Https://Hcservices.ecourts.gov.in/Hcservices v. In The Light Of The Above Development, The Petitioner Has

IN THE HIGH COURT OF JUDICATURE AT MADRAS The Thanthi TrustRepresented by its DirectorB.Sivanthi Adityan86, E.V.K.Sampath Road,Vepery, Chennai – 600 007. ... Petitioner Vs1.Director-General of Income Tax (Exemptions) Plot No.15, 2[nd] Floor, Laxmi Nagar District Centre, New Delhi – 110 092. 2.Assistant Director of Income Tax (Exemptions)-II (Now Deputy Director of Income Tax) (Exemption)-II 121, Nungambakkam High Road, Chennai – 34. ...Respondents Prayer: Writ Petition filed under Article 226 of theConstitution of India to issue a writ of Certiorarified Mandamusto call for the records on the files of the first respondent inF.No.DGIT(E)/waiver under Section 234 B of the IT Act 2011-12/33dated 4.5.2011 and quash the order of the first respondent asillegal, without jurisdiction and against the provisions of lawand direct the first respondent to allow the petitioner's prayerfor waiver of interest of Rs.1,41,87,344/- levied under Section234B of the Act in respect of the petitioner's Income Taxassessment for the assessment years 1989-1990, 1990-1991 and1991-1992. ORDER The petitioner has challenged the impugned order dated04.05.2011 passed by the first respondent in F.No.DGIT(E)/2011-12/133 denying the waiver of interest to the petitioner underSection 234B of the Income Tax Act, 1961. https://hcservices.ecourts.gov.in/hcservices/ 2. The dispute pertains to delay in payment of tax for theAssessment Years 1989-1990, 1990-1991 and 1991-1992. It is caseof the petitioner that the petitioner trust was created in year1954 and all along upto 1976-1977, exemption was granted to thepetitioner from payment of tax under the provisions of theIncome Tax Act, 1922 and thereafter Income Tax Act, 1961 afterthe said Act came into force. For the period upto 1983-84(Assessment Year 1984-1985), the petitioner had claimedexemption under Section 13(1)(bb) of the Income Tax Act. Witheffect from 01.04.1984 the exemption in form of Section 11(4)was introduced. 3. The petitioner claims that it was under bonafide belieffor the period after the introduction of Section 11(4) of theIncome Tax Act with effect from 01.04.1984, the petitioner wasstill exempt from payment of income tax as 75% of its surpluswas deployed for the educational purpose in another trust namedAditanar Educational Institution. 4. The learned counsel for the petitioner further submitsthat right from the beginning, there has been disputed with therespondents Department with regard to the exemption. The matterwould get sort out after prolonged litigation. 5. The learned counsel for the petitioner further submitsthat for the Assessment Years 1979-1980 to 1983-1984, theDivision Bench of this Court vide its order dated 19.12.1994,Thanthi Trust Vs Asst.Commissioner of Income Tax 1994 SCCOnLine Mad 781 : (1995) 213 ITR 626 (Mad), had allowed theexemption to the petitioner under Section 13(1)(bb) of theIncome Tax Act. Similarly, for the Assessment Years 1984-1985 to1991-1992, the Division Bench of this Court vide its order dated19.12.1994, in Thanthi Trust Vs CBDT and others 1994 SCC OnLineMad 782 : (1995) 213 ITR 639 and for the Assessment Year 1992-1993, a single Judge of this Court vide order dated 15.10.1998in Thanthi Trust Vs. Asst. Director of Income Tax and Another1998 SCC OnLine Mad 999 : (1999) 238 ITR 635 (Mad), had allowedthe exemption. 6. It is submitted that all the above three orders of theDivision Bench of this Court were appealed by the Income TaxDepartment before the Hon'ble Supreme Court. The Hon’ble SupremeCourt by its order dated 31.01.2001, reversed the decisions ofthis Court reported in 1994 SCC OnLine Mad 781 : (1995) 213 ITR626 (Mad) for the Assessment Year 1979-1980 to 1983-1984 andreported in 1994 SCC OnLine Mad 782 : (1995) 213 ITR 639 for theAssessment Year 1984-85 to 1991-1992 while upholding thedecision reported in 1998 SCC OnLine Mad 999 : (1999) 238 ITR635 (Mad) which allowed for grant of exemption to the petitionerfor the Assessment Years 1992-93, 1995-96 and 1996-1997 in termsof Section 11(4A) of the Income Tax Act, 1961. 7. In the light of the above development, the petitioner has also paid the tax payable for the Assessment Years 1989-1990,1990-1991 and 1991-1992 on various dates, i.e. on 17.07.2001,17.08.2001, 18.09.2001, 18.10.2001 and 19.11.2001 respectively. 8. Thus, in all, the petitioner had paid a sum ofRs.2,47,57,082/- on the net surplus of Rs.4,69,62,119/-, out ofwhich, the petitioner had transferred a sum of Rs.3,89,70,000/-for the charitable purpose of Aditanar EducationalInstitution/Trust. It is the contention of the learned counselfor the petitioner that if an amount of Rs.3,89,70,000/- and taxof Rs.2,47,57,082/- are considered as prayed towards Section 11of the Income Tax Act, 1961, the application and tax liability,the total amount that was used out of the petitioner’s packetwould be Rs.6,37,27,082/- which would be over and above the netsurplus generated by the petitioner. 9. It is further submitted that assuming the petitioner hadpaid the amount as advance tax, the petitioner would have paidsuch amount out of its pocket for the application of charitablepurpose. The learned counsel for the petitioner further submitsthat the Central Board of Direct Taxes (CBDT) has issued certainCirculars/Notification under Section 119(2)(a) of the Income TaxAct, 1961 bearing reference F.No.212/495/92-IT (A-II), dated02.05.1994 and F.No.400/234/95-IT(B), dated 23.05.1996 andF.No.400/234/95-IT(B), dated 30.01.1997. 10. He further submits that the case of the petitioner iscovered by the CBDT Circular F.No.400/234/95-IT(B), dated23.05.1996. The relevant clause from the said clause isreproduced below:- 2.The class of incomes or class of cases in which thereduction or waiver of interest under section 234A orsection 234B or, as the case may be, section 234C canbe considered, are as follows :- (a) ………………….. (b) …………………. (c) ………………….. (d) Where any income which was not chargeable toincome-tax on the basis of any order passed in thecase of an assessee by the High Court within whosejurisdiction he is assessable to income-tax, and as aresult, he did not pay income-tax in relation to suchincome in any previous year and subsequently, inconsequence of any retrospective amendment of law or,as the case may be, the decision of the Supreme Courtin his own case, which event has taken place after theend of any such previous year, in any assessment orreassessment proceedings the advance tax paid by the assessee during the financial year immediatelypreceding the relevant assessment year is found to beless than the amount of advance tax payable on hiscurrent income, the assessee is chargeable to interestunder section 234B or section 234C and the ChiefCommissioner or Director-General is satisfied thatthis is a fit case for reduction or waiver of suchinterest. (e)Where a return of income could not be filed by theassessee due to unavoidable circumstances and suchreturn of income is filed voluntarily by the assesseeor his legal heirs without detection by the AssessingOfficer. assessee during the financial year immediatelypreceding the relevant assessment year is found to beless than the amount of advance tax payable on hiscurrent income, the assessee is chargeable to interestunder section 234B or section 234C and the ChiefCommissioner or Director-General is satisfied thatthis is a fit case for reduction or waiver of suchinterest. (e)Where a return of income could not be filed by theassessee due to unavoidable circumstances and suchreturn of income is filed voluntarily by the assesseeor his legal heirs without detection by the AssessingOfficer. 11. He further submits that there were further relaxationsin CBDT Circular F.No.400/234/95-IT(B), dated 23.05.1996. Hefurther submits that said CBDT Circular liberalized therelaxation vide Clarification One dated 30.01.1997, wherein, inparagraph No.2, in has been clarified as follows:- 2.In partial modification of this para of theOrder, the Central Board of Direct Taxes has decidedthat there shall be no condition that the decision ofthe High Court or the Supreme Court, as referred totherein, must be given in the assessee’s own case.Also the condition that any retrospective amendmentof law or the decision of the Supreme Court or thejurisdictional High Court must have been made afterthe end of the relevant year stands withdrawn. 12. The learned counsel for the petitioner further submitsthat the petitioner requested the respondent for waiver ofinterest on the ground that the first respondent on the earlieroccasion passed an order dated 18.02.2005 and that order came tobe challenged before this Court in W.P.No.7457 of 2005. Hefurther submits that considering the submissions of thepetitioner, this Court allowed the said writ petition by settingaside the order dated 18.02.2005 passed by the first respondentvide order dated 12.03.2007 with the following observations:- 10. A perusal of Section 234-B shows that anassessee shall be liable to pay interest for non-payment/short payment of advance tax. Theinterest payable is held as compensatory incharacter. The Central Board of Direct Taxes, inexercise of its powers under Section 119(2)(a),authorised the Chief Commissioner and DirectorGeneral of Investigation to reduce or waive penalinterest charged under Section 234-A, 234-B and234-C in the following circumstances: seizure operations, books of account havebeen taken over by the Department and werenot available to the tax-payer to preparehis return of income; ii. Where, in the course of search andseizure operations, cash had been seizedwhich was not permitted to be adjustedagainst arrears of tax or payment of advancetax instalments falling due after the dateof the search; iii. Any income other than "Capital gains"which was received or accrued after the dateof the first or subsequent instalment ofadvance tax, which was neither anticipatednor contemplated by the taxpayer and onwhich advance tax was paid by the taxpayerafter the receipt of such income; iv. Where, as a result of anyretrospective amendment of law or thedecision of the Supreme Court after the endof the relevant previous year, certainreceipts which were hitherto treated asexempt, become taxable. Since no advance taxwould normally be paid in respect of suchreceipts during the relevant financial year,penal interest is levied for the default inpayment of advance tax; v. Where the return of income is filedvoluntarily without detection by the Income-tax Department and due to circumstancesbeyond the control of the taxpayer suchreturn of income was not filed within thestipulated time-limit or advance tax was notpaid at the relevant time. iv. Where, as a result of anyretrospective amendment of law or thedecision of the Supreme Court after the endof the relevant previous year, certainreceipts which were hitherto treated asexempt, become taxable. Since no advance taxwould normally be paid in respect of suchreceipts during the relevant financial year,penal interest is levied for the default inpayment of advance tax; v. Where the return of income is filedvoluntarily without detection by the Income-tax Department and due to circumstancesbeyond the control of the taxpayer suchreturn of income was not filed within thestipulated time-limit or advance tax was notpaid at the relevant time. 11. Learned senior counsel appearing for thepetitioner emphasized on Clauses 4 and 5 of theBoard's circular and pleaded that the firstrespondent had not considered the two clauseswhile considering the prayer for waiver. Hefurther submitted that considering the decisionof this Court and the order passed thereupon, theliability could only be said to arise on thedecision of the Supreme Court reversing thejudgment of this Court. In the circumstances, theview of the first respondent on the question ofthe petitioner lacking in bona fide is not correct. 12. It is no doubt true that given the provisionsof Section 11(4A), the demand was raised on theassessee. However, the subsequent declaration oflaw and the cancelling of the orders ofassessment merit to be considered on the questionof bona fides while considering the plea forwaiver. It is not denied that the fresh order ofassessment itself came to be passed after theSupreme Court decision. In the light of the abovefacts and considering the scope of the Board'snotification, the case of the petitioner meritsto be reconsidered and a fresh order passedaccordingly. In the circumstances, we set asidethe order of the first respondent and direct thefirst respondent to consider the case of thepetitioner afresh and pass orders in accordancewith law. 13. In the circumstances, the writ petition isallowed, but with a direction as stated above,remanding the matter back to the first respondentto pass orders in accordance with law and interms of the Board's circular cited above. Therewill, however, be no order as to costs. 13. He further submits that thereafter, the case was takenagain by the respondents for considering the case of thepetitioner for grant of exemption/waiver of interest and by anorder dated 03.03.2010, the first respondent once again rejectedthe request of the petitioner for waiver of interest underSection 234B of the Income Tax Act, 1961. He further submitsthat the petitioner thereafter filed the second writ petition inW.P.No.5859 of 2010. By an order dated 23.09.2010, this Courtonce again set aside the order dated 03.03.2010 passed by thefirst respondent with the following observations:- 7. Learned Senior Counsel appearing for thepetitioner pointed out that the petitionersatisfied the conditions in Clause 2(d) of thecircular of the Board. Having regard to the orderpassed by this Court in W.P.No.7457 of 2005,dated 12.03.2007, the first respondent shouldhave considered the claim of the petitioner andgranted the relief. He further pointed out thathaving regard to the order of this Court quashingthe assessment orders as reported in 213 ITR 626Thanthi Trust Vs. Assistant Commissioner ofIncome-tax and 213 ITR 639 (Thanthi Trust Vs.Central Board of Direct Taxes and others) and that the second respondent had passed freshassessment orders declaring the petitioner as notassessable, the petitioner’s claim should havebeen favourably considered. 7. Learned Senior Counsel appearing for thepetitioner pointed out that the petitionersatisfied the conditions in Clause 2(d) of thecircular of the Board. Having regard to the orderpassed by this Court in W.P.No.7457 of 2005,dated 12.03.2007, the first respondent shouldhave considered the claim of the petitioner andgranted the relief. He further pointed out thathaving regard to the order of this Court quashingthe assessment orders as reported in 213 ITR 626Thanthi Trust Vs. Assistant Commissioner ofIncome-tax and 213 ITR 639 (Thanthi Trust Vs.Central Board of Direct Taxes and others) and that the second respondent had passed freshassessment orders declaring the petitioner as notassessable, the petitioner’s claim should havebeen favourably considered. 8. As rightly pointed out by the learnedSenior Counsel appearing for the petitioner, theclaim of the petitioner rested not just on theapplicability of the circular alone. The petitionfor waiver narrates the grounds for grantingwaiver of interest that there was no willfuldefault on his part for non-payment of tax ordelayed filing of the return. In the light of thespecific plea made by the petitioner placingreliance on the decision of this Court in theassessee’s case and the subsequent reversal bythe Supreme Court, the first respondent shouldhave considered the plea of the petitioner on theaspect of genuine hardship. In the background ofthe facts thus projected, there being nodiscussion on this aspect. I agree with thesubmission of the petitioner that the orderpassed by the first respondent merits to be setaside with a direction that the first respondentshall consider the plea of the petitioner forwaiver in the light of the facts as stated in thepetitioner and pass order in accordance with lawwithin a period of eight from the date of receiptof a copy of the order of this Court. 14. The petitioner’s case was thereafter considered by thefirst respondent for the third time and by the impugned orderdated 04.05.2011, the first respondent had rejected again therequest of the petitioner for waiver of interest on the groundthat the petitioner’s case was not covered by the CBDT CircularF.No.400/234B/95/IT(3), dated 23.05.1996 and that the petitionerhas not made out any case for genuine hardship on account ofpayment of interest. 15. The learned counsel for the petitioner submits that allalong, the petitioner was under bonafide belief that it was notmade liable to pay tax and that the petitioner paid the taxpromptly since the issue attained finality as per the decisionof the Hon’ble Supreme Court in the petitioner’s own case videorder dated 31.01.2001 which was reported in (2001) 2 SCC 707 :(2001) 247 ITR 785 (S.C.). 16. He further submits that right from the beginning up tothe Assessment Year 1986-1987, there were no disputes relatingto the availability of exemption in terms of the decision of theHon’ble Supreme Court in Additional Commissioner of Income Tax Vs. Surat Art Silk Cloth Manufacturers Association, (1980) 2 SCC31 : (1980) 121 ITR 1 (SC) and as per the decision of theHon’ble Supreme Court in Asst. Custodian of Evacuee Property Vs.Brij Kishore Agarwala, (1975) 1 SCC 21 and the decision of thisCourt in Commissioner of Income-tax Vs. Rao Bahadur CalavalaCunnan Chetty Charities, (1979) SCC OnLine Mad 219 : (1982) 135ITR 0485 (Madras). 16. He further submits that right from the beginning up tothe Assessment Year 1986-1987, there were no disputes relatingto the availability of exemption in terms of the decision of theHon’ble Supreme Court in Additional Commissioner of Income Tax Vs. Surat Art Silk Cloth Manufacturers Association, (1980) 2 SCC31 : (1980) 121 ITR 1 (SC) and as per the decision of theHon’ble Supreme Court in Asst. Custodian of Evacuee Property Vs.Brij Kishore Agarwala, (1975) 1 SCC 21 and the decision of thisCourt in Commissioner of Income-tax Vs. Rao Bahadur CalavalaCunnan Chetty Charities, (1979) SCC OnLine Mad 219 : (1982) 135ITR 0485 (Madras). 17. He further submits that the petitioner was underbonafide belief with a view that the exemption under Section 11(4A) of the Income Tax Act, 1961 which was inserted by theFinance Act, 1983, w.e.f. 01.04.1984, was available to thepetitioner and the issue finally settled by only the Hon’bleSupreme Court vide order dated 31.01.2001 which was reported in(2001) 2 SCC 707 : (2001) 247 ITR 785 (S.C.) and therefore, thepetitioner is entitled for waiver of interest in terms of theabove CBDT Notification issued under Section 119(2)(a) of theIncome Tax Act, 1961. 18. The learned counsel for the petitioner further drew myattention to a recent decision of the Division Bench of thisCourt in petitioner’s own case in T.C.A.No.822 of 2018, dated29.10.2020 which pertains to the Assessment Years 2006-2007 to2009-2010. He further submits that the issue relating to thebonafide of the petitioner’s trust was considered by theDivision Bench in T.C.A.No.822 of 2018 under Section 12A(a) ofthe Income Tax Act, 1961 in the context of Circular No.1 of2011. He further submits that the Division Bench of this Courtafter considering the said Circular ultimately came to thefollowing conclusion:- 89.Circular No.1 of 2011 will clearly show that theamendment brought out in Section 12AA is applicablewith effect from 1 st June, 2010, i.e., from theassessment year 2011-12 and subsequent years.Therefore, the retrospective cancellation of theregistration of the assessee is wholly withoutjurisdiction and the assessee cannot be vexedrepeatedly on the same issue and reason for invokingthe power under sub-Section (3) of Section 12AA iswholly unsustainable, without any basis and suffersfrom perversity writ large on the face of the order.Unfortunately, the Tribunal misdirected itself byaddressing a wrong question without taking note ofthe earlier decisions rendered in the assessee's owncase. The DIT(E) has not recorded his satisfactionthat the activities of the assessee Trust are notgenuine, nor he has made any observation that theassessee had carried out activities which are notcovered in the Trust Deed or in the judgment anddecree in C.S.No.90 of 1961. The decisions relied onby the Revenue, in fact, would go to assist the case of the assessee, rather the Revenue. The DIT(E)committed gross error in restricting the meaning ofthe word 'education' and did not appreciate theeffect of the decision in Loka Shikshana Trust(supra), which was considered in several othersubsequent decisions. Above all, the DIT(E) and theTribunal violated the rule of consistency by showingutter disregard to the judgments of the Hon'bleSupreme Court and this Court in the assessee's owncase on the very same subject and the orders of theDIT(E) and the Tribunal have to be termed to be'utterly perverse'. The Tribunal lost sight of thedistinction between a claim for registration underSection 12AA and a claim for exemption under Section11 of the Act. To say the least, the Tribunal'sjustification would amount to judicial indisciplinefor not following the decision of the Hon'bleSupreme Court and this Court in the assessee's owncase. The DIT(E) failed to adhere to theinstructions issued by the CBDT which is binding onthe DIT(E). As observed earlier, the recent pandemichas taught very many lessons and one of which isthat, mode and method of education cannot be in anymanner restricted, but should be given the widestmeaning that is possible. 19. Defending the impugned order, the learned SeniorStanding Counsel for the respondents submits that the exemptionwas claimed by the petitioner under Section 13(1)(bb) of theIncome Tax Act, 1961 for the earlier assessments years cannot bethe basis for claiming exemption under the newly insertedexemption Section 11(4A) of the Income Tax Act, 1961 which wasintroduced by the Finance Act, 1983, w.e.f. 01.04.1984. Shesubmits that these writ petitions pertain to the AssessmentYears 1989-1990, 1990-91 and 1991-1992 and advance tax was notpaid on the due date as is evident from the dates and theparticulars given in these writ petitions which came up forconsideration in 1994 SCC OnLine Mad 782 : (1995) 213 ITR 639. 20. She further submits that the writ petitions were filedonly during 1989, 1991, 1992 and 1993 and since the advance taxhad to be paid for the relevant Assessment Years 1989-1990,1990-91 and 1991-1992 during the corresponding previous year, itcannot be said that the petitioner entertained a bonafidebelief. She also submits that the waiver of interest that wasdemanded from the petitioner under Section 234B of the IncomeTax Act, 1961 is only for the period between the due date andthe date of assessment and therefore, there are no merits in thepresent writ petition. She further submits that the petitionerhas also not made out any case for genuine hardship andtherefore, the respondent has rightly rejected the request of the petitioner for waiver of interest under Section 234B of theIncome Tax Act, 1961. 21. The learned Senior Standing Counsel drew my attentionto the following three decisions of this Court in support of hersubmission:- i. Chief Commissioner of Income-tax,Chennai-34 Vs. Rajanikant & Sons, (2017) 83taxmann.com 162 (Madras). ii. Tushin T. Mehta Vs. Chief Commissionerof Income-tax, Chennai – II, (2019) 108taxmann.com 257 (Madras). iii. M/s.Rayala Corporation Pvt. Ltd. Vs.The Chief Commissioner of Income Tax, Chennai IIand Others, in W.P.Nos.15399 & 15400 of 2007,dated 31.01.2020. the petitioner for waiver of interest under Section 234B of theIncome Tax Act, 1961. 21. The learned Senior Standing Counsel drew my attentionto the following three decisions of this Court in support of hersubmission:- i. Chief Commissioner of Income-tax,Chennai-34 Vs. Rajanikant & Sons, (2017) 83taxmann.com 162 (Madras). ii. Tushin T. Mehta Vs. Chief Commissionerof Income-tax, Chennai – II, (2019) 108taxmann.com 257 (Madras). iii. M/s.Rayala Corporation Pvt. Ltd. Vs.The Chief Commissioner of Income Tax, Chennai IIand Others, in W.P.Nos.15399 & 15400 of 2007,dated 31.01.2020. 22. She further submits that the Division Bench of thisCourt in Rajinikant case referred to supra has answered theissue against the petitioner as follows:-11. Having heard the learned counsel for theparties and perused the record, what emerges,in nutshell is that, this Court is required tolook at the contents of the Circular dated26.06.2006, in order to come to a conclusion,in one way or the other, as to whether or not,the respondent would be entitled to seek waiverof interest. 11.1. We may also note herein that the learnedcounsel for the Revenue, Ms.Muralikrishnan, isright in her submission that the ChiefCommissioner in his order dated 04.01.2010, hadexhaustively dealt with merits of the waiverpetitions and, then, come to a conclusion thatthe circumstances obtaining in the case did notfall within the provisions of clauses 2(a) to 2(d) of the Circular. 11.2. Therefore, what is required to be seen iswhat is the scope and ambit of the Circulardated 26.06.2006. A bare perusal of theCircular would show that the CBDT has delegatedits power to the Chief Commissioner and/or theDirector General of Income Tax to reduce orwaive interest charged under Section 234A orunder Section 234B or under Section 234C of the1961 Act, in the classes of cases or classes of incomes specified in paragraph 2 of the saidCircular. 11.3. The extent to which the said delegatees,i.e., Chief Commissioner/Director General ofIncome Tax, may waive or reduce the interesthas been left to their discretion. 11.4. Furthermore, the Circular makes it clearthat no reduction or waiver of interest underthe provisions referred to above shall beordered, unless the assessee has filed a returnof income for the relevant AY and paid theentire income tax (principal component ofdemand due on the income, as assessed). 11.5. In addition thereto, the ChiefCommissioner/Director General of Income Tax hasbeen empowered to impose any other condition,as it may deem fit, while granting reduction orwaiver of interest. 11.6. Therefore, what emanates upon perusal ofthe Circular is that, unless the Assessee'scase falls under the circumstances set out inparagraph 2(a) to 2(d) of the Circular dated26.06.2006, which includes classes of casesand/or classes of incomes, the ChiefCommissioner/Director General of Income Tax hasno power to reduce or waive interest. 11.7. In the instant case, as indicated in thenarration of facts above, though returns werefiled for the subject periods, the assessmentmade in the usual and normal course, wasreopened under Section 148 of the 1961 Act. Thereassessed tax was paid only after the Revenuehad passed the reassessment order. As notedabove, the assessee, at that stage, as advised,it appears, has also paid interest underSections 234A, 234B and 234C of the 1961 Act. 11.8. However, what emerges from the record, isalso, that in so far as AY 2001-2002 isconcerned, at the assessment stage itself, thededuction claimed under Section 80HHC qua thelocal sales was denied to the respondent. Thematter was carried in appeal, which wassustained by CIT(A), in his order dated27.08.2004. 11.9. Therefore, in a sense, at that stageitself, the respondent was made aware thatSection 80HHC deduction was not available. 11.8. However, what emerges from the record, isalso, that in so far as AY 2001-2002 isconcerned, at the assessment stage itself, thededuction claimed under Section 80HHC qua thelocal sales was denied to the respondent. Thematter was carried in appeal, which wassustained by CIT(A), in his order dated27.08.2004. 11.9. Therefore, in a sense, at that stageitself, the respondent was made aware thatSection 80HHC deduction was not available. 23. She also drew my attention to the decision in Tushin T.Mehta case referred to supra, wherein, the learned Single Judgeof this Court has held as under:- '' 13.Here is a case where the assesseeentertained a bonafide belief that thetransaction entered into by him had yielded onlylong term capital gains. But, his stand wasrejected by the assessing authority. The orderpassed by the assessing authority that thecapital gains yielded only short term capitalgains and not long term capital gains had becomefinal. The bonafide nature of belief entertainedby the assessee is wholly irrelevant. Theexpression “unavoidable” has been defined assomething impossible to avoid or prevent (OxfordAdvance Learner's Dictionary, 9 th Edition). InBlack's Law Dictionary (Eight Edition), theexpression “unavoidable-accident doctrine” hasbeen explained as a rule holding that no party isliable for an accident that was not foreseeableand which could not have been prevented by theexercise of reasonable care. In judicial andquasi judicial proceedings, the possibility isthat one's contention may be either accepted orrejected. Rejection of one's legal contentioncannot be characterised as an unavoidablecircumstance. The decision of the adjudicator issomething that is always beyond the control ofthe assessee and it cannot be foreseen unless ofcourse there is something like match-fixing! Theexpression “unavoidable circumstance” occurringin clause 2(e) of the circular dated 23.05.1996cannot obviously encompass outcomes of judicialand quasi judicial proceedings. This is all themore so because, clause 2(d) deals with arisingof liability on account of a subsequent decisionof the Hon'ble Supreme Court. If adverse judicialor quasi judicial decisions are to furnish acause for seeking waiver of interest, it wouldhave been expressly stated in clause 2(e) as inclause 2(d). When a person embarks on the journeyof litigation, one should always be prepared foran adverse verdict. Therefore, there is nothingunforeseeable about the outcome of judicial orquasi judicial proceeding.'' 24. Finally, she drew my attention to the decision of thisCourt in M/s.Rayala Corporation Pvt. Ltd. case referred tosupra, in support of her plea that the petitioner has not madeout any case for exemption/waiver from the payment of interestunder Section 234B of the Income Tax Act, 1961. 25. The petitioner had not only challenged the followingassessment orders and few other assessment order for few otherassessment years starting from 1984-85 to 1988 -89 but had alsoCBDT Circular No 372 dated 8.12.1983 reported in [1984] 146 ITR(ST) 9 in W.P.No. 203, 6632, 6633, 10838 of 1989 and in W. P.No.14032 of 1991 14827 of 1992 and 2228 of 1993 and W.P.No. 8971 of1993. SeriaAssessmeDue date forDateTaxInterestl Nont Yearspayment ofDetailsunderAdvance TaxDeduction234B ofthe IncomeTax Act,196111989-9015.9.1988 (20%)30.03.19926,29,3254,40,524/-15.12.1988(30%)15.3.1989(50%)2.1990-9115.9.1989 (20%)22.12.19921,04,90,045 69,23,400/-15.12.1989(30%)15.03.1990(50%)3.1991-9215.9.1990 (20%)19.02.19931,36,37,712 68,23,420/-15.12.1990(30%)15.03.1991(50%) 26. These writ petitions were answered in favour of thepetitioner by a Division Bench of this Court by its order dated19.12.1994 reported in [1995] 213 ITR 639 holding that thepetitioner was indeed entitled to exemption under Section 11(1)of the Income Tax Act,1961. SeriaAssessmeDue date forDateTaxInterestl Nont Yearspayment ofDetailsunderAdvance TaxDeduction234B ofthe IncomeTax Act,196111989-9015.9.1988 (20%)30.03.19926,29,3254,40,524/-15.12.1988(30%)15.3.1989(50%)2.1990-9115.9.1989 (20%)22.12.19921,04,90,045 69,23,400/-15.12.1989(30%)15.03.1990(50%)3.1991-9215.9.1990 (20%)19.02.19931,36,37,712 68,23,420/-15.12.1990(30%)15.03.1991(50%) 26. These writ petitions were answered in favour of thepetitioner by a Division Bench of this Court by its order dated19.12.1994 reported in [1995] 213 ITR 639 holding that thepetitioner was indeed entitled to exemption under Section 11(1)of the Income Tax Act,1961. 27. The Court held that amendment to Section 11 of theIncome Tax Act, 1961 vide Finance Act, 1983 with effect from1.4.1984 with the insertion of Sub-Section (4-A) to Section 11of the Income Tax Act, 1961 did not apply to the case of thepetitioner in trust as the petitioner was public charitabletrust, whereas clause (a) of subsection (4-A) deals with incomebeing profits and gains of business carried on by a trustcreated only for public religious purpose; and clause (a) doesnot deal with income derived from the business undertaking alender the trust for Public charitable purpose. It was furtherheld that “Similarly, clause (b) will apply only to income being profits and gains of persons carried on by an institution andnot by a Trust. 28. The Court followed its view for the assessment year1979-80 to 1983-1984 rendered on the same day in petitioner'sown case reported in [1995] 213 ITR 625. 29. However, the order passed by the Division Bench of thiscourt in [1995] 213 ITR 639 were ultimately reversed by theHonourable Supreme Court in its order dated 31.1.2001 reportedin [2001] 247 ITR 785. 30. In view of the adverse order of the Honourable SupremeCourt in holding that the petitioner was indeed liable to paytax and no exemption was available to the petitioner underSection 11 of the Act. The petitioner has also remitted the taxfor these assessment years through belatedly. 31. The petitioner thereafter approached the firstrespondent for exemption from payment of interest under section234 B of the Income Tax Act, 1961. 32. The first respondent by an order dated 18.2.2005rejected the application for waiver of interest under theaforesaid provision of the Income Tax Act, 1961. Thepetitioner therefore filed W.P.No. 7457 of 2005 which set asidethe aforesaid order dated 18.2.2005 of the first respondentdated 18.2.2005 and remanded the case back to the respondent toconsider the case afresh with the following observation:- “It is no doubt true that given theprovisions of Section 11 (4A), the demand wasraised on the assessee. However, the subsequentdeclaration of law and the cancelling of theorders of assessment merit to be considered onthe question of bona fides while considering theplea for waiver. It is not denied that the freshorder of assessment itself came to be passedafter the Supreme Court decision. In the lightof the above facts and considering the scope ofthe Board's notification, the case of thepetitioner merits to be reconsidered and a freshorder passed accordingly. In the circumstances,we set aside the order of the first respondentand direct the first respondent to consider thecase of the petitioner afresh and pass orders inaccordance with law”. 33. The 1[st] respondent thereafter passed another order dated3.3.2010. Once again, the 1[st] respondent rejected the request of https://hcservices.ecourts.gov.in/hcservices/ the petitioner for the second time. The said order was againset aside by an order dated 23.9.2010 In W.P.No. 5859 of 2010with the following observation:- 33. The 1[st] respondent thereafter passed another order dated3.3.2010. Once again, the 1[st] respondent rejected the request of https://hcservices.ecourts.gov.in/hcservices/ the petitioner for the second time. The said order was againset aside by an order dated 23.9.2010 In W.P.No. 5859 of 2010with the following observation:- “ As rightly pointed out by the learnedSenior Counsel appearing for the petitioner, theclaim of the petitioner rested not just on theapplicability of the circular alone. Thepetition for waiver narrates the grounds forgranting waiver of interest that there was nowilful default on his part for non-payment of taxor delayed filing of the return. In the light ofthe specific plea made by the petitioner placingreliance on the decisions of this Court in theassessee's case and the subsequent reversal bythe Supreme Court, the first respondent shouldhave considered the plea of the petitioner on theaspect of genuine hardship. In the background ofthe facts thus projected, there being nodiscussion on this aspects. I agree with thesubmission of the petitioner that the orderpassed by the first respondent merits to be setaside with a direction that the first respondentshall consider the plea of the petitioner forwaiver in the light of the facts as stated inthe petition and pass orders in accordance withlaw within a period of eight from the date ofreceipt of a copy of the order of this Court”. 34. Therefore this is the third round by the petitioner forthe same relief. The 1[st] respondent has rejected the request ofthe petitioner for the 3[rd] time vide impugned order dated28.06.2011 with the following observation: (A) Regarding the applicability of CBDTinstruction for waiver of interest it has beenvery elaborately discussed in the earlier orderof the DGIT (E) dated 18.02.2005 and 03.03.2010that the case of the asessee is not covered byany mitigating circumstances mentioned in theCBDT instruction governing waiver of interestunder section 234B. The repeated contention ofthe assessee that it was under bonafide beliefthat advance tax was not payable because offavourable High Court's order in its own case hasbeen rebutted in both the earlier order of theDGIT(E). The first due dates of liability forpayment of advance tax for Assessment Years 1989-90, 1990-91 and 1991-92 were 15.09.1988,15.09.1989 and 15.09.1990. The order of the Madras High Court which was in favour of theassessee (subsequently reversed by the Hon'bleSupreme Court in favour of the Department) waspassed only on 19.12.1994. Therefore, the saidorder was not in existence when advance tax wasdue and therefore, the contention of theapplicant is contrary to the facts of the case. Madras High Court which was in favour of theassessee (subsequently reversed by the Hon'bleSupreme Court in favour of the Department) waspassed only on 19.12.1994. Therefore, the saidorder was not in existence when advance tax wasdue and therefore, the contention of theapplicant is contrary to the facts of the case. (B)Regardinggenuinehardship,theassessee was asked to furnish evidence byproducing bank pass books and also relevantcopies of accounts to prove that on due dates forpayment of advance tax for all the relevantassessment years, the assessee was having seriousfinancial problems for payment of advance tax.The assessee during the course of hearing andalso in its written submission filed on22.01.2011 and on 26.01.2011 frankly admittedthat genuine hardship in the shape of financialproblem and shortage of liquid funds did notexist in the assessee's case. However, theassessee has contended that payment of interestwill cause genuine hardship to the assessee. Itis the contention of the assessee that assesseefiled nil return of income and it was onlybecause of Supreme Court's order that theassessee had to pay tax and interest. Theassessee also pleaded that the assessee hasapplied huge amounts under section 11 foreducational purpose and has also paid huge taxesand further payment of interest will causegenuine hardship to the assessee. Anyjustifiable demand of tax and interest upheld bythe Supreme Court, however, unpleasant it may be,cannot be treated as genuine hardship. Anypayment of tax and interest will lead todiminution of gross asset of the assessee andthis cannot be treated as hardship. This willlead to an absurd situation where everyassessee will contest the payment of intereston the ground of so called hardship. Genuinehardship means lack of liquid resources and acutefinancial distress and as frankly admitted by theassessee these conditions did not exist in thiscase. Therefore, the ground of genuine hardshipfails. (C)Regarding the issue of wilful default,it has been held and not disputed that thefavourable High Court's order did not exist when the payment of advance tax for all the threeassessment year was due to the revenue. Thus theassessee has taken a unilateral stand on its ownwithout any support of High Court's order for notpaying advance tax. This conscious stand of theassessee clearly indicates wilful default and notan act unintended omission. Therefore, theassessee is not entitled to any relief on theground that there is no wilful default on itspart for non-payment of advance tax. 35. There is no dispute that the petitioner has failed topay the advance tax in time. The records indicate that theCourt had earlier granted interim relief to the petitioner’s byits order dated 6.1.1989 and 12.6.1989 as is evident fromreading of order dated `18.5.2005 of the 1[st] respondent. Whilerejecting the petitioner's request for waiver of interestcharitable under Section 234 B of the Income Tax Act, 1961. 36. There is also no dispute that the petitioner has paidtax belatedly. By the time the third and final instalment ofthe advance tax was due from the petitioner for the assessmentyear 1989-90, an interim order was passed by this Court on6.1.1989. Thereafter, another order came to be passed by thiscourt on 12.6.1989. 37. Though, content of these orders have not been furnished,it is evident that the petitioner took a bonafide stand that itwas not liable to pay tax though the Section 11 had been amendedvide Finance Act, 1983 with effect from 1.4.1984. The contentionof the petitioner was also accepted by this court in its orderdated 19.12.1994 in [1995] 213 ITR 639. That position continuedto 31.1.2001 till the Honourable Supreme Court reversed the saidorder dated 19.12.1994 vide its order dated 31.1.2001 in [2001]247 ITR 785. 37. Though, content of these orders have not been furnished,it is evident that the petitioner took a bonafide stand that itwas not liable to pay tax though the Section 11 had been amendedvide Finance Act, 1983 with effect from 1.4.1984. The contentionof the petitioner was also accepted by this court in its orderdated 19.12.1994 in [1995] 213 ITR 639. That position continuedto 31.1.2001 till the Honourable Supreme Court reversed the saidorder dated 19.12.1994 vide its order dated 31.1.2001 in [2001]247 ITR 785. 38. Therefore, the question to be answered is whether thepetitioner is entitled for complete or partial waivers or nowaiver at all from payment of interest under section 234 B ofthe Income Tax Act, 1961. 39. As per clause (d) to CBDT Circular F. No.400/234/95-IT (B) dated 23.5.1996, where any income which wasnot chargeable to income tax on the basis of any order passed inthe case of an assessee by the High Court within whosejurisdiction such assessee was assessable to income tax, and asa result, such assessee did not pay income tax in relation tosuch income in any previous year and subsequently, inconsequence of any retrospective amendment of law, as the casemay be, decision of the Supreme Court in his own case, which https://hcservices.ecourts.gov.in/hcservices/ event has taken place after the end of any such previous year,in any assessment or reassessment proceedings, the advance taxpaid by the assessee during the financial year immediatelypreceding the relevant assessment years found to be less thenthe amount of advance tax payable on his current income, theassessee chargeable to interest under section 234B and/or 234Cis entitled to reduction of waiver of such interest if the ChiefCommissioner of the Director-General of Income Tax is satisfiedfor grant of such reduction or waiver interest. 40. Thus, the facts as they stand out make it clear that thepetitioner was indeed entitled for partial waiver of interestunder section 234 B of the Income Tax Act, 1961 inasmuch asthere was stay granted by this court on 6.1.1989 and on12.6.1989. These orders continued to be in force as these writpetition filed by the petitioner came to be allowed on 19.12.1994 and was reversed only on 31.1.2001. 41. Therefore, up to the date of the order of the HonourableSupreme Court this was a fit case for exercising the discretionvested with the first respondent f