Gujatrat Gold Coin Ceremics Ltd v. Chief Commisisoner Of Income Tax

C/SCA/13290/2004 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 13290 of 2004With SPECIAL CIVIL APPLICATION NO. 13291 of 2004With SPECIAL CIVIL APPLICATION NO. 7921 of 2006 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI andHONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ GUJATRAT GOLD COIN CEREMICS LTD....Petitioner(s) Versus CHIEF COMMISISONER OF INCOME TAX....Respondent(s) SPECIAL CIVIL APPLICATION NO. 13290 & 13291 of 2004, Appearance: MR SN SOPARKAR, SR. ADVOCATE, MRS SWATI SOPARKAR, ADVOCATE for the Petitioner(s) No. 1 MR PRANAV G DESAI, ADVOCATE for the Respondent(s) No. 1SPECIAL CIVIL APPLICATION NO. 7921 of 2006 Appearance: MR SN SOPARKAR, SR. ADVOCATE, MRS SWATI SOPARKAR, MR MR BHATT, SR. ADVOCATE for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKERDate : 17/11/2014COMMON ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.Since, the issue involved in these petitions is common, they are heard together and disposed of by this common judgment. 2.For the sake of convenience, the parties shall be referred to as the assessee and the Revenue. hitherto 3.Special Civil Application Nos. 13290 & 13291 of 2004 are filed by the petitioner-assesses, therein, challenging the order passed by the respondent-Revenue, Dated : 09.06.2004, under Section 119(2)(a) read with Sections 234B and 234C of the Income Tax Act, 1962 (‘the Act’, for short) and with a prayer to direct the Revenue to waive the interest charged on the assesses under aforesaid sections for the A.Y.s 1996-97 and 1997-98. 4.Special Civil Application No. 7921 of 2006 is filed by the assessee, therein, with a prayer to direct the Revenue to waive the interest charged on the assessee under aforesaid sections for the A.Y.s 1995-96 to 1999-2000, by quashing and setting aside the order passed by the respondent-Revenue, Dated : 09.01.2006, under Section 119(2)(a) of the Act. 4.Special Civil Application No. 7921 of 2006 is filed by the assessee, therein, with a prayer to direct the Revenue to waive the interest charged on the assessee under aforesaid sections for the A.Y.s 1995-96 to 1999-2000, by quashing and setting aside the order passed by the respondent-Revenue, Dated : 09.01.2006, under Section 119(2)(a) of the Act. 5.The brief facts of the case, so far as Special Civil Application Nos. 13290 & 13291 are concerned, are that the assesses, therein, filed their return of income on 27.11.1996 and 26.09.1997 for the A.Y.s 1996-97 and 1997-98, respectively, declaring their income at Nil. Here, it may be noted that prior to commencement of the business activities, the assesses had received interest income from their investment in share capital in temporary loan and advances, which have been shown as capital receipt in the return. Pursuant thereto, the assesses filed revised return for the relevant assessment years, in view of the decision of the Apex Court in “TUTICORIN ALKALIES CHEMICALS & FERTILIZERS LTD. Vs. CIT”, 227 ITR 172. The revised returns filed by the assesses were, though, accepted by the AO, while doing so he levied penalty on the assesses by invoking provisions of Sections 234B and 234C. Hence, the petitioner filed the application under Section 119(2)(a) of the Act for waiver of interest, which came to be dismissed by the Revenue by way of the impugned order. Hence, the assesses have approached this Court by way of the present petitions. C/SCA/13290/2004 JUDGMENT Application No. 7921 of 2006 are concerned, in view of the decision of the Apex Court in “TUTICORIN ALKALIES CHEMICALS & FERTILIZERS LTD.” (Supra) made an application under Section 119(2)(a) of the Act for waiver of interest levied on it under Section 234B of the Act, which came to be dismissed by the Revenue vide impugned order dated 09.01.2006. Hence, the present petition. 7.Mr. Soparkar, learned Sr. Advocate appearing for the petitioner-assesses, submitted that the impugned orders passed by the Revenue are bad in law and in violation of the provisions of Article 14 and 19(1)(g) of the Constitution of India. He submitted that the assesses filed their income of return prior to the decision of the Apex Court in “TUTICORIN ALKALIES CHEMICALS & FERTILIZERS LTD.” (Supra), and therefore, the AO was not justified in levying interest on the revised return and in view of the instructions of the CBDT, Dated : 23.05.1996, the Revenue ought to have waived the interest. 8.Mr. Soparkar also placed reliance on the Circular No.1410 pertaining to the reduction or waiver of penal interest for late filing of return of income, etc., more particularly, Clause 2(d) of the aforesaid Circular and Clause 2(vi) of the F.No. 400/234/95-ITB, Dated : 30.01.1997. C/SCA/13290/2004 JUDGMENT 9.On the other hand, Mr. Bhatt, learned Sr. Advocate, supported the orders of the Revenue and submitted that the assesses are not entitled to claim waiver of interest in view of the decision of the Apex Court in “COMMISSIONER OF INCOME-TAX VS. ANJUM H. GHASWALA AND ORS.”, [2001] 252 ITR 1, wherein, the Apex Court observed and held as under; 8.Mr. Soparkar also placed reliance on the Circular No.1410 pertaining to the reduction or waiver of penal interest for late filing of return of income, etc., more particularly, Clause 2(d) of the aforesaid Circular and Clause 2(vi) of the F.No. 400/234/95-ITB, Dated : 30.01.1997. C/SCA/13290/2004 JUDGMENT 9.On the other hand, Mr. Bhatt, learned Sr. Advocate, supported the orders of the Revenue and submitted that the assesses are not entitled to claim waiver of interest in view of the decision of the Apex Court in “COMMISSIONER OF INCOME-TAX VS. ANJUM H. GHASWALA AND ORS.”, [2001] 252 ITR 1, wherein, the Apex Court observed and held as under; “The learned Solicitor General has pointed out that by virtue of the power vested in the Board under section 119(2)(a) of the Act, the Board has issued circulars by Notification No. F. No. 400/234/95-IT(B), dated May 23, 1996. As per this circular, it has empowered that the Chief Commissioner of Income-tax and Director-General of Income-tax may waive or reduce interest charged under section 234A, 234B and 23C of the Act in the class of cases or class of incomes specified in paragraph 2 of the said order for the period and on conditions which are enumerated therein. He submitted that in view of the said circular, the same authority can be exercised by the Commission since the said circular would amount to relaxation of the rigour of sections 234A, 234B and 234C of the Act. We are in unison with this submission of the learned Solicitor General. This Court in a catena of cases has held that the circulars of the Central Board of Direct Taxes are legally binding on the Revenue : see UCO Bank v. CIT (1999) 237 ITR 889 (SC). Since these circulars are beneficial to assesses, such benefit can be conferred also on assesses who have approached the Settlement Commission under section 245C of the Act on such terms and conditions as contained C/SCA/13290/2004 JUDGMENT in the circular. In our opinion, it is for this purpose that section 245F of the Act has empowered the Settlement Commission to exercise the power of an income-tax authority under the Act. We must clarify here that while exercising the power derived under the circulars of the Board, the Commission does not act as a subordinate to the Board but will be enforcing the relaxed provisions of the circulars for the benefit of the assessee in the process of settlement. For the reasons stated above, we hold that the Commission in exercise of its power under section 245(D)(4) and (6) does not have the power to reduce or waive interest statutorily payable under sections 234A, 234B and 234C except to the extent of granting relief under the circulars issued by the Board under section 119 of the Act.” 10.Thus, from the above it becomes clear that the Commission has no power to waive the interest, which is statutorily payable, under Sections 234A, 234B and 234C. In that view of the matter, we are of the opinion that the Chief Commissioner committed no error, much less any jurisdictional error in passing the impugned orders and these petitions deserve to be dismissed as being without merit. 11.In the result, all the petitions fail and are DISMISSED. No order as to costs. Rule is discharged in each petition. UMESH (K.S.JHAVERI, J.) (K.J.THAKER, J)