C.panneer Mohamed v. The Principal Commissioner Of Income Tax

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 18.03.2021 CORAM THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN W.P.(MD)No.11321 of 2017 and W.M.P.(MD)No.8695 of 2017 C.Panneer Mohamed ... Petitioner Vs. The Principal Commissioner of Income Tax,No.2, V.P.Rathinasamy Nadar Road,Bibikulam, Madurai – 625 002. ... Respondent Prayer: Writ petitionis filed under Article 226 of theConstitution of India, to issue a Writ of Certiorarified Mandamus,calling for the records of the case relating to the impugned orderin C.No.419/02/CIT-1/MD/2010-11 dated 31.05.2017 passed by therespondent and to quash the same and consequently direct therespondent to grant waiver of interest of Rs.2,50,114/- claimed bythe petitioner for the assessment year 2006-07. For Petitioner : Mr.T.RameshFor Respondent : Mrs.S.Srimathy, Special Government Pleader. O R D E R Heard the learned counsel on either side. 2. The writ petitioner is an assessee coming under thejurisdiction of the respondent. He was periodically assessed toIncome Tax right from the year 2002-03. The petitioner belatedlyremitted the tax dues. Therefore, the Assistant Commissioner ofIncome Tax, Circle II, Madurai, vide proceedings datedAGAPP5802D/CIR II/Mdu/2010-11 dated 12.05.2010 charged interest ofRs.2,50,114/- under Section 220(2) of the Income Tax Act for non-payment of the tax demanded on the due dates. The petitionerthereupon filed a petition under Section 220(2A) of the Income TaxAct seeking waiver of the interest. The said petition was rejectedby the impugned order dated 31.05.2017. Questioning the same, thiswrit petition has been filed. https://hcservices.ecourts.gov.in/hcservices/ 3. The respondent has filed a detailed counter affidavitseeking to sustain the impugned order and the learned Standingcounsel took me through the contents set out therein. 4. The learned counsel appearing for the writ petitionersubmitted that the petitioner had fully co-operated with theassessment proceedings and that he had suffered severe economichardship and therefore the respondent ought to have waived theamount of interest demanded on the petitioner vide proceedings dated12.05.2010. He would also submit that the impugned order isvirtually non-speaking. 5. I carefully considered the rival contentions and wentthrough the materials on record. 6. Section 220(2A) OF THE INCOME TAX ACT, 1961 reads as under:-“220. When tax payable and when assessee deemed indefault- ... (2A) Notwithstanding anything contained in sub-section (2), the Principal Chief Commissioner or ChiefCommissioner or Principal Commissioner or Commissionermay reduce or waive the amount of interest paid orpayable by an assessee under the said sub-section if, he is satisfied that— (i) payment of such amount has caused or would causegenuine hardship to the assessee; (ii) default in the payment of the amount on whichinterest has been paid or was payable under the saidsub-section was due to circumstances beyond the controlof the assessee; and (iii) the assessee has co-operated in any inquiryrelating to the assessment or any proceeding for therecovery of any amount due from him: Provided that the order accepting or rejecting theapplication of the assessee, either in full or in part,shall be passed within a period of twelve months fromthe end of the month in which the application isreceived: Provided further that no order rejecting theapplication, either in full or in part, shall be passedunless the assessee has been given an opportunity ofbeing heard: Provided also that where anyapplication is pending as on the 1st day of June, 2016,the order shall be passed on or before the 31st day ofMay, 2017.“ https://hcservices.ecourts.gov.in/hcservices/ (iii) the assessee has co-operated in any inquiryrelating to the assessment or any proceeding for therecovery of any amount due from him: Provided that the order accepting or rejecting theapplication of the assessee, either in full or in part,shall be passed within a period of twelve months fromthe end of the month in which the application isreceived: Provided further that no order rejecting theapplication, either in full or in part, shall be passedunless the assessee has been given an opportunity ofbeing heard: Provided also that where anyapplication is pending as on the 1st day of June, 2016,the order shall be passed on or before the 31st day ofMay, 2017.“ https://hcservices.ecourts.gov.in/hcservices/ 7. It can be seen from the statutory provision that theauthority can grant waiver of the amount of interest if the assesseefulfills the three conditions. In other words, the conditions (i) to(iii) set out in Section 220(2A) of the Act are cumulative andconjunctive. The assessee has to fulfill all the three conditions.Of course the assessee in this case has fulfilled the thirdcondition, namely, to extend cooperation during the assessmentproceedings. One can also safely assume that the payment of theamount would cause hardship to the assessee. Fulfillment of theother conditions is also equally vital and important. The default inthe payment of the amount on which interest was payable must havebeen due to circumstances beyond the control of the assessee. 8. In the case on hand, levying of interest was occasioned forbelated payment of tax made for the assessment years 2002-2003 and2003-04. It is true that the returns in respect of those years werefinalised only in the year 2007. It was obviously the duty of theassessee to have paid the Income Tax properly. The assessee'scontention is that business turnover had fallen. During thefinancial year 2006-07, his business turnover was around Rs.10.46Crores. Even in the financial year 2007-08, it was around Rs.5.63Crores and during the financial year 2008-09, it was around Rs.3.72Crores. Though the gradual fall in turnover is a fact, even thereduced figures are substantial. The petitioner had a runningbusiness. It has not been shown that the default in payment of taxwas due to circumstances beyond the assessee's control. The assesseewho ought to have paid taxes promptly had failed to do so and theauthority was justified in levying interest on the petitioner forthe belated remittance of tax. 9. I do not find any ground to interfere with the impugnedorder. However, taking note of the fact that the assessee's businessturnover has been witnessing a downtrend over the years andparticularly, the fact that we are still in pandemic times, thepetitioner cannot be called upon to make any payment of interest oninterest. 10. The petitioner's counsel states that at the time ofadmission, this Court had granted interim order on condition thatthe petitioner should pay a sum of Rs.50,000/- and that he hadcomplied with the condition. Therefore, the balance amount to bepaid by the petitioner will be 2,00,114/- (Rupees Two Lakhs OneHundred and Fourteen only). If the petitioner pays the said amountwithin a period of sixteen weeks from the date of receipt of a copyof this order, he need not pay interest on interest. https://hcservices.ecourts.gov.in/hcservices/ 11. This writ petition stands dismissed. No costs.Consequently, connected miscellaneous petition is closed. // True Copy // Sd/- Assistant Registrar / /2021Sub Assistant Registrar(CS) Note: In view of the present lock down owing toCOVID-19 pandemic, a web copy of the order may beutilized for official purposes, but, ensuring thatthe copy of the order that is presented is thecorrect copy, shall be the responsibility of theadvocate/litigant concerned. To: -+1 CC to M/s.S.SRIMATHY, Advocate ( SR12525[F] dated 19/03/2021 ) https://hcservices.ecourts.gov.in/hcservices/ 11. This writ petition stands dismissed. No costs.Consequently, connected miscellaneous petition is closed. // True Copy // Sd/- Assistant Registrar / /2021Sub Assistant Registrar(CS) Note: In view of the present lock down owing toCOVID-19 pandemic, a web copy of the order may beutilized for official purposes, but, ensuring thatthe copy of the order that is presented is thecorrect copy, shall be the responsibility of theadvocate/litigant concerned. To: -+1 CC to M/s.S.SRIMATHY, Advocate ( SR12525[F] dated 19/03/2021 ) W.P.(MD)No.11321 of 2017 18.03.2021 MR(11.05.2021) 4P 2C https://hcservices.ecourts.gov.in/hcservices/