Supreme Court of India
PRAKASH NATH KHANNA AND ANR.versusCOMMISSIONER OF INCOME TAX AND ANR.
- Citation
- 2004 INSC 113
- Decided
- 16 February 2004
- Disposal
- Dismissed
- Bench
- DORAISWAMY RAJU
Holding
Section 276‑CC applies to failure to furnish a return within the time prescribed by Section 139(1) or a notice under Section 139(2); filing under Section 139(4) does not exempt a person from liability, and the presumption of culpable mental state under Section 278‑E is rebuttable.
Summary
The appellants, partners of a firm, filed their income‑tax return for AY 1988‑89 on 20‑Mar‑1991, well after the statutory due date of 31‑Jul‑1988, and were later prosecuted under Section 276‑CC of the Income Tax Act, 1961. They contended that filing the return under Section 139(4) before the assessment was completed amounted to filing "in due time" and that Section 276‑CC should not apply because no tax evasion had been discovered and they lacked a culpable mental state. The Supreme Court held that "in due time" under Section 276‑CC refers only to the time prescribed in Section 139(1) or a notice under Section 139(2); a return filed under 139(4) does not cure the infraction. The Court also rejected the argument that discovery of evasion is a condition precedent and affirmed that the presumption of culpable mental state under Section 278‑E is rebuttable. Consequently, the appeals were dismissed.
Issues considered
- The meaning of "in due time" in Section 276‑CC and its relation to Sections 139(1), 139(2) and 139(4).
- Whether filing a return under Section 139(4) before assessment negates liability under Section 276‑CC.
- Whether the discovery of tax evasion is a condition precedent for the operation of Section 276‑CC.
- Whether the presumption of culpable mental state under Section 278‑E is rebuttable.
- The relevance of marginal notes and headings in statutory interpretation.
Legislation cited
- Income Tax Act, 1961s. 139(1), s. 139(2), s. 139(4), s. 142, s. 276-CC, s. 278-E, s. 27l(l)(a)
Subjects
Income TaxSection 276-CCSection 139(4)due timetax evasionstatutory interpretationculpable mental stateSection 278-Elate filingcriminal prosecution
Judgment
A PRAKASH NA TH KHANNA AND ANR.
v.
COMMISSIONER OF INCOME TAX AND ANR.
FEBRUARY 16, 2004
B [DORAISWAMY RAJU AND ARIJIT PASAYAT, JJ.]
Income Tax Act, 1961:
Section 276-CC-Failure to furnish return-Return for assessment year
C 1988-89 filed in 1991 before the assessment was completed-Prosecution under
the section-Applicability-Held: Expression 'due time' occurring in the section
means that the return is to be farnished within the time stipulated under sub-
section (1) of section 139 or by notice given under sub-section (2) of section
139-Jf return is filed in terms of section 139(4) before the assessment is
D made, it would be infraction of section 139(1) and (2) as time is prescribed
therein and return is to be filed within the time prescribed-This is the legislative
intent of the statute-Further, discovery of failure regarding tax evasion
exceeding the monetary limit mentioned, is not a condition precedent for
applicability of section 276-CC-When return under section 139(4) is filed
before discovery of any evasion, it cannot be said that section 276-CC has no
E application-Section 139(1), (2) and (4).
Sections 276 CC and 278-E-Failure to furnish return-Return for
-
assessment year 1988-89 filed in year 1991-Presumption as to culpable
mental state--Held: Under Section 278£, Court can presume the culpable
mental state but the accused can plead to the contrary in defence-On facts,
F High Court did not deal with these aspects rightly-Accused can plead absence
of culpable mental state at the trial.
Interpretation of Statutes:
\-
Rule of construction-Legislative intent must be found in word used by
G the legislature itself-If the statutory provision is plain and unambiguous,
Court cannot read anything into the statute-Further while interpreting Court
can only interpret the law and not legislate it.
Principles of construction-Casus omissus and reading statute as a
H 434
PRAKASH NA TH KHANNA v. COMMISSIONER OF INCOME TAX 435
whole-Discussed. A
Heading of section or marginal note-Reliance upon-Held: It can be
relied upon to clear any doubt or ambiguity and to discern legislative intent-
Provisions of section 276-CC clear as such there is no scope for clearing any
doubt or ambiguity-Income Tax Act, 1961-Section 276-CC.
B
Appellants and others are the partners of a firm. For assessment year
1988-89 income tax return was filed on 20.3.1991 and the assessment was
completed on 26.8.1991. Penalty was imposed under section 27l(l)(a) of
the Income Tax Act for late submission of the return. Assistant
Commissioner filed complaint in terms of section 276-CC before the Chief C
Judicial Magistrate who took cognizance of the offence and issued process.
Appellants filed writ applications challenging the legality of the
proceedings. High Court dismissed the writ petitions. Hence the present
appeals.
Appellants relying on Kullu Valley Transport Co's case that the return D
furnished under Section 139(4) at any time before the assessment is made
has to be regarded as a return furnished under section 139(1), contended
that the return was furnished in due time and consequently section 276-
CC of the Act is not attracted; that having regard to the marginal heading
of section 276-CC it would not apply to the cases of assesses who have
been regularly assessed to income tax and have voluntarily submitted their E
- returns of income without issue of any notice within time permissible under
the Act; that section 276-CC is applicable where tax evasion exceeds Rs.
1,00,000 and such failure is not discovered and in the instant case there
has been no discovery of the failure regarding tax evasion and assessee
has submitted return voluntarily; that.there has been no concealment of F
income and the allegation of tax evasion is based on no evidence and is
contrary to the materials on record; and that the appellants had no guilty
mind.
Respondents contended that the High Court was justified in
dismissing the writ petitions; that the decision in Kullu Valley's case has G
no application to the facts of the instant case as sub-sections (1) and (4)
of section 139 deal with different situations and it cannot be said that a
return filed in term of section 139(4) would mean compliance with the
requirements indicated in section 139(1); and that section 278-E raises a
rebuttable presumption and the factual aspects raised by the appellants
can be placed for consideration in the proceedings before the CJM. H
436 SUPREME COURT REPORTS [2004) 2 S.C.R.
A Dismissing the appeals, the Court
HELD l.l. One of the significant terms used in Section 276-CC is
'in due time'. The time within which the return is to be furnished is
indicated only in sub-section (1) of Section 139 or by notice given under
sub-section (2) of sectiOn 139 and not in sub-section (4) of Section 139.
B That being so even if a 'return is filed in terms of sub-section (4) of Section
139 before the assessment is made that would not dilute the infraction in
not furnishing the return in due time as prescribed under sub-section (1)
of Section 139. Otherwise, the use of the expression 'in due time' would
lose its relevance and it cannot be said that the said expression was used
C without any purpose. Before substitution of the expression 'clause (i) of
sub-section (1) of section 142' by Direct Tax Laws (Amendment) Act, 1987
w.e.f. 1.4.1989 the expression used was 'sub-section (2) of section 139'. At
the relevant point of time the assessing officer was empowered to issue a
notice requiring furnishing of a return within the time indicated therein.
That means the infractions which are covered by Section 276-CC relate
· · D to non-furnishing of return within the time in terms of sub-section (1) or
indicated in the notice given under sub-section (2) of Section 139. There
is no condonation of the said infraction, even if a return is filed in terms
of sub-section (4). Accepting such a plea would mean that a person who
has not filed a return within the due time as prescribed under sub-sections
E (1) or (2) of Section 139 would get benefit by filing the return under Section
139(4) much later. This cannot be the legislative intent. [448-C-F)
1.2. The submission that since the return under sub-section (4) of
Section 139 was filed before the discovery of any evasion, Section 276-CC
-
has no application cannot be accepted. If such plea is accepted it could
p mean that in a given case where there is infraction and where a return
has not been furnished in terms of sub-section (1) of Section 139 or even
in response to a notice issued in terms of sub-section (2), the consequences
flowing from non-furnishing of return would get obliterated. At the
relevant point of time Section 139(4)(a) permitted filing of return where
return has not been filed within sub-section (1) and sub-section (2). The
G time limit was provided in clause (b). Section 276-CC refers to "due time"
in relation to sub-sections (1) and (2) of Section 139 and not to sub-section
(4). Had the Legislature intended to cover sub-section (4) also, use of
expression "Section 139" alone would have sufficed. It cannot be said that
Legi~lature without any purpose or intent specified only sub-sections (1)
H and (2) and the conspicuous omission of sub-section (4) has no meaning
PRAKASH NA TH KHANNA v. COMMISSIONER OF INCOME TAX 4 37
or purpose behind it. Sub-section (4) of Section 139 cannot by any stretch A
of imagination control operation of sub-section (i) wherein a fixed period
for furnishing the return is stipulated. The mere fact that for purposes of
assessment and carrying forward and to set off losses it is treated as one
filed within sub-sections (1) or (2) cannot be pressed into service to claim
it to be actually one such, though it is factually and really not by extending B
it beyond its legitimate. purpose. 1448-G; 449-C-EJ
Commissioner of Income Tax, Punjab v. Kullu Valley Transport Co. Pvt.
Ltd., (1970) 77 ITR 518, distinguished.
1.3. Whether there was wilful failure to furnish the return is a matter
which is to be adjudicated factually by the Court which deals with the C
prosecution case. Under Section 278-E the Court has to presume the
existence of culpable mental state and absence of which can be pleaded
by an accused as a defence in respect to the act charged as an offence in
the prosecution. Therefore, the factual aspects highlighted by the
appellants were rightly not dealt with by the High Court. This is a matter D
for trial and it is certainly open to the appellants to plead absence of
culpable mental state. [449-F, 450-C)
2.1. It is well-settled principle in law that the court cannot read
anything into a statutory provision which is plain and unambiguous. A
statute is an edict of the legislature. The language employed in a statute E
is the determinative factor of legislative intent. The first and primary rule
of construction is that the intention of the legislation must be found in the
word used by the legislature itself. The question is not what may be
supposed and has been intended but what has been said. Further, while
interpreting a provision the court only interprets the law and cannot F
legislate it. If a provision of law is misused and subjected to the abuse of
process of law, it is for the legislature to amend, modify or repeal it, if
deemed necessary. [446-E-F; 447-BJ
Padma Sundara Rao (dead) and Ors. v. State of Tamil Nadu and Ors.,
[2002] 3) SCC 533; D.R. Venkatchalam v. Dy. Transport Commissioner, G
[1977] 2 SCC 273 and Union ofIndia v. Filip Tiago De Gama of Vedem Vas co
De Gama, AIR (1990) SC 981, referred to.
Rishabh Agro Industries Ltd. v. P.N.R. Capital Services Ltd., [2000] 5
sec 515, relied on.
H
438 SUPREME COURT REPORTS [2004] 2 S.C.R.
A Lenigh Valley Coal Co. v. Yensavage, 218 FR 547, referred to.
2.2. Two principles of construction one relating to casus omissus and
the other in regard to reading the statute as a whole appear to be well
settled. Under the first principle a casus omissus cannot be supplied by
the court except in the case of clear necessity and when reason for it is
B found in the four corners of the statute itself but at the same time a casus
omissus should not be readily inferred and for that purpose all the parts
of a statute or section must be construed together and every clause of a
section should be construed with reference to the context and other clauses
thereof so that the construction to be put on a particular provision makes
C a consistent enactment of the whole statute. This would be more so if literal
construction of a particular clause leads to manifestly absurd or anomalous
results which could not have been intended by the legislature. (447-C-D]
Artemiou v. Procopiou, (1966) 1QB878 and Luke v. /RC, (1963) AC >
557, referred to.
D
2.3. The heading of the section or the marginal note may be relied
upon to clear any doubt or ambiguity in the interpretation of the provision
and to discern the legislative intent. The provisions of section 276-CC are
in clear terms as such there is no scope for trying to clear any doubt or
ambiguity. (447-G; 448-B]
E
Cl T. v. Abmerbai Umarbhai and Co., AIR (1950) SC 134; Board of
Muslim Waifs, Rajasthan v. Radha Kishan and Ors., (1979) 2 SC 468 and
Kalawatibai v. Soirvabai and Ors., AIR (1991) SC 1581, referred to.
Smt. Nandini Satpathy v. P.L. Dani and Anr., AIR (1978) SC 1025,
F relied on.
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal Nos.
1260-1261 of 1997.
From the Judgment and Order dated 21.11.96 of the Himachal Pradesh
G High Comt in Cr!. W. Nos. 15/92 and 20 of 1994.
G.C. Sharma Anoop Sharma, Rajiv Tyagi, M. Husain for M/s. Rajiv
Tyagi & Associates for the Appellant.
R.P. Bhatt and O.P. Srivastava for B.K. Prasad for the Respondents.
H
-· PRAKASH NA TH KHANNA v. COMMISSIONER OF INCOME TAX [PASA VAT, J.]
The Judgment of the Court was delivered by
439
A
ARIJIT PASAYAT, J. These appeals revolve round the scope and
ambit of Section 276-CC of the Income Tax Act, 1961 (in short the 'Act'),
and are directed against a common judgment rendered by a Division Bench
of the Himachal Pradesh High Court which rejected the three writ petitions
filed by the appellants in these two appeals. The Assistant Commissioner of B
Income tax, Circle I, Shimla filed a complaint in terms of Section 276-CC of
the Act in the Court of the CJM who had issued process of taking cognizance
of the offence. In each of the writ applications, challenge was made to legality
of the proceedings pending in the Court of Chief Judicial Magistrate, Shim la
(in short the 'CJM'). C
The factual position is almost undisputed and needs to be noted in
brief.
The three appellants were partners of a firm carrying on business under
the name and style of M/s Kailash Nath and Associates. Apart from the three D
appellants, two other persons were partners and one of them Shri Kailash
/ Nath was the Managing partner in tenns of the Partnership Deed dated
1.4.1983. For the assessment year 1988-89 return of income was to be filed
on or before 31. 7.1988, but was in fact filed on 20.3.1991. Assessment under
Section 143(3) of the Act was completed on 26.8.1991. Proceedings for late
submission of return were initiated against the appellants under Section E
27l(l)(a) of the Act and penalty was imposed. Proceedings in terms of Section
276-CC of the Act were also initiated and complaint was filed before the
concerned Court. As noted above, cognizance was taken and process was
issued. The writ applications were filed challenging legality of the proceedings.
By the impugned judgment the High Court dismissed the writ petitions. The F
points which were mooted before the High Court were re-iterated in the
present appeals.
Mr. G.C. Sharma, learned senior counsel appearing for the appellants
urged the following points for consideration:
l. The expression "to furnish in due time'~ occurring in Section 276CC
G
means to furnish within the time permissible under the Act. The
return furnished under Section 139(4) at any time before the assessment
is made has to be regarded as a return furnished under Section 139(1).
This was so held by this Court in Commissioner of Income Tax Punjab
v. Kullu Valley Transport Co. Pvt. Ltd., ( 1970) 77 ITR 518 in the H
A
440 SUPREME COURT REPORTS [2004] 2 S.C.R.
context of Sections 22(1) and 22(3) of the Indian Income Tax Act,
1922 (in short the 'Old Act') which are in pari-materia of Section
·-
139(1) and Section 139(4) of the Act. It follows that return was
furnished in "the due time" and consequently Section 276CC is not
attracted.
B 2. The provisions of Section 276CC(i) are not intended to apply to
the cases of assessees who have been regularly assessed to income
tax and have voluntarily submitted their returns of income without
. issue of any notice to do so by the Assessing Officer in that behalf,
within the time permissible to furnish the return under the Act. This
interpretation gets support from the marginal heading and explanatory
c memo laid before Parliament when the Section was introduced.
3(i) The provision only applies where the amount of tax which would
have been evaded if the failure had not been discovered exceeds Rs,
1,00,000. There has been no discovery of the failure in this case from
the point of view of evasion of tax. The assessee has submitted return
D
voluntarily, paid advance tax and self assessment tax.
3 (ii) There has been no concealment of income in this case, and no
penalty has been or can be imposed. The allegation made in the
complaint that there has been evasion of tax to the extent of
-
Rs.5,68,039/- is based on no evidence and is contrary to the materials
E
on record.
4. The petitioners in reply to show cause notice issued pleaded that
the delay in submission of returns was unavoidable, because their
share of profit from the firm in which they were partners had not
F been communicated by the Managing Partner of the firm who was
responsible for the accounts. They had no guilty mind.
5. Mere delay in filing a return without contumacious conduct and
mens rea being established could not make the petitioner liable for
prosecution.
G 6. Petitioner having been subjected to levy of interest under Section
139(1) and also to penalty proceedings under Section 27l(l)(a)ofthe
Act, could not further be prosecuted for the same defaults.
Per contra, learned counsel appearing for the respondents submitte?
H that the High Court was justified in its conclusions in dismissing the writ
- PRAKASH NA TH KHANNA v. COMMISSIONER OF INCOME TAX [PASA YAT, J.] 441
petitions. The decision in Kuitu Valley's case (supra) has no application to
the facts of the present case and in fact it was rendered in a different set up.
A
Sub-sections (1) and (4) of Section 139 deal with different situations and it
cannot be said that a return filed in terms of Section 139(4) would mean
compliance with the requirements indicated in sub-section (1) of Section 139,
It is further submitted that Section 278-E raises a presumptioP which is a B
rebutable one and the factual aspects raised by the appellants can be placed
for consideration in the proceedings before the learned CJM.
Since the fate of the appeals revolves round the scope and ambit of
Section 276-CC in the background of sub-sections (1) and (4) of Section 139,
it would be appropriate to quote the aforesaid provisions, as they stood at the C
relevant point of time:
"Section 276-CC: Failure to furnish returns of income: If a person
wilfully fails to furnish in due time the return of income which he is
required to furnish under sub-section (1) of Section 139 or by notice
given under sub-section (2) of Section 139 or Section 148, he shall D
be punishable,-
(i) in a case where the amount of tax, which would have been evaded
if the failure had not been discovered, exceeds one hundred thousand
rupees, with rigorous imprisonment for a tenn which shall not be less
than six months but which may extend to seven years and with fine; E
(ii) in any other case, with imprisonment for a term which shall not
be less than three months but which may extend to three years and
with fine:
Provided that a person shall not be proceeded against under this F
section for failure to furnish in due time the return of income under
st:b-section (1) of Section 139-
(i) for any assessment year commencing prior to the 1st day of April,
1975; or (ii)for any assessment year co!llmencing on or after the 1st
day of April, 1975, if- G
(a) the return is furnished by him before the expiry of the assessment
year; or
(b) the tax payable by him on the total income determined on regular
assessment, as reduced by the advance tax, if any, paid, and any tax
deducted at source, does not exceed three thousand rupees". H
442 SUPREME COURT REPORTS [2004] 2 S.C.R.
A Section 139: Return of income-
(1) Every person, if his total income or the total income of any other
person exceeded the maximum amount which is not chargeable
to income tax, shall furnish a return of his income or the income
of such other person during the previous year in the prescribed
B fonn and verified in the prescribed manner and setting forth such
other particulars as may be prescribed.
(a) in the case of every person whose total income, or the total
income of any other person in respect of which he is
assessable under this Act, includes any income from business _.,
c or profession, before the expiry of four months from the end
of the previous year or where there is more than one previous
year, from the end of the previous year which expired last
before the commencement of the assessment year, or before
the 30th day of June of the assessment year, whichever is
later;
D
(b) in the case of every other person, before the 30th day of
June of the assessment year:
Provided that, on an application made in the prescribed
manner, the Assessing Officer may, in his discretion, extend
E the date for furnishing the return, and, notwithstanding that
the date is so extended, interest shall be chargeable in
accordance with he provisions of sub-section (8).
(IA) Notwithstanding anything contained in sub-section (I), no person
need to furnish under that sub-section a return of his income or the
F income of any other person in respect of whose total income he is
assessable under this Act, if his income or, as the case may be, the
income of such other person during the previous year consisted only
of income chargeable under the head "Salaries" or of income
chargeable under that head and also income of the nature referred to
in any one or more of clause (i) to (ix) of sub-section (I) of Section
G
80L and the following conditions are fulfilled, namely:-
(a) where he or such other person was employed during the previous
year by a company, he or such other person was at no time during
'the previous year a director of the company or a beneficial owner Qf
shares in the company (not being shares entitled to a fixed rate of
H
PRAKASH NA TH KHANNA v. COMMISSIONER OF 1NCOME TAX [PASAYA T, J.] 443
dividend whether with or without a right to participate in profits) A
carrying not less than twenty per cent of the voting power;
(b) his income or the income of such other person under the head
"Salaries'', exclusive of the value of all benefits or amenities not
provided for by way of monetary payment, does not exceed twenty
four thousand rupees; B
(c) the amount of income of the nature referred to in clause (i) to (ix)
of sub-section (l) of Section SOL, if any does not, in the aggregate,
exceed the maximum amount allowable as deduction i!'! his case under
that section; and
c
(d) the tax deductible at source under section 192 from the income
chargeable under the head "Salaries" has been deducted from that
income.
(2) In the case of any person who, in the Assessing Officer's opinion,
is assessable under this Act, whether on his own total income or on D
the total income of any other person during the previous year, the
Assessing Officer may, before the end of the relevant assessment
year, issue a notice to him and serve the same upon him requiring
him to furnish, within 30 days from the date of service of the notice,
a return of his income or the income of such other person during the
previous year, in the prescribed form and verified in the prescribed E
manner and setting forth such other particulars as may be prescribed:
Provided that, on an application made in the prescribed manner,
the Assessing Officer may, in his discretion, extend the date for
furnishing the return, and, notwithstanding that the date is so
extended, interest shall be chargeable in accordance with the F
provisions of sub-section (8).
(3) If any person who has not been served with a notice under sub-
section (2), has sustained a loss in any previous year under the
head "Profits and gains of business or profession" or under the
head "Capital gains" and claims that the loss or any part thereof G
should be carried forward under sub-section ( 1) of Section 72, or
sub-section (2) of Section 73, or sub-section (l) or sub-section
(3) of Section 74, or sub-section (3) of Section 74A, he may
furnish within the time allowed under sub-section (I) or by the
thirty first day of July of the assessment year relevant to the H
444 SUPREME COURT REPORTS [2004] 2 S.C.R.
A previous year during which. the loss was sustained, a return of
loss in the prescribed form and verified in the prescribed manner
and containing such other particulars as may be prescribed, and
all the provisions of this Act shali apply as if it were a return
under sub-section (I).
B (4) (a) Any person who has not furnished a return within the time
allowed to him under sub-section (I) or sub-section (2) may, before
the assessment is made, furnish the return for any previous year at
--
any time before the end of the period specified in clause (b ), and the
provisions of sub-section (8) shall apply in every such case.
C (b) The period referred to in clause (a) shall be-
(i) where the return relates to a previous year relevant to any
assessment year commencing on or before the Ist day of April,
1967 four years from the end of such assessment year;
(ii) where the return relates to a previous year relevant to the
D assessment year commencing on the Ist day of April, 1968 three
years from the end of the assessment year;
(iii) where the return relates to a previous year relevant to any
other assessment year, two years from the end of such assessment
year.
E
(4A) Every person in receipt of income derived from property held
under trust or other legal obligation wholly for charitable or religious
purposes or in part only for such purposes, or of income being
voluntary contributions referred to in sub-clause (iia) of clause (24)
of section 2 shall, if the total income in respect of which he is
F assessable as a representative assessee (the total income for this purpose
being computed under this Act without giving effect to the provisions
of sections l I and 12) exceeds the maximum amount which is not
chargeable of income tax f~rnish a ·return of such income of the
previous year in the prescribed form and verified in the prescribed
G manner and setting forth such other particulars as may be prescribed
and all the provisions of this Act shall, so far as may be, apply as if
it were a return required to be furnished under sub-section (I).
(4B) The Chief Executive Officer (whether such Chief Executive
Officer) is known as Secretary or by any other designation) of every
--
H political party shall, ifthe total income in respect of which the political
PRAKASl:I NA TH KHANNA v. COMMISSIONER OF INCOME TAX [PASAYA T, J.] 44 5
party is assessable (the total income for this purpose being computed A
without giving effect to the provisions of section 13A) exceeds the
maximum amount which is not chargeable of income tax furnish a
return of such income of the previous year in the prescribed form and
verified in the prescribed manner and setting forth such other
particulars as may be prescribed and all the provisions of this Act B
- shall, so far as may be, apply as if it were a return required to be
furnished under sub-section (1 ).
(5) If any person having furnished a return under rnb-section {I) or
Sli,lb-section (2), discovers any omission or any wrong statement therein,
he may furnish a revised return at any time before the assessment is C
made.
Kullu Valley's case (supra) was rendered in the background of Section
22 of the Old Act. Great emphasis is laid on the observation by this Court
that sub-section (3) of Section 22 of the Old Act was in the nature of a
proviso to sub-section (1) thereof. It is to be noted that the decision was D
rendered in a totally different context. The question related to the treatment
of a return of loss filed beyond the time provided under sub-section ( l) of
Section 22. The observation on which reliance is placed cannot be read out
of context.
In Kutlu valley's case (supra) the majority view was that Section 22(3) E
---
•
'
of the Old Act (corresponding to Section 139(4) of the Act) is merely a
proviso to Section 22(1) (Section 139( 1)) respectively, and if Section 22(3)
is complied with, Section 22(1) must be held to have been complied with and
that if compliance has been made with Section 22(3), the requirement of
Section 22(2A) (corresponding to Section 139(3) of the Act) would stand p
satisfied. It was thus, held that the ascertained losses could be carried forward
to the subsequent years and set off, even though suo motu return is not filed
within time prescribed under Section 22(1) of the Old Act.
The decision was rendered in a conceptually different situation, and has
no relevance so far as the present dispute is concerned. G
The basic issue in Kutlu Valley's case (supra) was determination of loss
on the basis of return filed under Section 22(1) or 22(3) of the Old Act. In
the Act, Section 80 deals specifically with the situation.
The original Section 80 in the Act reads as under: H
t
'
446 SUPREME COURT REPORTS [2004] 2 S.C.R.
A "Notwithstanding anything contained in this Chapter, no loss which
has not been determined in pursuance of a return filed under Section
139, shall be carried forward and set off under sub-section (1) of
Section 72 or sub-section (2) of Section 73 or sub-section (1) of
Section 74".
B By the Taxation Laws (Amtndment) Act, 1984 with effect from Ist April,
1985, the words "under Section 139" (underlined for emphasis) were
substituted by the words "within the time allowed under sub-section (1) of
Section 139 or within such further time as may be allowed by the Income Tax
-
I-
Officer". (underlined for emphasis)
c As a result of the amendment of Section 13 9(3) by the Taxation Laws
(Amendment and Miscellaneous Provisions) Act, 1986 the power of the
Income tax Officer to extend time for furnishing return was taken away w.e.f.
1st April, 1987. I
D Yet again, by the Direct T~x Laws (Amendment Act), 1987 w.e.f. 1st
April, 1989 the words "within the time allowed ).lnder sub-section (1) of
Section 139 or within such further time as may be allowed by the Income tax
Officer" were substituted by the words "in accordance with the provisions of
sub-section (3) of Section 139".
E It is well settled principle in Jaw that the Court cannot read anything
into a statutory provision which is plain and unambiguous. A statute is an
edict of the legislature . The language employed in a statute is the determinative
factor of legislative intent. The first and primary rule of construction is that
the intention of the legislation must be found in the words used by the
legislature itself. The question is not what may be supposed and has been
F intended but what has been said. "Statutes should be construed, not as theorems
of Euclid", Judge Learned Hand said, "but words must be construed with
some imagination of the purposes which lie behind them". (See Lenigh Valley
Coal Co. v. Yensavage, (218 FR 547). The view was re-iterated in Union of
India v. Filip Tiago De Gama of Vedem Vasco De Gama, AIR (1990) SC
G 981, and Padma Sundara Rao (dead) and Ors. v. State of Tamil Nadu and
Ors., [2002] 3 SCC 533.
In D.R. Venkatchalam v Dy. Transport Commissioner, [1977] 2 SCC
273 it was observed that courts must avoid the danger of a priori determination
of the meaning of a provision based on their own preconceived notions of
H ideological structure or scheme into which the provision to be interpreted is
...... PRAKASH NA TH KHANNA 1·. COMMISSIONER OF INCOME TAX [PASA YAT, .1.] 447
somewhat fitted. They are not entitled to usurp legislative function under the A
disguise of interpretation.
While interpreting a provision the court only interprets the law and
cannot legislate it. If a provision of law is r.1 isused and subjected to the ~buse
: of process of law, it is for the legislature to amend, modify or repeal it, if
--- deemed necessary. (See Rishabh Agro Industries Ltd v. P.N.B. Capital Services
Ltd, [2000) 5 SCC 515. The legislative casus omissus cannot be supplied by
judicial interpretative process.
B
Two principles of construction- one relating to casus omissus and the
other in regard to reading the statute as a whole -appear to be well settled.
Under the first principle a casus omissus cannot be supplied by the court
c
except in the case of clear necessity and when reason for it is found in the
four comers of the statute itself but at the same time a casus omissus should
not be readily inferred and for that. purpose all the parts of a statute or section
must be construed together and every clause of a section should be construed
with reference to the context and other clauses thereof so that the construction D
to be put on a particular provision makes a consistent enactment of the whole
statute. This would be more so if literal construction of a particular clause
leads to manifestly absurd or anomalous results which could not have been
intended by the legislature. "An intention to produce an unreasonable result",
said Danckwerts, L.J., in Artemiou v. Procopiou, (1966) I QB 878, "is not
to be imputed to a statute if there is some other construction available". E
Where to apply words literally would "defeat the obvious intention of the
legislation and produce a wholly unreasonable result'', we must "do some
violence to the words" and so achieve that obvious intention and produce a
rational construction. Per Lord Reid in Luke v. /RC, (1963) AC 557 where
-- at AC p.577 he also observed: "This is not a new problem, though our F
standard of drafting is such that it rarely emerges".
The heading of the Section or the marginal note may be relied upon to
clear any doubt or ambiguity in the interpretation of the provision and to
discern the legislative intent. In C./. T. v. Ahmedbhai Umarbhai and Co., AIR
(1950) SC 134 after referring to the view expressed by Lord Machnaghten G
in Ba/raj Kunwar v. Jagatpal Singh, !LR 26 All. 393 (PC), it was held that
marginal notes in an Indian Statute, as in an Act of Parliament cannot be
referred to for the purpose of construing the statute. Similar view was expressed
in Board of Muslim Wakft, Rajasthan v. Radha Kishan and Ors., [1979) 2
SCC 468, and Kalawatibai v. Soiryabai and Ors., AIR (1991) SC 1581. H
448 SUPREME COURT REPORTS [2004] 2 S.C.R.
A Marginal note certainly cannot control the meaning of the body of the Section
---
if the language employed there is clear. (See Smt. Nandini Satpathy v. P.L.
Dani and Anr., AIR (1978) SC I 025. In the present case as noted above, the
provisions of Section 276-CC are in clear terms. There is no scope for trying
to cl.ear any doubt or ambiguity as urged by learned counsel for the appellants.
Interpretation sought to be put on Section 276-CC to the effect that if a return
B is filed under sub-section (4) of section I 39 it means that the requirements
of sub-section (I) of Section 139 would stand complied with cannot be
accepted for more reasons than one.
.
One of the significant terms used in Section 276-CC is 'in due time'. L
C The time within which the return is to be furnished is indicated only in sub-
section (I) of Section 139 and not in sub-section (4) of Section 139. That
being so, even if a return is filed in terms of sub-section (4) of Section 139
r
that would not dilute the infraction in not furnishing the return in due time t
as prescribed under sub-section (I) of Section 13 9. Otherwise, the use of the
expression "in due time" would loose its relevance and it cannot be said that
D the said expression was used without any purpose. Before substitution of the
expression "clause (i) of sub-section (I) of section 142" by Direct Tax Laws
(Amendment) Act, 1987 w.e.f. 1.4.1989 the expression used was "sub-section
(2) of section 139". At the relevant point of time the assessing officer was
empowered to issue a notice requiring furnishing of a return within the time
E indicated therein. That means the infractions which are covered by Section
276-CC relate to non-furnishing of return within the time in terms of sub-
section ( 1) or indicated in the notice given under sub-section (2) of Section
139. There is no condonation of the said infraction, even if a return is filed
in terms of sub-section (4). Accepting such a plea would mean that a person
who has not filed a return within the due time as prescribed under sub-
F sections (1) or (2) of Section 139 would get benefit by filing the return under
Se'ction 139(4) much later. This cannot certainly be the legislative intent.
Another plea which was urged with some amount of vehemence was
-
that the provisions of Section 276-CC are applicable only when there is
discovery of the failure regarding evasion of tax. It was submitted that since
G the return under sub-section (4) of Section 139 was filed before the discovery
of any evasion, the provision has no application. The case at hand cannot be
covered by the expression "in any other case". This argument though attractive
has no substance.
The provision consists of two parts. First relates to the infractions
H
-~
___,__ PRAKASH NA TH KHANNA v. COMMISSIONER OF INCOME TAX [PASA VAT, J] 449
warranting penal consequences and the second, measure of punishment. The A
second part in turn envisages two situations. The first situation is where there
is discovery of the failure involving the evasion of tax of a particular amount.
For the said infraction stringent penal consequences have been provided.
Second situation covers all cases except the first situation elaborated above.
The term of imprisonment is higher when the amount of tax which B
would have been evaded but for the discovery of the failure to furnish the
return exceeds one hundred thousand rupees. If the plea of the appellants is
accepteJ it would mean that in a given case where there is infraction and
where a return has not been furnished in terms of sub-section (1) of Section
139 or even in response to a notice issued in terms of sub-section (2), the
consequences flowing from non-furnishing of return would get obliterated.
c
At the relevant point of time Section 139(4)(a) permitted filing of return
j
where return has not been filed within sub-section ( 1) and sub-section (2).
The time limit was provided in clause (b). Section 276-CC refers to "due
time" in relation to sub-sections (1) and (2) of Section 139 and not to sub-
section (4). Had the Legislature intended to cover sub-section (4) also, use of D
expression "Section 139" alone would have sufficed. It cannot be said that
Legislature without any purpose or intent specified only the sub-sections (I)
and (2) and the conspicuous omission of sub-section (4) has no meaning or
purpose behind it. Sub-section (4) of Section 139 cannot by any stretch of
imagination control operation of sub-section (1) wherein a fixed period for
E
furnishing the return is stipulated. 1l1e mere fact that for purposes of assessment
and carrying forward and to set off losses it is treated as one filed within sub-
sections (1) or (2) cannot be pressed into service to claim it to be actually one
such, though it is factually and really not by extending it beyond its legitimate
purpose.
F
Whether there was wilful failure to furnish the return is a matter which
is to be adjudicated factually by the Court which deals with the prosecution
case. Section 278-E is relevant for this purpose and the same reads as follows:
"278-E: Presumption as to culpable mental state-
G
(1) In any prosecution for any offence under this Act which requires
a culpable mental state on the part of the accused, the court shall
I presume the existence of such mental state but it shall be a defence
'--
for the accused to prove the fact that he had no such mental state with
respect to the act charged as an offence in that prosecution.
H
A
450 SUPREME COURT REPORTS [2004] 2 S.C.R.
Explanation: In this sub-section, "culpable mental state" includes
-
intention, motive or knowledge of a fact or belief in, or reason to
believe, a fact
(2) For the purposes of this section, a fact is said to be proved only
when the court believes it to exist beyond reasonable doubt and not
B merely when its existence is established by a preponderance of
probability".
There is a statutory presumption prescribed in Section 278-E. The Court
has to presume the existence of culpable mental state, anct absence of such
mental state can be pleaded by an accused as a defence in respect to the act
C charged as an offence in the prosecution. Therefore, the factual aspects
highlighted by the appellants were rightly not dealt with by the High Court.
This is a matter for trial. It is certainly open to the appellants to plead absence
of culpable mental state when the matter is taken up for trial.
Looked at from any angle the appeals are without merit and are
D dismissed.
N.J. Appeals dismissed.
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