Sub-section (6) of Section 18A of the Indian Income-tax Act, 1922, which provided for the calculation of interest on tax not paid, could be interpreted to apply to cases where no tax had been paid by reading it as "from the 1st day of January in the financial year in which the tax ought to have been paid" instead of "from the 1st day of January in the financial year in which the tax was paid".

Judgment

SARKAR, J. : In certain assessment proceedings under the Indian Income-Tax Act, 1922, the assessee was charged with interest under sub-s. (8) of S. 18A of that Act. That sub-section provided that in the cases there mentioned interest calculated in the manner laid down in sub-s. (6) of S. 18A shall be added to the tax assessed. The assessee contends that he could not be made liable to pay the interest as in his case it could not be calculated in the manner indicated. The only question that arises in this appeal is whether this contention is right.

2. The assessee s contention was rejected by the Appellate Commissioner but not by the Appellate Tribunal. The respondent Commissioner thereupon obtained a reference of the following questions to the High Court of Punjab for its decision:

"Whether, on a true construction of sub-sections (6), (8) and (9) of Section 18A of the Indian Income-tax Act, the interest referred to in sub-section (8) is chargeable for failure on the part of an assessee to submit an estimate of his income, and pay tax, as required by the terms of sub-section (3) of that Section?"

The High Court answered that question against the assessee. Hence the present appeals by him there are three appeals because there are three orders charging interests under S. 18A(8), one in respect of each of three assessment years.

3. It would help now to refer briefly to some of the provisions of S. 18A. That section deals with advance payment of income-tax and super-tax, that is, payment of such taxes on income of the year in which taxes are paid and therefore before assessment. Sub-section (l) of this section gives power in certain cases to an Income-tax Officer to make an order directing a person to make an advance payment of tax of an amount equal to the amount of the tax payable for the latest previous year in respect of which he has been assessed. Sub-section (2) gives an assessee on whom an order under sub-s. (1) has been made, power to make his own estimate of the advance tax payable by him and to pay according to sub estimate instead of according to that order. Sub-section (3) deals with the case of a person who has not been assessed before and requires him to make his own estimate of the tax payable by him in advance and pay accordingly. This sub-section applies to the assessee in the present case for he had not been assessed earlier. The assessee however neither submitted any estimate nor paid any tax. It remains now to state that the payment of tax in advance has to be made on June 15, September 15, December 15, and March 15 in each financial year or on such of these dates as may not have expired in the cases contemplated by sub-sections (2) and (3), and that the income on which tax is payable in advance under the section does not include income in respect of which provision is made by S. 18 for deduction of the tax at the source of the income.

4. Now we shall take up sub-ss. (6) and (8) of S. 18A both of which have to be considered in some detail as the decision in this case depends on the words used in them. Sub-section (6) in the sub-section which has created the difficulty felt in this case and the relevant portion of it is in these terms :

"Where in any year an assessee has paid tax under sub-section (2) or sub-section (3) on the basis of his own estimate, and the tax so paid is less than eight per cent of the tax determined on the basis of regular assessment, ..........simple interest at the rate of six per-cent per annum from 1st day of January in the financial year in which the tax was paid up to the date of the said regular assessment shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty per cent."

5. It is designed to apply to cases where tax has been paid by the assessee according to his own estimate but that estimate is on regular assessment found to be deficient. Under this sub-section interest has to be calculated from January 1 in the financial year in whi