Counsel For The Flespcindents: Sri J v. Prasad,. Senior Standing Counsel For Income Tax. Senior Standing Counsel For Income Tax

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD(Special Original Jurisdiction) IUONDAY, THE TWENTY NINTH DAY OF JANUARYTWO THOUSAND AND TWENTY FOURTWO THOUSAND AND TWENTY FOUR PRESENTTHE HON'BLE SRI JUSTICE P.SAM KOSHYANDTHE HON'BLE SRI JUSTICE N.TUKARAMJIWRIT PETITION NO.14951 OF 2005 Between: M/s. Electronlcs Corporation of lndia Limited (ECIL), [P.O. ][Hyderabad ]- 500062, Represented by its G.M. Finance Arlr. B. AshokS/o B. Satya Sundar Rao, Agedabout 56 years.062, Represented by its G.M. Finance Arlr. B. AshokS/o B. Satya Sundar Rao, Agedabout 56 years. ...PETITIONER AND ICentral Board of Direct Taxes, lrlinistry of Finance, Department of RevenueGovernment of lndia, North Block, New Delhi Represent6d by its ChairmanGovernment of lndia, North Block, New Delhi Represent6d by its Chairman 2Chief Commissioner of lncome Tax (1), Aayakar Bhavan, Hyderabad 3Assistant Commissioner of lncome Tax, Circle 1(3), Aayakar Bhavan,HyderabadHyderabad ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in thecircumstances stated in the affidavit filed therewith, the High Court may bepleased to issue a Writ, direction or order especially in the nature of Writ ofmandamus directing the Respondents 1 and 2 to reconsider the case of thepleased to issue a Writ, direction or order especially in the nature of Writ ofmandamus directing the Respondents 1 and 2 to reconsider the case of thepetitioner for Waiver of interest levied Under Sections 234 B and C in the sum ofRs. 61,38,142l- and Rs. 1,25,77,O121- respectively for the Assessment year 2003-2004, rt necessary by appropriate special order relaxing the rigor of the said2004, rt necessary by appropriate special order relaxing the rigor of the saidsections to the peculiar class of income as in the case of the petitioner. l.A. NO: 1 OF 2005(WPMP. NO: 1 9001 0F 2005) Petition under section 151 cpc praying that in the circumstances stated inthe affidavit filed in support of the petition, the High court may be pleased stay theimpugned demarrd for waiver if interest levied under sections 234 B and c in thesum of Rs.61,38,1421- and Rs. 1,2s,77,o12l- respectively for the assessment year2003-2004. Counsel for the lretitioner: SRt M. NAGA DEEpAK, REPRESENTINGSRI S. RAVI, SENIOR COUNSEL Counsel for the Flespcindents: SRI J. V. PRASAD,. SENIOR STANDING COUNSEL FOR INCOME TAX. SENIOR STANDING COUNSEL FOR INCOME TAX The Court made the following: ORDER THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUKARAMJI WRIT PETITION No.14951 of 2OO5 ORDER: ber Hoi'bte Si Justrce P.sAltr KosHY) The present writ petition has becn filed seeking the [following]relief:"...1o issue a writ, direction or order cspecially in thenature of writ of mandamus directing the Respondents [1]and 2 to reconsider the case of the Petitioner for waiver ofinterest levied under Sections 2348 and 234C irt the sumof Rs.61,38,142/- and Rs. 1,25,77,O12/- respectively [for]the Assessment Year 2OO3-O4, if necessary byappropriate special order relaxrng the rigor of the [said]sections to the peculiar class of income as in the case [of]the Petitioner... ["]"...1o issue a writ, direction or order cspecially in thenature of writ of mandamus directing the Respondents [1]and 2 to reconsider the case of the Petitioner for waiver ofinterest levied under Sections 2348 and 234C irt the sumof Rs.61,38,142/- and Rs. 1,25,77,O12/- respectively [for]the Assessment Year 2OO3-O4, if necessary byappropriate special order relaxrng the rigor of the [said]sections to the peculiar class of income as in the case [of]the Petitioner... ["] 2. Heard Mr. M. Naga Deepak, learned counsel [representing]Mr. S. Ravi, learned Senior Counsel for the [petitioner and ][Mr. ][J. ][V.]Prasad, learned Senior Standir.rg Counscl for [Income ][Tax ][appearing]lor thc respondents. 2. Heard Mr. M. Naga Deepak, learned counsel [representing]Mr. S. Ravi, learned Senior Counsel for the [petitioner and ][Mr. ][J. ][V.]Prasad, learned Senior Standir.rg Counscl for [Income ][Tax ][appearing]lor thc respondents. 3. The necessity for filing of the [prescnt ]writ [petition ][came ][up ][after]the application hled by the [petitioner ][sceking ][for ][waiver ][of ][interest]stood hrst rejected by the [respondent ][No.2 ]/ [Chief ][Commissioner ][of]Income Tax (1) uide order dated 26.IO.2OO4. 4. Subsequent to the rejection [of app'lication ][for ][waiver ][o[ ][interest]by thc responclcnr No.2, the [petitioner ][had ][approached ][respondent]No. 1/Central Board of Direct Taxcs(for [short ]['CBDT). ][Howev-er, ][the] respondent No.l also uide its order dated 19.01.2005 rejected thematter hold ng that they were not empo\arcred to review an orderpassed by the respondent No.2 on the issue of ',vaiver of interest. 5. The re levant facts which need to be considered are that thepetitioner is a Ccntral Public Sector Undertaking which is under theadministrative control of the Department of Alomic Encrgz. Thepetitioner is engaged in the business of manufacture and sale ofelectronic gcods and components. For the assessment year 2OO3-2004, Lhe p,:titioner filed a re turn of income on 01.12.2003. I'hepetitioner hal returned a total income of Rs.62,94 ,82,443 /- and thetax thereon v,as determined at Rs.23,13,34,798/-. The pctitioner alsohad to its crrdit, tax deduction at source under various provisions ofthe Act, in the gross sum of Rs.83,32,598/-. The petitioner furtherpaid a sum of Rs.IO crores on 30.04.2003 and a further sum ofRs.2,65,2O,1i:9 /- by way of self-assessme nt on 28. 1 1.2OO3. 6. As per the audited accounts, the turnover and profit isRs.926.88 crcres and Rs.80.58 crores respectively. Thus, thc increasein profit from the revised estimates prepared in AugusL,2002, is morethan 10 fold f rom Rs.8 crores to 80.58 crores. The ta-x liability tor thefirst Lhree ins;tallments was made on the revised budget estimates.However, bcczuse of certain unprecedented transactions that dropped up in the turnover of the fourth [quarter, ][the payment of ][interest ][also]has arisen 7 . I t was the contenlion of the learned counsel for [the ][petitioner]that since it is a pubiic sector undertaking, [it ][needs ][to ][prepare ][and]submit budget to the administralive ministry [i.e. the ][department ][of]atomic energr and upon submission of [the ][said budget, ][the ][income]and expenditure is made according to [the ][budget ][approved ][by ][the]concerned department. The budget is submitted [before ][the]commencement of the financial [year and ]the [revised budget ][is ][also]submitted in September for the same [financial ][year. ][According ][to ][the]learned counsel for the pelitioner because of [the administrative ][and]procedural requirements in the department, where [necessary]approvals have to be obtained from the [concerned ][administrative]ministry, there was some delay that [arose ][in ][the ][payment ][of ][tax ][in]respect of the turnover that took [place ][in ]the [last quarter.] 8. According [o the learned counsel for the [petitioner, ][the ][tax]liability was to be cleared by [31.03.2003, ][however, ][because of]administrative reasons it could [only ][be cleared ][by ][29.O4.2OO3. ][Thus,]there was a delay of only 29 days in [clearing ][of ][dues which ][was]primarily because of unprecedented [rise ]in the turnover [in ][the ][last]quarter for the hnancial year 2OO2-O3 [and ]also on account of [the]procedural requirements that is required to be met [before ][the] payment could bc made so far as the excess tax that was requircd tobe paid b1' 31.O3.20O3 which in fact could be paid only by29.O4.2t]o3. 8. According [o the learned counsel for the [petitioner, ][the ][tax]liability was to be cleared by [31.03.2003, ][however, ][because of]administrative reasons it could [only ][be cleared ][by ][29.O4.2OO3. ][Thus,]there was a delay of only 29 days in [clearing ][of ][dues which ][was]primarily because of unprecedented [rise ]in the turnover [in ][the ][last]quarter for the hnancial year 2OO2-O3 [and ]also on account of [the]procedural requirements that is required to be met [before ][the] payment could bc made so far as the excess tax that was requircd tobe paid b1' 31.O3.20O3 which in fact could be paid only by29.O4.2t]o3. 9. Immerliately, Lhereafter the petitioner had approachedrespondent No.2 for waiver of interest charged under Section 2348and 234C for thc assessment year 2OO3-O4. The rcspondcnt No.2 uideits order deted 26.10.2004 considered the same and rejected theapplication seeking waver of interest. Thereafter, the petitionerapproached Lhe respondent No. 1 which again refused to entertain thesaid application on the ground that it was not empowered to review anorder passed by the respondent No.2 which led to filing of the presentwrit petition. 1O. It has been contended that the pctitioner on an earlicr occasionflled a Writ Petition No.2395 of 2O05 which srood disposed of on05.04.2005 whereby the petitioner was directed to approach the"Committee rn Disputes" for necessary decision on the samc. TheCommittee o 1 Disputes uide its order dated 20.O5.2005 disposed thesaid proceedings giving clearance to the petitioner to pursue theappeal in vierv of the questions of fact of law involved in the matter. 11. Learne,l counsel for the petitioner rcferrcd to t.hc provision ofpara 2(c) of the CBDT notificarion date d 3O.O 1. 1997 whcreby thercwas power :onferrecl upon thc Chief Commissioner or Director General upon being saLisfied with the facts and circumstances [of ][the]case for reduction of waiver of intcrest chargeable under Section [234C]of the Income Tax Act. The relevant provision of the said circular [is]reproduced herein under: "Where any income chargeable to income-tax under alyhead of income, other than 'Capital ga.ins' is received oraccrues after the due date of payment of the [[-r.rst ][or]subsequent installments of advance tax which neitheranticipated nor was in the contemplation of the [assessee]and the advance tax on such income is [pard ]in [the]remaining insta-llments and the Chief Commissioner [or]Director General is sarisfied on the facts andcircumstances o[ the case that this is a flt case [for]reduction of waiver of interest chargeable under section234C of Lhe Income Tax Act-"head of income, other than 'Capital ga.ins' is received oraccrues after the due date of payment of the [[-r.rst ][or]subsequent installments of advance tax which neitheranticipated nor was in the contemplation of the [assessee]and the advance tax on such income is [pard ]in [the]remaining insta-llments and the Chief Commissioner [or]Director General is sarisfied on the facts andcircumstances o[ the case that this is a flt case [for]reduction of waiver of interest chargeable under section234C of Lhe Income Tax Act-" L2. It was relying upon the said circular by which the respondentNo.2 had rejected the same uide order dated 26.1O.20O4. [On]26.06.2006 there was yet another order issued by the CBDT [whereby]the Chief Commissioner of Income Tax or Director General of [Income]Tax were again empowered to consider the applications [lor ][reduction]of waiver of interest under Section 234C of the lncome Tax. [CIause ][(b)]of the said order reads as under: L2. It was relying upon the said circular by which the respondentNo.2 had rejected the same uide order dated 26.1O.20O4. [On]26.06.2006 there was yet another order issued by the CBDT [whereby]the Chief Commissioner of Income Tax or Director General of [Income]Tax were again empowered to consider the applications [lor ][reduction]of waiver of interest under Section 234C of the lncome Tax. [CIause ][(b)]of the said order reads as under: "Any income chargeable to income-tax under any head ofincome, other than "Capital gains" is received or accruedafter due date of payment of the first or subsequentinstalments of advance tax which was neither anticipatednor was in the contemplation of the assessee, [and ][the]advance tax on such income is [paid ]in the [remaining]insta.lment or instalments, and the ChiefCommissioner/Director General [is ][satished ][on ][thc ][facts]and circumstances of the case [that ][it ][is ][a ][fit ][case ][for] rcduction or waiver ol [the ][intcrest ][chargcablc undcr]scction 234C of the [lncome-Tax ][Act-"] 13. Furthtrr, [paragraph ][4 ][of the ][said ][order ][would ][also ][give ][an]indication tl [at ][the ][authorities ][concerned were also ][given ][lhe ][pou'er ][to]even reconsider the [matters ][which ][stood ][rejected ][or ][decided' ][For]ready refererlce, [paragraph ][4 is also reproduced ][herein under:] "Eartier Orders under section 119(2)(a) [dated 23-5-1996]and 30- I 1997 on the subject [stand ][superseded ][by this]Ordr'r. If any [petition ]in [the ][past ][has ][been ][rejectcd]bccause the Board [had not ][issued ][this ][direction ][earlier,]such petition may be [reconsidered ][and ][decided ][in]accordance with this Order. If [any petition ][in ][the ][past]was allowed in accordance with the [Orders ][under ][section]I l9(2)(a) dated 23-5-1996 and [30-1-1997, ][such ][Orders]allov.ing waiver should not [be ][reopened ]/ [revised ][as ][per]the [g1-ridelines ]contained [in this ][Order."] I4. In the light [of ][the aforesaid revised ][circular ][issucd ][by ][the ] dated 20.O6.2006 [emporvering ][the ][Chief ][Commissioner ][and ][the]Dircctor Ger eral of [Income ][Tax ][to ][consider ][and ][decide ][reduction ][of]waiver of int:rest under [Section ][234A, ][B and ][C, ][what ][is ][necessary at]this [juncturt, ]to consider [is that ][admittedly the petitioner ][is ][a ][central]public sccto [- ]undertaking exclusively [owned ][by ][the ][Government ][ol]Inclia r.vhich :omes directly under [the ][ministry ][of ][atomic ][encrgr. ][From]perusal of the order ol rejectior-i of the [application ][for ][waiver ][of]interest by the respondent No.2, it [stands ][established ][that ][the ][said]increase in tr.trnover arose only in the [last quarter of ][tl-re ][hnancial ][ycar]2OO2-O3. TL e required tax was to [be ][paid ][by ][the ][petitioner ][by] 31.03.2003. The entire exccss tax liability of [Rs. ][lO ][crores was ][to ][be]paid before 31.03.2003 however the remaining tax liability [was ][paid]on 29.O4.2OO3 i.e. only with a delay of [just ]around [29 ][days.] 15. The reason assigned by the pctitioner [was ]that [since ]it [was]directly under the ministry of atomic e ners/, administrativc [approvals]and sanctions were required to be obtained lrom the [concerned]ministry. On account of certain administrative reasons, certain [delays]arose in clearing the balance of payment of Rs. l0 [crores ][which ][was]immediately cleared within a short span of time of [less ][than a ][month]from the last date by which it was to be [paid. ]Apparently [there ][does]not seem to be any case of mala fide on the [part of the petitioner ][for]not clearing the said outstanding dues, nor is [the ][case ][of ][the]respondents that the act on the part of the [petitioner was ][with ][a]deliberate intention of avoiding [paymcnt ]of [tax ][or ][cvasion of ][tax.] 15. The reason assigned by the pctitioner [was ]that [since ]it [was]directly under the ministry of atomic e ners/, administrativc [approvals]and sanctions were required to be obtained lrom the [concerned]ministry. On account of certain administrative reasons, certain [delays]arose in clearing the balance of payment of Rs. l0 [crores ][which ][was]immediately cleared within a short span of time of [less ][than a ][month]from the last date by which it was to be [paid. ]Apparently [there ][does]not seem to be any case of mala fide on the [part of the petitioner ][for]not clearing the said outstanding dues, nor is [the ][case ][of ][the]respondents that the act on the part of the [petitioner was ][with ][a]deliberate intention of avoiding [paymcnt ]of [tax ][or ][cvasion of ][tax.] 16. Further, admittedly the Chief Commissioncr as [also the ][Dircctor]General were empowered to consider the [factual ][aspects ][of ][the ][case]which led to delayed payment of tax. The [reasons assigned ][by]petitioner does not seem to be in dispute by the [Iearned ][Scnior]Standing Counsel for Income Tax. Except [for ]the [fact ][that ][the ][learned]Senior Standing Counsel submits that [these ][relevant facts were ][in]facr duly considercd by the rcspondcnt [No.1 ]on an earlier [occasion] when thc order dated 20.06.2004 was passed and there was as suchno scope of ,rny further indulgence in this writ petition. L7. In the factual backdrop narrated in the preceding paragraphsand also tal:ing note of the subsequent order of the CBDT issued on26.06.2006, r,r,e arc of the considered opinion that particularly takinginto consideration thc fact that the petitioner being an public sectorundertaking, the reasons assigned by the learned counsel for thepetitioner w.rich led to delayed clearing of the outstanding payment ofRs. 1O crores and also considering the fact that payment of Rs.lOcrorcs was i e fact made in less than a month's time from the last datcon which it -e11 due. It is a fit case u,here in the opinion of this Bench,the matter necds rcconsideration by the respondent No.2 and theorder to the aforesaid extent stands set aside and the matter standsremitted back to the respondent No.2 for passing of fresh orderkeeping in v.ew the subsequent order of the CBDT dated 20.06.2006. 18, Consirlering the Iong lapse that has lapsed in between, it isexpected thzrt rcspondenL No.2 shall give an opportunity of hearing tothc pe tition,:r bcfore passing of a fresh order. Furthcr, taking intoconsideration that the issuc involves [paymcnt ]of tax liability so lar asthe financiel year 2OO2-O3, the [respondent ][No.2 ]should [take ][an]appropriate decision within an outer limit [of four ][(04) ][months ][from]the date of r:ceipt of a copy of this ordcr. 19. With the above observations, the present writ petition standsallowed. However, there shall no order as to costs. Consequently,miscellaneous petitions pending if any, shall stand closed. SD/- C. PRAVEEN KUMARASSISTANT REGISTRAR //TRUE COPY// SECTIN OFFICER To, 1. The Chairman, r Central Board of Direct Taxes, [tr4inistry ]of [Finance,]Department of Revenue Government of lndia, [North Block, New ][Delhi.]Department of Revenue Government of lndia, [North Block, New ][Delhi.] 2. The Chief Commissioner of lncome Tax [(1), ]Aayakar [Bhavan, ][Hyderabad.] 3. The Assistant Commissioner of [lncome ][Tax, Circle ][1(3), Aayakar ][Bhavan,]HyderabadHyderabad 4. One CC to SRI S. RAVI, Senior Counsel 5. One CC to SRI J. V. PRASAD, S.C. [for ] 6. Two CD Copies GJPMP[Yt'] [.d*]qvY...--61c{ HIGH COURT DATED:291O112024 eLGA.rc\=*a)a"oul.\EJFto\ORDER*3 HWP.No.14951 of 2005 ALLOWING THE WRIT PETITIONWITHOUT COSTS