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Judgment
R.S. Jha, J.
Being aggrieved by the order passed by the revisional authority dated 14.2.1994 (Annexure-K), the petitioner has filed the present petition praying for quashing of the orders of rectification to the extent that they direct adjustment of the amount due for refund and the order of the Commissioner rejecting the petitioner''s revision dated 4.2.1994.
Learned counsel for the petitioner submits that the petitioner was assessed to income tax for the years 1982-83, 1983-84 and 1984-85. Subsequently, in exercise of powers u/s 154 of the Act, 1961 (hereinafter referred to as "the Act") the orders were amended with a view to rectify the mistakes apparent on the face of the record. Consequently, the assessments were rectified vide orders dated 12.1.93,18.1.93,29.1.93 and 17.9.92 which have been placed on record as Annexure-B to Annexure-H. In these orders of rectification u/s 154 of the Act, the authority, while coming to the conclusion that the petitioner was entitled to refund of tax has ordered adjustment of the amount to be refunded against the outstanding demand for the subsequent years towards income tax.
The petitioner being aggrieved by the order of adjustment filed a revision application u/s 264 of the Act, before the Commissioner of Income Tax, Bhopal contending therein that in view of the provisions of Section 245 of the Act adjustment or set off of any amount to be refunded against tax remaining payable could not have been made without prior intimation or notice to the petitioner. The Commissioner of Income Tax, Bhopal who is the Revisional Authority dismissed the revision filed by the petitioner on the ground that the object and spirit of Section 245 of the Act is only that the assessee should have knowledge of the adjustment of the amount to be refunded as there in no requirement under the provisions of the Section 245 of the Act which gives him any right of prior notice nor does it require any approval of the assessee before adjustment. It is submitted by the learned counsel for the petitioner that the impugned orders deserve to be quashed due to non-compliance of the requirement of giving prior intimation as required by Section 245 of the Act. The counsel for the petitioner has relied upon the judgment reported in Shiv Narain Shivhare Vs. Assistant Commissioner of Income Tax, (1996) 135 CTR (MP) 365.
Shri Rohit Arya, learned senior counsel appearing for the respondents has submitted that the intimation as required by Section 245 of the Act was in fact given to the assessee-petitioner in view of the order passed u/s 154 of the Act rectifying the mistakes. He further contends that the object and intention of Section 245 of the Act, is only that the assessee must have knowledge of the set off or adjustment and nothing more and therefore, in the instant case as the petitioner had knowledge of the set off in view of the orders passed u/s 154(3) of the Income Tax Act, there was substantial compliance of the requirement of Section 245 of the Act and therefore, the impugned orders are unimpeachable.
1 have heard learned counsel appearing for the parties. Two issues arise for the decision of this Court. First is whether the petitioner is entitled to an intimation or notice u/s 245 of the Act before adjusting any amount towards any sum remaining payable under the Act without giving an intimation in writing to the assessee of the action proposed to be taken u/s 245 of the Act. The second issue is whether knowledge on the part of the petitioner of the adjustment sought to be made amounts to substantial compliance of the provisions of Section 245 and therefore in cases where the person concerned has knowledge the authorities need not comply with the requirement of giving prior notice or intimation which is merely a formality.
At this juncture, it would be profitable to quote the provisions of Section 245 of the Act.
Where under any of the provisions of this Act, a refund is found to be due to any person, the Income Tax Officer, Appellate Assistant Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, ''after giving an intimation in writing to such person of the action proposed to be taken under this Section.
It is basic principles of interpretation of statutes that when the words of a statute are clear, plain and unambiguous and only one meaning can be given to them the Courts are bound to give effect to that meaning irrespective of consequences. Justice Shri G.P. Singh in his authoritative book Principles of Statutory Interpretation (Eighth Edition) has analyzed the law as follows:
When the words of a statute are clear, plain or unambiguous, i.e. they are reasonably susceptible to only one meaning, the courts are bound to give effect to that meaning irrespective of consequences. The rule stated by TINDAL, C.J. In Sussex Peerage case is in the following form: "If the words of the statute are in themselves precise and unambiguous, then no more can be necessary then to expound those words in their natural and ordinary sense. The words themselves do alone in such cases best declare the intent of the lawgiver". The rule is also stated in another form: "When a language in plain and unambiguous and admits of only one meaning no question of construction of a statute arises, for the Act speaks for itself. The results of the construction are then not a matter for the court, even though they may be strange or surprising, unreasonable or unjust or oppressive. "Again and again", said VISCOUNT SIMONDS, L.C. " this Board has insisted that in construing enacted words we are not concerned with the policy involved or with the results, injurious or otherwise, which may follow from giving effect to the language used". And said GAJENDRAGADKAR, J:" If the words used are capable of one construction only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act.
In view of this settled law, I propose to examine the words used in Section 245. The relevant part of Section which is material for decision of the issue is "after giving an intimation in writing to such person of the action proposed to be taken under this Section." The meaning of the words "after giving an intimation" and the " action proposed to be taken" is absolutely plain and unambiguous and admit to only one interpretation i.e. that the authority can set off the refund only after giving prior intimation of their proposed action or intention to set off or adjust the amount due to the assessee by way of refund. As the words of the statutory provisions are plain, clear and unambiguous and require the authority to give prior intimation in writing of the proposed intention of setting off the amount, the authorities are bound to follow the law and cannot be permitted to wriggle out of their statutory requirement or obligation on the ground that it is a mere formality or that the object is only to give information about the adjustment.
The case of Shiv Narain Shivhare Vs. Assistant Commissioner of Income Tax reported in (1996) 135 CTR (MP) 365 is a Single Bench Judgment of this Court. In that case the authorities after revising the assessment u/s 154 of the Act and rectifying the mistakes in the assessment simultaneously adjusted the amount due to be refunded towards payment of income tax for the subsequent years of the petitioner. In that case being aggrieved by the adjustment, the petitioner had filed a petition before this Count contending that the order of adjustment was contrary to the provisions of Section 245 of the Act as it had been passed without giving proper opportunity of hearing to the petitioner. It was also pointed out to this Court that even while making adjustment in the order of rectification u/s 154 of the Act notice u/s 154 (3) was not given to the petitioner. This Court in paragraph-4 held as under:-
Therefore, the so called order passed on 9th June, 1992 appears to be without jurisdiction as no notice was given to the petitioner-assessee nor Shri Jain could point out that any notice was given before proceedings were taken up. This is in breach of principles of natural justice as no notice as required u/s 154 (3) as well as u/s 245 of the Act were served on the petitioner. Hence, the respondents are directed to refund the amount due forthwith. If they want to make recourse of set off, it is open to them to proceed in accordance with law. The petitioner shall also be entitled to interest for the illegally withheld amount, according to law. The petition is allowed.
I am in full agreement with the view taken by this Court in the above mentioned case. This Judgment in Shiv Narain Shivbare''s (supra) case has been followed in another judgment of this Court reported in Pithambardas Dulichand & others Vs. Union of India and another (2000) 162 CTR(MP) 219 : (2000) 244 ITR 231 (MP) , and in a judgment of the Calcutta High Court reported in Commissioner of Income Tax Vs. J.K. Industries Ltd., . The Bombay and Delhi High Courts have also taken a similar view in Suresh B. Jain Vs. A.N. Shaikh, Sixteenth Income Tax Officer and Others, , and Ms. Archana Shukla Vs. Jt. Commissioner of Income Tax and Another, respectively.
In view of the above mentioned analysis of the provisions of Section 245 of the Act and the judgments of this Court, I am of the considered opinion that the impugned order deserves to be quashed as the authorities have not given prior notice/intimation to the petitioner regarding the proposed adjustment.
This leads us to the next issue raised by the respondents that knowledge would amount to substantial compliance of the requirement of Section 245 of the Act. It is one of the guiding of Rules of Interpretation of Statutory Provisions that specific words used by the legislature in statutory provisions cannot be avoided or rejected. Each and every word used in a statute must be given effect to as the legislature is presumed to have used specific words with a particular object and intention. In the instant case when the statutory provision clearly lays down that before making any adjustment the person concerned must be given an intimation in writing of the action proposed to be taken, it is clear that the intent and object of the statutory provisions is that the authority is required to give prior notice of the proposed adjustment to the concerned person before taking any action or steps towards adjustment. This requirement which is inconsonance with the principles of natural justice being mandatory cannot be waived or bye-passed on the ground that the person concerned had knowledge of the adjustment being made and therefore knowledge in itself amounts to substantial compliance of the statutory provisions and in such circumstances prior intimation as required by law need not be given. Such a contention has to be heard only to be rejection as otherwise it shall render part of Section 245 of the Act redundant and otiose. Justice G.P. Singh in the Principles of Statutory Interpretation (Tenth Edition) while referring the judgments of the Supreme Court in cases of Aswini Kumar Ghosh and Another Vs. Arabinda Bose and Another, , Rao Shiv Bahadur Singh and Another Vs. The State of Vindhya Pradesh, , The J.K. Cotton Spinning and Weaving Mills Co. Ltd. Vs. The State of Uttar Pradesh and Others, ; Mohammad Ali Khan and Others Vs. Commissioner of Wealth Tax, New Delhi, , Quebec Railway, Light, Heat & Power Co. Vs. Vandry, AIR 1920 PC 181 p.186, and Ghanshyam Das Vs. Regional Assistant Commissioner of Sales Tax, Nagpur, ; Commissioner of Income Tax, U.P.,Lucknow Vs. Kanpur Coal Syndicate, has summed up the law which may profitable be quoted:
"As on the one hand, it is not permissible to add words or to fill in a gap or lacuna, on the other hand effort should be made to give meaning to each and every word used by the Legislature. "It is not a sound principle of construction" said PATANJALI SHASTRY, C.J." to brush aside words in a statute as being inapposite surplusage, if they can have appropriate application in circumstances conceivably within the contemplation of the statute". And as pointed out by JAGANNADHADAS, J:" It is incumbent on the court to avoid a construction, if reasonably permissible on the language, which would render a part of the statute devoid of any meaning of application." "In the interpretation of statutes", observed DAS GUPTA, J: "the courts always presume that the Legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statute should have effect". The Legislature is deemed not to waste its words or to say anything in vain and a construction which attributes redundancy to the Legislature will not be accepted except for compelling reasons.
There is yet another reason why the answer to the second issue raised by the respondents has to be in the negative. That part of Section 245 of the Act which requires giving of prior intimation is mandatory as noncompliance with it renders the action thereunder illegal and non-est as has been held in the preceding paragraphs and as it embodies the principle of natural justice which cannot be waived or by-passed. As the provision is mandatory the principles or theory of substantial compliance cannot be taken aid of by the respondents as it is not applicable to mandatory provisions or requirements which have to be compulsorily complied with.
In view of the above mentioned analysis, I am of the considered opinion that the contention of the learned counsel for the respondents that knowledge on the part of the petitioner regarding adjustment is sufficient and therefore they need not have given prior notice or intimation to the petitioner has to be rejected. The second issue raised by the petitioner is answered accordingly.
In the considered opinion of this Court, the authorities have erred in law in not giving any separate and clear intimation to the petitioner u/s 245 of the Act before adjusting the refund against the dues for the subsequent years. This Court is also of the opinion that the authorities could not have directed adjustment of the amount due to be refunded to the petitioner in the orders passed u/s 154 of the Act for rectification of mistakes without following the procedure prescribed u/s 245 of the Act.
Consequently, the impugned orders directing adjustment of the amount to be refunded to the petitioner against the demand for the subsequent assessment years are quashed as the same are in breach of statutory provisions and mandatory preconditions as prescribed u/s 245 of the Act. The respondents are directed to refund the amount due alongwith interest to the petitioner. However, if the respondents are so inclined they may take up fresh proceedings in accordance with law.
The petition is allowed. There shall be no order as to costs.