ORDER
Pramod Kumar, A.M.
This appeal filed by the revenue, is directed against the order dated 5-1-1994, passed by the learned Deputy Commissioner (Appeals) Range IX, Calcutta, in the matter of penalty under section 221(1) for the financial year 1990-91. Revenue is aggrieved that the Deputy Commissioner (Appeals) erred in deleting penalty of Rs. 15,000 charged under section 221 of the Income Tax Act, 1961 (hereinafter referred to as the Act).
2. First, the relevant material facts. Admittedly, the only lapse on the part of the assessee tax deductor was that he did not take into account the increase in surcharge, effected vide Finance (Second Amendment) Ordinance, 1990 promulgated on 15-10-1990, which resulted in a surcharge on TDS to at the rate of 15 per cent. In the case of companies, as against 8 per cent surcharge in force upto that point of time. The assessees case is that it was simply an inadvertent error on the part of the assessee which was solely attributable to the fact that the person responsible for TDS work missed this increase in surcharge rate. The assessee has stated that it was a bona fide mistake and that there were no, and could not have been, any mala fides in this marginal short deduction of tax at source. In view of the default of short deduction, however, the assessee was called upon, under section 201(1), to make good the shortfall in deduction in tax at source and consequential interest under section 201(1A) was also charged. It appears that these demands were duly paid, and the orders were duly accepted, by the assessee; there was no challenge to these proceedings by way of appeal. However, the assessing officer (TDS) did not stop here and went on to initiate penalties under section 271C and under section 221(1) also. We find that penalties under both these sections have been imposed on the assessee under section 221 for, what the assessing officer (TDS), has termed as 'default for deducted (sic) but had failed to deposit the tax within the time prescribed under section 200 read with rule 30 of the Income Tax Rules, 1962', and under section 271C because, in considered opinion of the Deputy Commissioner, 'it appears that the surcharge rate has been deliberately applied at 8 per cent instead of 15 per cent with the intention of defrauding the revenue '. Both these penalties were deleted by separate orders of the first appellate authority and the revenue is at present in appeal before us against the cancellation of penalty under section 221(1) of the Act.
3. Rival contentions are heard, orders of the authorities below perused, and applicable legal position deliberated upon.
4. As we have stated earlier, admitted and only lapse of the assessee is that there was a short deduction in tax at source from dividends paid to the corporate shareholders. Inasmuch as the surcharge rate was applied at the rate of 8 per cent as against 15 per cent applicable rate. In the backdrop of this fact, let us take a look at the consequences of such a short-deduction of tax at source. Of course, the first and foremost consequence is that the tax deductor has to make good the shortfall in tax deduction and the tax deductor also has to compensate the revenue by way of interest for the period of late realization of this tax to the revenue authorities. These provisions, contained in section 201(1) and 201(1A), are set out in Chapter XVII-B titled as Collection and Recovery of Tax. The next set of consequences are contained in section 271C and section 276B, covered by Chapter XXIPenalties Imposable and Chapter XXII-Offences and Prosecutions respectively. Section 276B, as it stands now, is not applicable on the facts of this case which comes to the play only when the assessee has deducted the tax at source but he does not pay, or does not pay in time, the taxes so deducted at source. We, therefore, need not elaborate on this aspect of the matter. Section 271C deals with levy of penalty for total or partial failure to deduct tax at source i.e., for non-deduction and short-deduction of tax at source. This provision is clearly a penalty provision which is applicable for the cases of tax deductors not discharging, wholly or partially, statutory obligations of deducting taxes at source. In the case before us, penalty under section 271C has been imposed on the assessee (although the penalty has been cancelled by the first Appellate Authority and the matter is in further appeal at the instance of the revenue) and the assessing officer has also imposed penalty under section 221(1) which is subject-matter of appeal before us. It may be mentioned that section 221(1) provides that 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 arrears and the amount of interest payable under section 220(2), be liable to pay such penalty as the assessing officer may impose-of course subject to certain limitation which, for the present purposes, are not necessary to be examined. It is also not in dispute that by the virue of section 201(1) the tax deductor is to be deemed to be an assessee in default to the extent of amount of non-deduction or short deduction of tax is concerned. In view of these discussions, imposition of penalty under section 221(1), in case of an assessee being treated as an assessee in default under section 201, seems to be prima facie according to the scheme of the Act, but the question that stares at our face then is that if the assessee has already been penalised, by way of penalty under section 271C for short-deduction of tax at source, what for he is being penalised by way of penalty section 221 which, in such a situation, is de facto a penalty for short-deduction of tax at source because that is the only lapse on the part of the assessee and because it is only due to such a short-deduction that the assessee is being treated as an assessee in default. A question also emerges as to whether an assessee can be, in effect, penalised twice for the same default of short-deduction of tax at source, and if he can only be penalised once, under which section should such a lapse be penalised.
5. The rule of double jeopardy, which implies that a person cannot be punished twice for the same offence, finds its place in Article 20(2) of the Constitution of India which lays down that no person shall be prosecuted and punished for the same offence more than once. Article 20(2), being one of the fundamental rights guaranteed under the Constitution, has to be viewed as one of the parameters within which laws are to be framed, given effect to, and even interpreted. This rule is also embodied in section 26 of the General Clauses Act which, in more specific terms, provides that where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be punished twice for the same offence. A fortiorari, an assessee cannot also be punished twice for the same act or omission, by way of two separate penalties which, in nature, belong to the same genus. Penalty proceedings are quasi criminal proceedings and we see no reason for non-application of the underlying principle of Article 20(2) of the Constitution of India, as also of section 26 of the General Clauses Act, to the penalty proceedings under the Income Tax Act. As pointed out by Justice G.P. Singh in his Principles of Statutory Interpretation (6th Edition 1997 reprint-Laws defining offences and penalties at p. 410, relevant portion at page 411), it is also noteworthy that opening words of section 26 lay emphasis upon Identity of act or omission constituting an offence and not on identity of offences per se. It is also settled in law that the expression enactment applies not only to a complete Act but also to various provisions in an Act, as held in the case of Abdul Aziz v. State of Uttar Pradesh AIR 1958 All 109 at 111. The words 1 enactment does not mean the same thing as Act, Act means the whole Act, whereas a section or part of section may be an enactment (Prabodh Verma v. State of Uttar Pradesh AIR 1985 SC 167 at 175). In the light of these discussions, we are of the considered view that even under the Income Tax Act, an act or an omission of the assessee, even if technically covered by the separate defaults, cannot be punished twice under the penal provisions. No doubt an act or omission of the assessee can be visited with several consequences, which may have different purposes and different objects such as recovery of taxes, interest compensation for late realisation of taxes and even separate criminal proceedings, but it cannot be visited with two or more penalties which are identical in effect and belong to the same genus. It is not in any dispute that section 271C and section 221(1) relate to penalties and therefore, both the provisions belong to the same genus. We may also mention that being punished twice may not mean that a punishment may not have more than one limb, but it does imply that there is more than one judicial or quasi judicial proceeding for the same offence. Looked from this point of view also, penalties under section 271C and under section 221(1) are surely separate and distinct proceedings. Keeping in view all these discussions, in our considered view, both the penalties, i.e. under section 221(1) as well as under section 271C, cannot be imposed as a consequence of the same lapse of short deduction of tax at source.
6. That takes us to the question that in case only one penalty, i.e., either under section 221(1) or under section 271C, is imposable for the default of short deduction of tax at source, under which section can such a penalty be imposed.
7. We find that section 271C was inserted in the Income Tax Act with effect from 1-4-1989, by the virtue of Direct Tax Laws (Amendment) Act, 1987, and that the Central Board of Direct Taxes, vide Circular No. 551, dated 23-1-1990, (published at (1990) 82 CTR (St) 325) explained the insertion of this section in following words :
'16.5 Under the old provisions of Chapter XXI of the Income Tax Act, no penalty was provided for failure to deduct tax at source. This default, however, attracted prosecution under the provisions of section 276B, which prescribed punishment for failure to deduct tax at source or after deducting, failure to pay the same to the government. It was decided that the first part of default, i.e., failure to deduct the tax at source should be made liable to levy of penalty, while the second part of default i.e. failure to pay the tax deducted to the government, which is a more serious offence, should continue to attract prosecution. The Amending Act, 1987 has accordingly inserted a new section 271C to provide for imposition of penalty on any person who fails to deduct tax at source as required under the provisions of Chapter section XVII-B of the Act. The penalty in a sum equal to the amount of tax which would have been deducted at source.'
8. It was only at the time of insertion of section 271C that rigours of section 276B were relaxed and non-deductions and short-deductions of tax at source were taken out of the purview of this section. We may mention that until that point of time, section 276B provided that if a person, without reasonable cause or excuse, fails to deduct or after deducting, fails to pay the tax as required by or under the provisions of sub-section (9) of section 80E or Chapter XVII-B, he shall be liable to be prosecuted and, in effect, a sentence in the prison. It is thus clear that upto 31-3-1989, only penalty which could have been imposed, if at all imposable, for the default of short-deduction of tax at source was penalty under section 221(1). Since for our purposes it is not necessary to go further into this aspect of the matter, we leave it at that.
9. Let us now take a look at the legal position after the insertion of section 271C, i.e., with effect from 1-4-1989. We have already noticed that section 271C is a specific provision dealing with assessees failure of non-deduction, or short-deduction, of tax at source. It is fairly well settled in law that general provisions do not override specific provisions, as aptly described by the maxim generalia specialibus non derogant. A special provision normally excludes the operation of a general provision and we are of the view that such a principle governs the instant case also. In the case of South India Corporation (P) Ltd. v. Secretary, Board of Revenue AIR 1964 SC 207, at page 215, Honble Supreme Court had an occasion to consider whether Article 277 or Article 372 of the Constitution of India should govern the particular situation involved therein. Their Lordships then pointed out that 'a special provision should be given effect to the extent of its scope, leaving the general provision to control cases where specific provisions do not apply.' In the light of these discussions, it is clear to that to the extent a default is covered by the specific provisions of section 271C, such a default cannot be subject-matter of penalty under section 221(1) of the Act. We are, therefore, of the considered view that penalty under section 221(1) cannot be imposed for the cases of non-deduction and short-deduction of taxes at source, which are undisputedly covered by the specific provisions of section 271C, so far as period after 1-4-1989, is concerned.
10. In view of the above discussions, we are of the considered view that the very levy of penalty under section 221(1), on the facts of this case, was unsustainable in law since the short deduction of tax at source took place in the financial year 1990-91, i.e., much after insertion of section 271C with effect from 1-4-1989. In this view of the matter we see no need to even address ourselves to the merits of the case. For the detailed reasons set out above, we support the conclusion arrived at by first appellate authority and decline to interfere in the matter.
11. In the result, revenues appeal is dismissed.