D.C Puliani v. Commissioner Of Income Tax Lucknow And Others

Dwivedi, J.:— The petitioner defaulted in the payment of income-tax assessed on him. The Income-tax Officer imposed a penalty on him in accordance with Sec. 221 Income-tax Act. The petitioner filed a revision before the Commissioner of Income-tax against the order imposing penalty. It was rejected. He has now filed the present petition.

2. When the petition came up for hearing before a Division Bench, the petitioner argued that as Sec. 221 does not give power to impose penalty to the Income-tax Officer specifically, the order imposing penalty is without power and invalid. He relied on Smt. Kusum Kumari v. Union of India . 85 I.T.R 19.. It is a Division Bench decision of the Court. The decision squarely supports the petitioner's argument. But the Bench hearing this petition had doubts about the correctness of Smt. Kusum Kutnari. So the case has been referred to a larger Bench. Hence this petition is before us now.

3. Section 221 materially reads:

“(i) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under Sub-sec. (2) of Sec. 220, be liable to pay by way of penalty, an amount which, in the case of a continuing default, may be increased from time to time, so however, that the total amount, of penalty does not exceed the amount of tax in arrears”.

4. Obviously, Sec. 221 does not empower specifically any authority to impose penalty on an assessee who has defaulted in payment of tax due by him. But it cannot be assumed that Sec. 221 is otiose. Superfluity may be imputed to the parliament only in the last resort if no other provision in the Act is found to repair the omission in Sec. 221. It is a familier rule of interpretation that a section in a statute should be construed in all its enter-connections. Other provisions of the Act should be examined to find out its true import. Bearing in mind this familiar rule, we will examine other provisions of the Act. Sec. 246 provides for the filing of an appeal against various orders of the Income-tax Officer. It says that an assessee aggrieved by any of the orders of an Income-tax Officer, which are specified therein, may appeal to the Appellate Assistant Commissioner. Clause (o) of Sec. 246 mentions an order imposing a penalty under Sec. 221. It is unsustainable clear from Sec. 246(o) that an order imposing penalty under Sec. 221 may be made by an Income-tax Officer. Sec. 246(i) provides for an appeal from an order of the Income-tax Officer made under Sec. 201. Sec. 201(i) provides that if the principal officer or the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under the Act, he or it shall, be deemed to be an assessee in default in respect of the tax.

5. The proviso to Sub-sec. (i) of Sec. 201 reads:—

“Provided that no penalty shall be charged under Sec. 221 from such person, principal officer or company unless the Income-tax Officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax.”

6. The proviso also clearly shows that an Income-tax Officer may impose penalty under Sec. 221. Sec. 246(1) and (o) are there in the Act from its very beginning. So when we read Sec. 221 in conjunction with Sec. 246(i) and (o) and the proviso to Sub-sec., (i) of Sec. 201, there remains no doubt that an Income-tax Officer is authorised to impose penalty under Sec. 221.

7. The immediate background of Sec. 221 also indicates that it authorises the Income-tax Officer to impose penalty in default of payment of tax. Chapter XVII of the Income-tax Act is headed as “Collection and recovery of tax”. The Chapter has got several subchapters. One sub-chapter is headed as “collection and recovery”. This sub-chapter consists of 13 sections (Secs. 220 to 232). Sec. 221 fixes the date for payment of the tax due. Tax is to be paid with 35 days of the service of the notice of demand on the assessee. The proviso to Sub-sec. (i) of Sec. 220 indicates that the power under the proviso is to be exercised by the Income-tax Officer. Sec. 222 requires a certificate to be sent to the Tax Recovery Officer for collection of the arrears of tax. The certificate is to be issued by the Income-tax Officer. Sec. 225 provides for stay of proceedings for recovery of tax and the amendment or withdrawal of the certificate by the Income-tax Officer. Sec. 226 states that notwithstanding the issue of a certificate to the Tax Recovery Officer under Sec. 222, the Income-tax Officer may recover the tax by any one or more of the modes provided therein. Sec. 228 provides for the recovery of tax from a person in Pakistan on the certificate issued by the Income-tax Officer. Sec. 229 provides that penalty shall also be recovered in the manner provided for the recovery of tax. Sec. 230 empowers the Income-tax Officer to take the action on a certain contingency. Sec. 230-A also empowers the Income-tax Officer to take certain action in a certain other contingency. Sec. 232 authorises the Income-tax Officer to institute a suit for recovery of tax. It is only Sec. 221 which does not expressly authorise the Income-tax Officer to impose penalty. But its immediate context would suggest that parliament intended to authorise, the Income-tax Officer to impose penalty.

8. Counsel for the petitioner wants us to apply the rule of strict interpretation to the construction of Sec. 221. But the rule of strict interpretation does not allow the. Court to overlook the relevant context of section. As already stated, when Sec. 221 is read along with Sec. 246(i) and (o), there is left no room for doubt that the power under Sec. 221 is exercisable by the Income-tax Officer. In Smt. Kusum Kumari v. Union of India (supra) the Bench was not referred to Sec. 246(i) and (o).

9. Counsel for the petitioner has also referred us to the amendment made by Parliament in Sec. 221. The amended Sec. 221 authorises expressly the Income-tax Officer to impose penalty in default of payment of tax. But the amendment cannot assist in the construction of the unamended Sec. 221.

10. No other point has been pressed before us.

11. In the result, the petition is dismissed with costs.

Petition dismissed.