Law:

Section:

Section 17A(3) of the Kerala Agricultural Income-tax Act, 1950 - Penalty - For default in payment of tax on income admitted in return - Assessment year 1981-82 - Whether period during which it could be said that a person is in default within meaning of sub-section (3) of section 17A is period from date of filing of return to actual date on which he pays tax - Held, yes FACTS For the assessment year 1981-82, the assessee-company filed its return on 4-12-1986. The admitted tax was paid on 28-2-1987. The department imposed penalty under section 17A(3) for the default in payment of admitted tax for the period from 1-6-1981 to 28-2-1987. The assessee, however, contended that the period of default in paying the admitted tax before filing the return under section 17A(3) would be only from 4-12-1986 to 28-2-1987. HELD The proviso to sub-section (3) of section 17 would indicate that the levy of penalty under this section is not automatic on the commission of a default by the assessee. The word 'may' used in the section read with the proviso necessarily implies that it is in the discretion of the assessing authority to levy the penalty. That means it is open to the assessing authority to levy the penalty, or not at all. It is also clear from the plain language employed in this sub-section that the penalty can be levied only if the person commits default in paying the tax in terms of sub-section (1). Sub-section (1) will be attracted only if a person furnishes the return. It is not mandatory for an assessee to furnish the return. But if he decides to furnish the return, the return shall be accompanied by proof of payment of the tax on the basis of self-assessment. This, in short, is the scheme of section 17A. Going by the scheme, the person made mention of in sub-section (1) can be said to have committed the default in paying the tax only from the date on which he files the return which is not accompanied by the proof of payment of the tax. The penalty contemplated under sub-section (3), therefore, can be levied only for the period between the date on which the person files the return and the date on which he pays the tax. To put it briefly, the period during which it can…

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