HEGDE, P. JAGANMOHAN REDDY AND H. R. KHANNA JJ.] 
Income Tax Act (43 of 1961), ss. 143, 156 and 21l(l)(a)(i)-
Penc..-lty-Whether related to tax assessed or tax payable. 
The assessee failed to furnish the return of its- income within 
the 
time allowed but submitted the return after a notice under s. 28(3) of 
the J;ncome·tax Act, 1922, was served on him.· A provisional 
assess· 
ment was made by the lncome·tax Officer under s. 23B of the 1922-Ac! 
and the assessee· deposited the amount. The Income-tax 
Act, 
1961, 
having come into force thereafter. the Income-tax Officer completed the 
assessment under the provisions of that Act, determined the 
tax 
due 
and the penalty payable by. the asscssee. 
In doilllg so, he did not take 
into consideration the amount deposited by the asses.see, that is, he 
took into consideration not the amount ·demanded under s. 156 of the 
1961-Act but the amount assessed under s. 143. The Appellate Assis-
ta:nt Commissioner confirmed the order; but the Tribunal held that the 
penalty under s. 271 (1 )(a)(i) is to be levied on the t~x assessed minus 
the amount paid under the provisional assessment order, and the High 
Court, on refe're(lce, agreed with the Tribunal. 
Dismissing the appeal by the Revenue to thi& Court, 
HELD : ( 1) The acceptance of one or 
the 
other ijnterpretation 
sought to be placed on s. 271(1)(a)(i) by the parries would lead to 
some inconvenient result; but the duty of_ the Court is to. read the 
section, understand its language and give ,effect to it. If the language 
is plain, the fact that the consequence of gMng effloct to it may lead 
to some absurd result is not a factor t'o be taken into 
account 
in 
interpreting a provision. 
It is for the Legislature to step in and remove 
the absu'rdity. 
On the "Other hand, if two reasonable constructions 
of 
a taxing provision are possible that construction which 
favours 
the 
assessee must be adopted. 
[451D-F] 
(2) Section 271(J)(a)(i) stipulates that the Income-tax Officer may 
direct ti1at the assessee shall pay by way of penalty, "in addition to 
the amount of tax, if any, payable by' him a sum equal to two per cent 
of the tax for everv month ............ " 
Qua:Mifiootion of the 
tax 
payable is always refefred to in the Act as .a tax "assessed". A tax 
payable is not the same thing as tax assessed. 
The tax payable is that 
A'lmovnt for which a demand not_ice is issued 
under 
s. 156. Hence, 
there can be no doubt that the -expression 'the amount of tax, if any, 
payable by him' referred to in the first part of the section refers to 
the tax payable under a demand ;notice. The definite article 
'the' 
in 
the words "the tax" in the lattet pal-! of the provision, shows that 
it refers to the tax, if any, payable by the assessee-, mentioned in the first 
part of the section. 
[452D-G; 453A-B] 
(3) At any rate, the provision is capable of more tOOn one reasonable 
interprietation, and since the provisiqn, is not merely a tax-
proyision 
but a penalty provision as well the interpretation in 
favour 
of the 
assessee must be accepted. 
[453B-D] 
c: 
D 
E 
H 
A 
ll 
c 
D 
E 
F 
G 
H 
C.I.T. v. VEGETABLE PRODUCTS (Hegde, J.) 
449 
M. M. A.nnaioh v. Commissioner of Income-tax, Mysore, 76, I.T.R .. 
582, approved. 
Vir Bhan Bansi Lal v. Commissioner of 
Income-tax, 
Punjab, 
6 
J.T.R. 616 and Commissioner of Income-tax, 
Delhi 
v. 
Hindustan 
Industrial CorpOTation, 86 I.T.R. 657, disapproved. 
CJv1L APPELLATE JURISDICTION : Civil Appeal No. 497 of 
1970. 
Appeal by Certificate from the Judgment and order date June 
26, 1969 of the Calcutta High Court in Income-tax Reference No. 
145 of 1966. 
S. C. Manchanda, T. A. Ramachandran, 
S. P. Nayar and 
R. N. Sachthey, for the appellant. 
B. Sen, S. Sadhu Singh, J.M. Khanna ·and S. Ramachandran, 
for the respondent. 
S. V. Gupte, T. S. Viswanatha Rao and A. T. M. Sampat, for 
the intervener. 
The Judgment of the Court was delivered by 
HEGDE, J.-This appeal by certificate arises from the decision 
of the Calcutta High Cou~t in a case stated by the Income-tax 
Appellate Tribunal, 'B' Bench, Calcutta. 
After setting out the 
relevant facts, the Tribunal solicited the opinion of the High Court 
on the following question of law : 
'Whether on the facts and in the circumstances of 
the case, the Tribunal was right in holding tha1t in cal-
culating the pe

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