Direct Taxes,Having Office v. Bakre, Jj

IN THE HIGH COURT OF BOMBAY AT GOA WRIT PETITION NO.205/2011 CORAM:- S. C. DHARMADHIKARI &U. V. BAKRE, JJ. Reserved on: 12th March, 2012.Pronounced on: 29th March, 2012. JUDGMENT: (Per U. V. Bakre) Heard Shri Mahesh Sonak, learned Counsel for the petitioners and Mrs. Asha Dessai, learned Counsel for the respondent. 2.Rule. Advocate Mrs. Dessai waives service on behalf of the respondents. 3.Heard forthwith with the consent of learned Counsel for the parties. 4.By this petition, filed under Articles 226 and 227 of the Constitution of India, the petitioners pray as under : “(A)This Hon'ble Court be pleased to issue a writ of certiorari or a writ or a writ in the nature of certiorari or any other appropriate writ, order or direction, calling for the records of the case from the Respondent No.1 and upon perusing the same, to quash and set aside the Impugned Order dated 12/7/2010 (ANNEXURE “A” TO THE PETITION); (B)This Hon'ble Court be pleased to issue a declaration that Paragraph 3 of the Order dated 26/6/2006 (ANNEXURE “B” TO THE PETITION), is ultra vires, illegal, null and void; and for an appropriate writ, order or direction to strike down Paragraph 3 of the Order dated 26/6/2006 (ANNEXURE “B” TO THE PETITION); (C)This Hon'ble Court also be pleased to issue an appropriate writ, order or direction, commanding the Respondent No. 1 to grant waiver of interest and the consequent refund of interest paid by the Petitioners under Sections 234B and 234C of the Income Tax Act for the Financial Year 2007-2008 and the Assessment Year 2008-2009 along with interest as may be deemed fit; (D)In the alternate, this Hon'ble Court be pleased to direct the Respondent No.1 to reconsider the Petitioners' application for seeking waiver/ reduction of interest paid by the Petitioners under Section 234B and 234C of the said Act for the Financial Year 2007-2008 and the Assessment year 2008-2009 and pass orders thereon within a time bound schedule; (E)For such other and further relief that this Hon'ble Court deems fit and proper; (F)For costs.” 5.Petitioners' case is as under: Petitioner no.1 is a Company incorporated under the Companies Act, 1956, of which petitioner no. 2 is the authorised representative. The Company was incorporated on 31/12/1998 and it commenced the business activities in the year 2004. Petitioner no. 1 is a property developer and its main objective is to carry on business as Hoteliers, Times Share Resorts, etc. and later on the Company also decided to carry on business activities as Real Estate Agents involving themselves into purchase and sale of properties for profit. The present petition concerns the financial year 2007-2008 and consequently, the assessment year 2008-2009. The period between the years 2004 to 2008 was both traumatic and chaotic in so far as the Directors of petitioner no. 1 Company are concerned and there were difficulties practically on all fronts commencing from the health issues concerning Mrs. Christaline De Souza (now about 87 years old) arising from loss of memory and gall bladder complications. During the same period, the petitioner no. 1 involved itself in a Real Estate Project in Sindhudurg District, Maharashtra State. The said project of acquisition of property did not materialise and the petitioner no.1 was condemned to suffer huge losses by way of bad debts. This position was not very clearly evident during the entire financial year 2007-2008 and the said position became clear in the following financial year 2008-2009, for which the income tax returns have been duly filed by petitioner no. 1. The petitioners have paid full tax during the assessment year 2008-2009 as assessed by the respondents. However, there was justifiable and genuine reason for late payment of advance taxes for the financial year 2007-2008 and the consequent assessment year 2008-2009. Petitioner no. 1 has paid income tax of approximately Rs.6,06,21,700/- which includes interest components as follows : “Interest under Section 234B =Rs.19,02,740/- (Rupees Nineteen lakhs two thousand seven hundred forty only). Interest under Section 234C=Rs.25,55,518/- (Rupees twenty five lakhs fifty five thousand five hundred eighteen only)” 6.The present petition concerns waiver/ refund of the said total interest in the sum of Rs.44,58,258/- paid by petitioner no. 1 under Section 234B and 234C of the Income Tax Act, 1961(said Act). The petitioners say as follows: They have made out a case for grant of waiver/ refund and the same has been declined by misinterpretation and/ or narrow interpretation of the order F. No. 400/29/2002-IT(B), dated 26/06/2006(said Order) issued by the Central Board of Direct Taxes (CBDT). In the alternative, paragraph 3 of the said Order, to the extent it declines the benefit of waiver of interest charged under Section 234B and 234C to the class or classes referred to in paragraph 2(a) and 2(d) of the said order dated 26/06/2006, is arbitrary and unequal and is in violation of Article 14 of the Constitution of India. The position of payment of advance tax for the Financial Year 2007-2008 i.e. the Assessment Year 2008-2009 is as follows: “(a) No advance tax came to be paid for the first quarter ending on 15/06/2007 because there was no real estate transaction (sale) upto 14/09/2007. No sales were anticipated during this period and based upon final return filed by September, 2008, 15% of the total tax paid and therefore, payable by the first quarter ending 15/06/2007 would be Rs. 83 Lakhs. Since there were no sales and no transactions, the petitioner no. 1 Company would never have been faulted for not effecting the payment of advance tax at the quarter ending 15/06/2007. The levy of interest is, therefore, completely unjustified and waiver was certainly due. (b) No advance tax came to be paid for the quarter ending on 15/09/2007. Based upon the total tax paid by 30/09/2008, the amount payable corresponding to 30% shall be Rs.1,67,00,000/-. However, for genuine reasons, the same could not be paid. Apart from the health issues plaguing the directors/ their family members, the first sale transaction in respect of only a small portion of property acquired came to be effected on 14/09/2007 which transaction took place in Sindhudurg District, Maharashtra, where the directors were required to be personally present. It was impossible to co-ordinate with the accounts/ tax consultant so as to reflect the position arising out of such sale transaction by 15/09/2007. There was considerable expense to be incurred by way of development of the project on sites. Such decision being entirely unclear, no advance taxes came to be paid for the quarter ending 15/09/2007. The interest levied upon such quarter under Sections 234B and 234C of the said Act was unjustified and the petitioners were entitled to waiver. (c) For the quarter ending 15/12/2007, the petitioner no. 1 Company paid advance tax of Rs. 25 Lakhs. As per the total tax paid on 30/09/2008, the advance tax payable by 15/09/2007 would correspond to 30% i.e. Rupees 1 Crore 66 Lakhs. Hence, again, the short payment was (c) For the quarter ending 15/12/2007, the petitioner no. 1 Company paid advance tax of Rs. 25 Lakhs. As per the total tax paid on 30/09/2008, the advance tax payable by 15/09/2007 would correspond to 30% i.e. Rupees 1 Crore 66 Lakhs. Hence, again, the short payment was entirely on account of the circumstances referred to in paragraph (d) above. This was absolutely a genuine circumstance, which was required to be taken into consideration for grant of waiver of interest under Sections 234B and 234C of the said Act. (d ) The advance tax of Rs.1 Crore 50 lakhs came to be paid at the quarter ended 15/03/2008. As per the tax paid on 30/09/2008, 25% percentage thereof and payable as advance tax would correspond to Rs.1 Crore 39 Lakhs. Thus, there was a short fall which again is clearly attributable to the same reasons set out in preceding paragraphs. The ultimate buyer (Unitech Private Ltd.) was interested in setting up a Hotel Project and as such, the contiguous property was required to be acquired and thereafter sold. Considerable infrastructure expenses were required to be incurred. In the circumstances, there was no justification for denial of waiver of interest” 7.The petitioners have further alleged as follows : When the final returns for the financial year 2007-2008 and the consequent assessment year 2008-2009 came to be filed by 30/09/2008, as a matter of abundant caution, the profits came to be declared as Rs.16,52,35,104/- which includes the interest component of Rs.44,58,258/- and the taxes of Rs.6,06,21,700/- again paid under Sections 234B and 234C of the said Act. As it turns out, the profits indicated for the financial year 2007-2008 and the assessment year 2008-2009 do not reflect the correct financial position/ picture, the petitioners were advised against filing of any revised returns for the financial year 2007-2008. However, the facts, circumstances and the legal position warrants at least waiver of interest to the tune of Rs.44,58,258/- paid by petitioner no. 1 Company under Section 234B and 234C of the said Act for the financial year 2007-2008 and the assessment year 2008-2009. The petitioners, therefore, filed an application dated 19/03/2009 to respondent no. 1 invoking the provisions of Section 119 of the said Act and seeking for waiver/ refund of the interest already paid under Sections 234B and 234C of the said Act. Respondent no. 1, relying almost entirely upon the said Order declined waiver vide order dated 12/07/2010. Respondent no. 1 has failed to exercise powers and jurisdictions as vested in it by Section 119 of the said Act. The said order dated 12/07/2010 is vitiated by non-application of mind, unreasonableness and failure to exercise jurisdiction. 8.The petitioners have stated that paragraph 3 of the said Order states that the class of cases referred to in paragraph 2(a) and 2(d) are specified only for the purposes of waiver of interest charged under section 234A of the said Act due to which even where the circumstances referred to in paragraph 2(a) and 2(d) exist or apply, the same are directed to be ignored for the purposes of waiver of interest charged under section 234B and 234C of the said Act. This exclusion, according to the petitioners, is illegal, arbitrary and unconstitutional, and contrary to the mandate of Article 14 of the Constitution of India. The petitioners say that paragraph 3 of the sa9id Order is liable to be struck down as being illegal, arbitrary, ultra vires, null and void. 9.In answer to the writ petition, the Assistant Commissioner of Income Tax has filed an affidavit-in-reply. It is stated herein as follows : 9.In answer to the writ petition, the Assistant Commissioner of Income Tax has filed an affidavit-in-reply. It is stated herein as follows : Learned Chief Commissioner of Income Tax (CCIT), after carefully examining the petition, written submissions and the financial statements filed before him came to the conclusion that there was no mistake or error in making the estimate of profit for the current year due to non-quantification of expenses on road, rehabilitation of tenants, etc. Since the income had already accrued during the financial year 2007-2008, the assessee cannot plead that this expenditure should have been considered for estimating the profits. It was further noticed that the assessee had not made any provision for payment of income tax liability though the same was quantified and ascertainable. The extract of the note on accounts vide items (2) and (3) of the schedule 15 indicates that the provisions for deferred tax liability has not been done since the amount required to be provided was not material. It is, therefore, that the CCIT rejected the petition under Section 119 of the said Act as the case of the assessee did not fall under the prescribed conditions as laid down in the said Order of CBDT and for other reasons mentioned in the order. The interest under Section 234A is charged for delayed filing of returns whereas the interests under Sections 234B and 234C are charged for short payment of advance tax or deferment of advance tax installments. The conditions stipulated for waiver of altogether different types of defaults ought to be in variance, for the said reason. In so far as the constitutional validity of the said Order is concerned, it is for the legislature to determine the objects on which tax shall be levied and the rates thereof and the Court will not strike down the Act as denying the equal protection of law merely because the other objects could have been, but are not taxed by the legislature. A State does not have to tax everything in order to tax something. The legislature is competent to classify persons or person into different categories and tax them differently and classification made is rational. The Taxing Statute cannot be challenged merely because different rates of taxation are prescribed for different categories of persons or objects. The interest under Sections 234A, 234B and 234C of the said Act are chargeable mandatorily as they are compensatory in nature. No discretion is allowed to the Assessing Officer. The powers, to waive the interest so charged, are specifically conferred under Section 119(2) of the said Act upon the CBDT and are further delegated to the Chief Commissioner subject to conditions specified under the instructions. The conditions specified under paragraphs 2(a) to 2(d) and 3 are reasonable and time tested only to safeguard the interest of revenue and to avoid excessive discretion vested upon the authorities. The levy of interest under Sections 234A, 234B and 234C is mandatory and automatic in character and no appeal is independently provided by the Act against the levy of the said interest. The expression 'shall' used in the said section cannot by any stretch of imagination be construed as 'may'. The said Order has been passed in terms of Section 119(2)(a) of the said Act. The power under said sections to CBDT is wider power and the same is not meant to be exercised on the ground of undue hardship having been caused to a particular assessee as the Act is meant to be of uniform application and cannot be altered or modified as per the needs of the particular assessee. 10.The Assistant Commissioner of Income Tax has further stated that the assessee is a property developer and has declared income of Rs.16.52 Crores for the assessment year 2008-2009 on which advance tax was liable to be paid. The details of advance tax payable and paid during the financial year 2007-2008 are as under : 'may'. The said Order has been passed in terms of Section 119(2)(a) of the said Act. The power under said sections to CBDT is wider power and the same is not meant to be exercised on the ground of undue hardship having been caused to a particular assessee as the Act is meant to be of uniform application and cannot be altered or modified as per the needs of the particular assessee. 10.The Assistant Commissioner of Income Tax has further stated that the assessee is a property developer and has declared income of Rs.16.52 Crores for the assessment year 2008-2009 on which advance tax was liable to be paid. The details of advance tax payable and paid during the financial year 2007-2008 are as under : The assessee is bound to diligently estimate tax liability on the income declared and pay taxes within the prescribed period to avoid payment of interest which is only compensatory in nature. The assessee was required to pay Rs.5.55 Crores (excluding TDS) as against which only a sum of Rs.1.75 Crores was paid as advance tax on the ground of health/ financial hardship/ non-estimation of infrastructure expenses, etc. which do not entitle to waiver of interest. Break up of expenses claimed clearly indicates that majority of expenditure is ascertained and quantifiable. The assessee ought to have paid taxes on the income already accrued during the financial year on the basis of computerised accounts. The assessee is liable to pay the taxes including interest thereof, on income voluntarily declared in the returns of income and there was no basis for revising the income declared and for waiver of interest under Sections 234B and 234C of the said Act amounting to Rs.44.58 Lakhs thereon. A perusal of the said Order reveals that the CBDT has categorically mentioned in paragraph 3 that the class of cases referred to in paragraphs 2(a) and 2(d) are applicable only for the purposes of waiver of interest under Section 234A of the said Act. A reading of the conditions given in paragraph 2 of the said Order reveals that while the conditions at 2(a) and 2(d) specifically refer to the cases of delay in furnishing the returns of income, under the scheme of any tax, the delay in furnishing returns of income involves levy of interest under Section 234A and, therefore, these conditions are not extendable to interest charged under Sections 234B and 234C of the said Act and paragraph 2(c) is specifically made applicable to sections 234B and 234C of the said Act. It is clear that the subordinate legislations made by CBDT in the form of orders under Section 119(1) of the said Act are within the powers conferred upon it by the said Act and do not transgress the cannons of subordinate legislation or Article 14 of the Constitution of India. The said instructions in the matter of waiver of interest are unambiguous and are binding on the authorities and there is no scope for interpreting the said specific instructions issued under Section 119(2) of the said Act. The petition is, therefore, liable to be dismissed with costs. 11.Shri M. S. Sonak, learned Counsel for the petitioners, argued that the CBDT instructions are only in the form of guidelines whereas the application of the petitioners for waiver as well as for reduction of the advance tax was under Section 119(2) of the said Act. He pointed out that the 11.Shri M. S. Sonak, learned Counsel for the petitioners, argued that the CBDT instructions are only in the form of guidelines whereas the application of the petitioners for waiver as well as for reduction of the advance tax was under Section 119(2) of the said Act. He pointed out that the entire tax with the advance tax was paid along with interest and the petitioners subsequently asked for refund of the interest on genuine grounds. He submitted that under Section 119(2)(b) of the said Act it has to be seen whether there is a genuine hardship. According to Shri Sonak there are no exhaustive conditions for waiver or reduction. He contended that clause (d) of paragraph 2 of the said Order provides that where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs, without detection by the Assessing Officer, the reduction or waiver of interest can be considered. He further pointed out that in terms of paragraph 3 of the said instructions, the class of cases referred to in paragraphs 2(a) to 2(d) are specified only for the purpose of waiver of interest charged under Section 234A of the Income Tax Act. He pointed out that the petitioners have asked for reduction of the interest charged under Sections 234B and 234C. The learned counsel also contended that the said Order does not cover all other eventualities covered under sections 234B and 234C of the said Act. for the respondents, argued that Sections 234A, 234B and 234C of the said Act are all mandatory provisions and that the respondents are bound by the said Order which has been issued in the exercise of the powers under Section 119(2)(a) of the said Act. The difficulties mentioned by the assessee have no relation with quantifying further expenditure on the land purchased. She argued that the petitioners were required to make arrangement for payment of advance tax and not having done so, they are bound to pay the interest as charged. She argued that there is no scope for interference with the order dated 12/07/2010 passed by the CCIT. 13.We have gone through the entire material on record. 14.A perusal of the application dated 19/03/2009, made by the petitioners before the CCIT and the impugned order dated 12/07/2010 of the CCIT reveals that what has been claimed by the petitioners is waiver of interest under sections 234B and 234C of the said Act and nowhere the expression “reduction of interest” is used. Thus, the submission of Shri M. S. Sonak that the application of the petitioners was for waiver as well as for reduction of interest is not correct. Such a claim has been made, by way of an afterthought, in this petition. 15.Clauses (a) and (b) of Sub-Section (2) of Section 119 of the said Act provide as under : “(2)Without prejudice to the generality of the foregoing power, - (a)the board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sections 115P, 115S, 115WD, 115WE, 115WF, 115WG, 115WH, 115WJ, 115WK, 139, 143, 144, 147, 148, 154, 155, 158BFA, sub-section (1A) ODF section 201, sections 210, 211, 234A, 234B, 234C, 271, and 273 or otherwise) general or special orders in respect of any class of incomes or fringe benefits or class of cases, setting forth directions or instructions (not being prejudicial to assessee) as to the guidelines, principles or procedures to be followed by other income-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the board is of the opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information; may, if the board is of the opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information; (b)the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income tax authority not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction refund or any other relief under this Act for making such application or claim and deal with the same on merits in accordance with law.” 16.The said Order has been issued under Section 119(2)(a) of the said Act. Under the above Order, the Chief Commissioner of Income Tax and the Director-General of Income Tax may reduce or waive interest charged under section 234A, or section 234B or section 234C of the said Act in the classes of cases or classes of income specified in paragraph 2 of the said Order, for the period and to the extent, the Chief Commissioner of Income Tax/ Director General of Income Tax may deem fit. However, no reduction or waiver of such interest shall be ordered unless the assessee has filed the return of income tax for the relevant assessment year and paid the entire income tax (principle component of demand) due on the income as assessed. The Chief Commissioner of Income Tax or the Director General of Income Tax may also impose any other conditions as deemed fit for the said reduction or waiver of interest. Under clause (d) of paragraph 2 of the said Order, the reduction or waiver of interest under section 234A or section 234B or as the case may be section 234C, can be considered where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the assessment officer. Paragraph 3 of the said Order, however, provides that the class of cases referred to in paragraph 2(a) and 2(d) are specified only for the purposes of waiver of interest charged under section 234A of the said Act. 17.The petitioners had prayed for waiver of interest under section 234B and section 234C of the said Act. The criteria under paragraph 2(d) of the said Order, which pertains to inability to file the return due to unavoidable circumstances, is available only for the purposes of waiver of interest charged under section 234A of the said Order and this is clear from paragraph 3 of the said Order. Paragraph 2(b) exclusively applies to section 234C and paragraph 2(c) applies to sections 234B and 234C of the said Act. The jurisdiction for grant of waiver is to be exercised under section 119 of the said Act, but the same has to be done in accordance with the orders, instructions and directions issued from time to time by the CBDT. The general orders, directions, circulars issued under section 119(2)(a) of the said Act are binding on the income tax authorities. Thus, the petitioners cannot get assistance of paragraph 2(d) of the said Order. Section 234B of the said Act is in respect of the liability to pay interest for default in payment or short payment of advance tax whereas section 234C pertains to the liability to pay interest for deferment of advance tax. Sections 234B and 234C of the said Act are mandatory, however they are subject to section 119(2)(a) and (b) of the said Act. Since the petitioners have claimed waiver of interest under sections 234B and 234C only, and since paragraph 2(d) of the said Order under section 119(2)(a) of the said Act does not apply to said sections 234B and 234C, the petitioners are not entitled to any waiver/ reduction of interest. 18.According to the petitioners, the mother of the petitioner no.2 namely Mrs. Christaline de Souza was sick since the year 2004 due to old age, loss of memory and gall bladder complications and the gall bladder stones had to be removed by a major surgery and in the year 2007, she had a fall and had to be operated for replacement of thigh bone. In the application dated 19/3/2009, for waiver of interest, the petitioners have stated that in the year 2008, the Directors of the Company who are brothers, had faced difficulties on family front as their mother was sick and subsequently hospitalized which prevented the visits of the Directors to the sites at District Sindhudurg, where they had ventured into a new project of acquiring properties admeasuring about 2000 acres for the purpose of sale to Unitech Private Limited. Then, they have explained their difficulties to get proper feed backs about the sales, purchases and development activities at Sindhudurg, which is about 150 kilometres away from Calangute. They say that they had contacted another developer by name “Dantas Estates Pvt. Ltd.” for acquiring the lands from farmers which lands were at scattered places which required heavy expenditure and further to buy places between two lands for having connectivity so that ownership would be on a continuous stretch of land for developing a Hotel Project by said “Unitech Pvt. Ltd.” According to the petitioners, on account of the above income earned during the relevant year could not be anticipated in view of non-quantification/ estimation of expenses of development pertaining to land and other difficulties of sickness of mother. In this regard, the learned CCIT in paragraph 5 of the impugned order has indicated the break up of the administrative expenses of the petitioners during the year ending 31/3/2007 and 31/3/2008, by way of a chart which clearly reveals that the majority of the expenditure was ascertained and quantifiable. The said chart is based on the returns filed by the petitioners. The petitioners could have anticipated the income pertaining to the Financial Year 2007-2008 and the difficulties which the petitioners have mentioned in estimating the advance tax had nothing to do with quantifying further expenditure on the land purchased. In paragraph 12 of the Affidavit-in-reply, the Assistant Commissioner of Income Tax has furnished the details of the advance tax payable and paid by the petitioners during 2007-2008. It is seen that as against requirement of payment of Rs.5.55 Crores as advance tax (excluding TDS), the petitioners had paid only Rs.1.75 Crores as advance tax. The petitioners could have paid advance tax on the income already accrued during the Financial year. The learned CCIT has referred to an admission made by the petitioners in the Notes to Accounts vide items no.(2) and (3) of schedule 15, which are as under : (2) Provision for Income Tax liability has not been made. The total income tax liability for the year is Rs.6,06,21,700/-. Profit after tax shall reduce to the same extent. (3)Provision for deferred tax liability has not been done since the amount required to be provided is not material. 19. 19.In the circumstances above, the case of the petitioners does not fall under the conditions laid down by the said Order, issued by CBDT, as has been rightly held by the CCIT. The request of the petitioners for waiver of interest has been rightly rejected. 20.For properly appreciating the rival contentions, a reference can usefully be made to Section 119 of the said Act. That Section empowers the Board (Central Board of Direct Taxes) to issue, from time to time, such orders, instructions and directions to other Income Tax Authorities (3)Provision for deferred tax liability has not been done since the amount required to be provided is not material. 19. 19.In the circumstances above, the case of the petitioners does not fall under the conditions laid down by the said Order, issued by CBDT, as has been rightly held by the CCIT. The request of the petitioners for waiver of interest has been rightly rejected. 20.For properly appreciating the rival contentions, a reference can usefully be made to Section 119 of the said Act. That Section empowers the Board (Central Board of Direct Taxes) to issue, from time to time, such orders, instructions and directions to other Income Tax Authorities as it may deem fit for proper administration of the Act and such authorities and all other persons employed in the execution of this act shall observe and follow such orders, instructions and directions of the Board. The petitioners do not question the power of the Board to issue such instructions. 21.As far as other provisions relied upon, i.e. Section 234A, 234B and 234C of the said Act are concerned, a perusal thereof would be enough to indicate that Section 234A provides for interest for defaults in furnishing return of income. This provision falls in Chapter XVII which is entitled “COLLECTION AND RECOVERY – INTEREST CHARGEALE”. Section 234B provides for interest fordefaults in payment of advance tax. Section 234C deals with interest for deferment of advance tax. A bare perusal of these provisions would indicate that the interest under Sections 234A, 234B and 234C is to cover cases of default in furnishing return of income, interest for defaults in payment of advance tax and lastly for deferment of advance tax. 22.In this light, if the said Order is construed, it provides as under : “ In exercise of the powers conferred under clause (a) of sub-section (2) of section 119 of Income-tax Act, 1961, Central Board of Direct Taxes, hereby directs that the Chief Commissioner of Income-tax and Director General of Income-tax may reduce or waive interest charged under section 234A or section 234B or section 234C of the Act in the classes of cases or classes of income specified in paragraph 2 of this Order for the period and to the extent the Chief Commissioner of Income-tax/Director General of Income-tax may deem fit. However, no reduction or waiver of such interest shall be ordered unless the assessee has filed the return of income for the relevant assessment year and paid the entire income-tax (principal component of demand) due on the income as assessed. The Chief Commissioner of Income-tax or Director General of Income-tax may also impose any other conditions as deemed fit for the said reduction or waiver of interest. 2. The class of incomes or class of cases in which the reduction or waiver of interest under section 234A or section 234B or, as the case may be, section 234C can be considered, are as follows : (a) Where during the course of proceedings for search and seizure under section 132 of the Income-tax Act, or otherwise, the books of account and other incriminating documents have been seized, and the assessee has been unable to furnish the for search and seizure under section 132 of the Income-tax Act, or otherwise, the books of account and other incriminating documents have been seized, and the assessee has been unable to furnish the return of income for the previous year, during which the action under section 132 has taken place, within the time specified inthisbehalf,andtheChief Commissioner/Director General is satisfied, having regard to the facts and circumstances of the case, that the delay in furnishing such return of income cannot reasonably be attributed to the assessee. return of income for the previous year, during which the action under section 132 has taken place, within the time specified inthisbehalf,andtheChief Commissioner/Director General is satisfied, having regard to the facts and circumstances of the case, that the delay in furnishing such return of income cannot reasonably be attributed to the assessee. (b) Any income chargeable to income-tax under any head of income, other than Capital gains is received or accrued after due date of payment of the first or subsequent instalments of advance tax which was neither anticipated nor was in the contemplation of the assessee, and the advance tax on such income is paid in the remaining instalment or instalments, and the Chief Commissioner/Director General is satisfied on the facts and circumstances of the case that this is a fit case for reduction or waiver of the interest chargeable under section 234C of the Income Tax Act.under any head of income, other than Capital gains is received or accrued after due date of payment of the first or subsequent instalments of advance tax which was neither anticipated nor was in the contemplation of the assessee, and the advance tax on such income is paid in the remaining instalment or instalments, and the Chief Commissioner/Director General is satisfied on the facts and circumstances of the case that this is a fit case for reduction or waiver of the interest chargeable under section 234C of the Income Tax Act. (c) Where any income was not chargeable to income-tax in the case of an assessee on the basis of any order passed by the High Court within whose jurisdiction he is assessable to income-tax, and as result, he did not pay income-tax in relation to such income in any previous year, and income-tax in the case of an assessee on the basis of any order passed by the High Court within whose jurisdiction he is assessable to income-tax, and as result, he did not pay income-tax in relation to such income in any previous year, and subsequently, in consequence of any retrospective amendment of law or the decision of the Supreme Court of India, or as the case may be, a decision of a Larger Bench of the jurisdictional High Court (which was not challenged before the Supreme Court and has become final), in anyassessmentorreassessment proceedings the advance tax paid by the assessee during such financial year is found to be less than the amount of advance tax payable on his current income, and the assessee is chargeable to interest under section 234B or section 234C, and the Chief Commissioner/Director General is satisfied that this is a fit case for reduction or waiver of such interest. (d) Where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the Assessing Officer.filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the Assessing Officer. 3. The class of cases referred to in paragraphs 2(a) and 2(d) are specified only for the purposes of waiver of interest charged under section 234A of the Income-tax Act. 4. Earlier Orders under section 119(2)(a) dated 23-5-1996 and 30-1-1997 on the subject stand superseded by this Order. If any petition in the past has been rejected because 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 119(2)(a) dated 23-5-1996 and 30-1-1997, such Orders allowing waiver should not be reopened/revised as per the guidelines contained in this Order.” 3. The class of cases referred to in paragraphs 2(a) and 2(d) are specified only for the purposes of waiver of interest charged under section 234A of the Income-tax Act. 4. Earlier Orders under section 119(2)(a) dated 23-5-1996 and 30-1-1997 on the subject stand superseded by this Order. If any petition in the past has been rejected because 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 119(2)(a) dated 23-5-1996 and 30-1-1997, such Orders allowing waiver should not be reopened/revised as per the guidelines contained in this Order.” 23.A bare perusal of the said Order which is issued in exercise of powers conferred under Clause (a) of sub-section (2) of Section 119 of the said Act, would indicate that it directs that the Chief Commissioner of Income Tax or Director General of Income Tax may reduce or waive interest in the interest charged under these provisions in the classes of cases or classes of income specified in paragraph 2 of the said Order for the period and to the extent the Chief Commissioner of Income Tax or the Director General of Income Tax may deem fit. However, no reduction or waiver of such interest shall be ordered, unless the assessee has filed the return of income for the relevant assessment year and paid the entire income tax (principal component of demand) due on the income as assessed. The Chief Commissioner/Director General may also impose any other condition as deemed fit for the said reduction or waiver of interest. The argument of Shri Sonak that this part which confers power on the Chief Commissioner/Director General is not exhaustive is not legally sound inasmuch as the Board has empowered the Officer to consider the cases or class of income or the classes specified in paragraph 2 of the said Order, but with certain preconditions. What Mr. Sonak would emphasize is the power of the Chief Commissioner or the Director General to impose any other condition as deemed fit for such reduction or waiver of interest. That does not enable these officers to ignore paragraph 2 or brush aside the said Order of the Board by imposing conditions in their discretion without any reference to paragraph 2. It is clear from a reading of the said Order that the cases of reduction or waiver of interest charged under these three provisions alone are covered, but they are also specified in paragraph 2 of the said Order. The class is specified in paragraph 2 of the said Order. Therefore, the discretion to impose any other conditions as deemed fit for reduction or waiver of interest will not empower the Chief Commission or the Director General of Income-tax to introduce any other class or classes of cases or classes of income. They have been conferred with the discretion to reduce or waive the interest charged under these three provisions alone and that too for specified classes of cases. Therefore, when they impose conditions while refusing or waiving interest in their discretion, what they have to do is to impose them only after they are satisfied that the case or class before them falls within paragraph 2 of this order and not otherwise. Ultimately, the Assessee cannot claim a vested right in seeking concessions and reductions or waiver of interest. income. They have been conferred with the discretion to reduce or waive the interest charged under these three provisions alone and that too for specified classes of cases. Therefore, when they impose conditions while refusing or waiving interest in their discretion, what they have to do is to impose them only after they are satisfied that the case or class before them falls within paragraph 2 of this order and not otherwise. Ultimately, the Assessee cannot claim a vested right in seeking concessions and reductions or waiver of interest. 24.As far as paragraph 2 of the said Order is concerned, that should be read in its entirety. If this paragraph, together with other clauses, are read together, it would be apparent that in paragraph 2(a) what is dealt with is delay in furnishing return of income and, therefore, the waiver of interest, if there is a satisfactory and reasonable explanation for the delay and particularly when there is a clear case of search and seizure proceedings in which books of account and other incriminating documents have been seized. As far as clause (b) of paragraph 2 is concerned, that is with reference to Section 234C where interest is leviable for deferment of advance tax, if the Chief Commissioner or the Director General is satisfied, in the facts and circumstances of each case that reduction or waiver of any interest should be granted as the income chargeable to income-tax under any head of income, other than 'Capital Gains' is received or accrued after due date of payment of the first or subsequent installments of advance tax and secondly, if such income was not anticipated nor was in the contemplation of the assessee. Thirdly, the advance tax on such income is paid in the remaining installment or installments. Therefore, this is a reduction or waiver of interest for deferment of advance tax. 25.The other case covered is under paragraph 2(c) of the said Order wherein the income was not chargeable to income tax in the case of an assessee on the basis of any order passed by the High Court within whose jurisdiction he is assessable to income tax and as a result, he did not pay income tax in relation to such income in any previous year, and subsequently, in consequence of any retrospective amendment of law or the decision of a superior Court, in any assessment or re-assessment proceedings the advance tax paid by the assessee during such financial year is found to be less than the amount of advance tax payable on his current income, and the interest under Section 234B of the said Act is chargeable, that the Chief Commissioner or the Director General is satisfied that this is a fit case for reduction or waiver of such interest. This clause is referable to Section 234B of the said Act where interest is for default in payment of advance tax. The default has occurred because of bonafide and genuine impression that the tax is not chargeable on that income because of a Judgment of High Court, and depending upon the satisfaction that other conditions have been complied with, that the Chief Commissioner may waive the interest or reduce it. This is interest for default in payment of advance tax. 26.Paragraph 2(d) of the said Order once again deals with a case of non-filing of return of income by the assessee due to unavoidable circumstances and such return of income filed voluntarily by the Assessee or his legal heirs without detection by the assessing officer. If in this light, paragraph 3 of the said Order is read, it would be apparent that class of cases referred to in paragraphs 2(a) and 2(d) are specified only for the purposes of waiver of interest charged under section 234A of the said Act. The reason for this, is obvious because the interest charged under Sec