Both The Petitions v. The Chief Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 09.06.2009 CORAM: THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.NOs.7041 and 7042 of 2003 V.Akilandeswari ..Petitioner in both the petitionsVs. The Chief Commissioner of Income Tax, 67-A, Race Course Road,Coimbatore-641 018. ..Respondent in both the petitions These writ petitions have been preferred under Article 226 of theConstitution of India praying for the issue of a writ ofcertiorarified mandamus to call for the records of the respondent inPCCCIT/CBE/1433(103) 2002-2003, dated 19.12.2002 and to quash thesame and consequently, to direct the respondent to delete theinterest levied under Sections 234B and 234C of the Act for theassessment years 1991-92 and 1992-93. For Petitioner : Mr.K.RadhakrishnanFor Respondent : Mr.T.Ravikumar ORDER Heard both sides. 2.The petitioner has filed these petitions seeking to challengethe order of the respondent, dated 19.12.2002 and to direct therespondent to delete the interest levied under Sections 234B and 234Cof the Act for the assessment years 1991-92 and 1992-93. These twomatters were came to be posted before this court on being speciallyordered by the Hon'ble the Chief Justice, vide order, dated20.4.2009. 3.The petitioner was a minor during the assessment year 1991-92and 1992-93. A return of income was filed voluntarily on 31.12.97declaring a taxable income of Rs.1,13,440/-. The said return was https://hcservices.ecourts.gov.in/hcservices/ processed under Section 143(1)(a) on 29.9.2000 determining the taxliability at Rs.1,09,979/-. Interest under Sections 239A and 234B and234C of the IT Act was levied after giving credit to to pre-assessment tax paid. Balance of Rs.70,520/- was directed to be paid.The intimation under Section 143(1)(a) was served on the petitionerafter a period of 2 years. For the assessment year 1992-93, thereturn of income was filed voluntarily on 31.12.97 declaring ataxable income of Rs.2,97,790/- and agricultural income ofRs.10,000/- was declared. After processing the return under Section143(1)(a) on 29.9.2000, the tax liability was fixed at Rs.1,80,618/-after giving credit to the pre-assessment tax of Rs.1,30,724/-. Thebalance was arrived at Rs.49,894/-. For these two assessment years,taxes have been paid and the balance tax of arrears payable relatedto interest levied under Sections 243A, 243B and 243C of the IT Act. 5.Aggrieved by the levy of interest, a petition to waive theinterest was filed before the respondent, i.e. Chief Commissioner ofIncome Tax, Coimbatore. The reason pleaded by the petitioner as foundin para 6 of the affidavit may be extracted below: "6. ... the above return was filed voluntarily and myFather was expired on 28.2.99 leaving my mother Smt.SriDevi Venkataswami, house wife to look after the affairs ofthe family and business matters for my father. Being ahouse wife my mother took considerable time to acquaintwith the matter in finalising the accounts and also atthat time I was a minor. Further after the death of myfather my mother become the Director of M/s.VenkateswaraSpinners Pvt. Ltd. along with the other Directors and mymother had looked after the day to day affairs of thetextile mills. Later the Company Venkateswara SpinningMills Pvt. Ltd. was demerged and new company was floated.When my mother become the only person responsible forrunning the company. Due to unavoidable circumstances, Iam not able to file a return and pay the advance tax andthen later my mother approached a tax consultant and thereturn was filed voluntarily and paid the tax. In earlier years and subsequent years we have filed the returns intime and paying the tax regularly." years and subsequent years we have filed the returns intime and paying the tax regularly." 6.However, not accepting the plea of the petitioner, therespondent, by the impugned order, dated 19.12.2002, rejected therequest. It was stated that the petitioner's father died only on28.3.1991 and the petitioner had not paid any advance tax for theassessment year 1991-92, but paid the amount of Rs.52,500/- asadvance tax for the assessment year 1992-93, since there was noaddition to the total income on account of any judicial decision, theplea of the petitioner was not accepted. 7.Aggrieved by the said impugned order, the present writpetitions were filed. Pending the writ petition, this court grantedinterim stay in both the writ petitions. On notice from this Court,the respondent has filed a counter affidavit, dated 24.3.2003. Inpara 4 of the counter, the petitioner's plea was countered, which isas follows: "4.I further State that as per the petition forwaiver of interest the petitioner's father died on28.3.1991 (though as per the affidavit filed with thewrit petition he died on 28.2.1999), and the advance taxpayments would have become due and payable in his lifetime itself for the assessment year 1991-92. In fact, thepetitioner who did not pay advance tax for the year inwhich the father was alive, has paid an amount ofRs.52,500 for the subsequent year after his death. It isthereby clear that non payment was not due to the deathof the father." 8.Heavy reliance was placed upon the circular issued by theDepartment in Circular No.400/234/95-IT(B), dated 23.5.96,authorizing the Chief Commissioner to grant waiver. Para (e) of thesaid circular reads as follows: "e)Where a return of income could not be filed by theassessee due to unavoidable circumstances and such returnof income is filed voluntarily by the assessee or hislegal heirs without detection by the Assessing Officer. The Chief Commissioner of Income Tax/Director General ofIncome Tax may order the waiver or reduction of interestunder sections 234A, 234B and 234C under this order withreference to the assessment year 1989-90 or anysubsequent assessment year. ..." 9.A Division Bench of this Court, while considering the plea forwaiver of interest and the scope for judicial interference in suchmatters, in a decision in Kanchipuram Silk Handloom Weavers' https://hcservices.ecourts.gov.in/hcservices/ Co-operative Marketing Society Ltd. Vs. Commissioner of Income-Taxand others reported in (2008) 296 ITR 63 (Mad), in page No.69, hadobserved as follows: "It is a fairly settled proposition of law thatgranting waiver is a matter of discretion, yet, theexercise of discretion under the rules referred to aboveis conditional upon the satisfaction of the authoritiesconcerned as to the existence of the appropriatecircumstances alone. Hence, the conclusion as to whetherthe circumstances exist or do not exist will ordinarily bea finding of fact. In exceptional circumstances, the HighCourt would exercise its writ jurisdiction to find outwhether the view of the authorities below is sustainableand supported by any evidence or based upon the view offacts which could never be reasonably entertained. Thejurisdiction to interfere is a very restrictive one thatHigh Court will not interest or reverse the finding of theauthorities if the conclusion for rejection of waiver pleaor reduction of the liability on interest is found to be apossible conclusion drawn from facts. In the case on hand, the petitioner has projected thereasons for granting waiver, taking a considerate view.The first respondent herein has stated that there is nowhisper of any facts and circumstances which compelled theinaction on the part of the assessee. The perusal of theorder shows that the first respondent has not consideredthe various circumstances projected in its petition andthe explanations offered on the question of its financialdifficulties and hardships faced." 10.The very same Division Bench had an occasion to consider thecircular of the CBDT, dated 23.5.96 referred to above, vide decisionin M.Ganesan Vs. Vice-Chairman, Settlement Commission (IT and WT) andanother reported in (2008) 299 ITR 456 (Mad). It is necessary torefer to the following passage found in page 459, which reads asfollows: "The perusal of the Board's order dated May 23, 1996,lists out the circumstances under which a reduction orwaiver of interest under section 234A, 234B or 234C can beconsidered. Given this power of waiver and thecircumstances under which it could be considered, theauthority before whom a petition is made, is bound toconsider the circumstances warranting a rejection or areduction. Devoid of reasons indicated for reduction, itis difficult to uphold the order of the first respondent." 11.After following the judgment in T.N.Arumugam's case, thisCourt allowed a writ petition on the ground that the Commissioner didnot consider the circumstances under which an assessee was unable topay the tax earlier and the order passed by the Chief Commissionerwas bereft of reason vide its decision in T.N.Arumugam Vs. ChiefCommissioner of Income Tax and another reported in (2009) 308 ITR216 (Mad). 12.Applying the ratio of this court noted above, it is seen inthe present case that the petitioner has paid the tax voluntarily andhas also pleaded a good and sufficient reason for the non payment oftax on time. The fact of the death of petitioner's father who waslooking after the business, and as well as the petitioner's motherand guardian was an house wife unfamiliar with such transactions, isnot denied by the respondent. On the contrary, he has given somelogical interpretation for overruling the claim made by thepetitioner. In the present case, the entire tax amount for the years1991-92 and 1992-93 have been paid by the petitioner. She has alsopaid some extra amount. The claim made by the petitioner is bona fideand genuine and the respondent has not exercised his discretion interms of law. 13.In the light of the above, the writ petitions will standallowed and the impugned order insofar as levying interest underSections 234A, 234B and 234C is set aside and it is declared that thepetitioner need not pay any interest for those two assessment years.At the same time, if any excess amount had been paid, she is also notentitled to seek refund of the same. However, there will be no orderas to costs. vvk To The Chief Commissioner of Income Tax, 67-A, Race Course Road, Coimbatore-641 018. W.P.NOs.7041 and 7042 of 2003 CK (CO)GSK 11.06.2009.