Janata Textiles (Presently Known As Kanika Texstyles) v. Chief Commissioner Of Income – Taxmadurai

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT RESERVED ON : 02 / 08 / 2018 PRONOUNCED ON: 16 / 06 / 2021 CORAM: THE HONOURABLE MR.JUSTICE M.GOVINDARAJ WP (MD) NO.5523 OF 2012 Janata Textiles (Presently known as Kanika Texstyles) 21, V.P. Ratnasamy Nadar Road, Madurai – 625 014. ... Petitioner Vs. Chief Commissioner of Income – TaxMadurai. ... Respondent PRAYER: Writ Petition is filed under Article 226 of theConstitution of India praying for the issuance of Writ ofCertiorarified Mandamus, to call for the records in the matter ofwaiverclaimofthepetitionerinFileNo.C.No.2118/24/CC/MDU/TECH/2006-2007 of the respondent for theassessment year 1999-2000 quash the order dated 27.07.2011rejecting the claim of the petitioner and direct waiver of theinterest levied under Section 234B and refund of amount paid withinterest. For Petitioner:Mr.R.Srinivasan For Respondent :Mrs.S.Srimathy O R D E R The writ petitioner is a Manufacturer and Exporter ofHandloom Goods. They filed returns of income for the year ended31.03.1999 relevant for the assessment year 1999-2000. TheAssessing Authority issued a notice dated 10.08.2000 forrectification of the mistakes in the returns filed under Section154 of the Income Tax Act, 1961 (Shortly “the Act”). Thepetitioner filed an objection on 23.08.2000 stating that there isno mistake rectifiable under Section 154 of the Act. However, thesame was rejected on 05.10.2000. The petitioner preferred anappeal against the order of rejection and the same was allowed byhttps://hcservices.ecourts.gov.in/hcservices/ the Commissioner (Appeals) on 31.03.2002. The appeal filed by theRevenue before the Income Tax Appellate Tribunal was dismissed on30.09.2005. Thereafter, in the year 2006, notice under Section 148of the Act came to be issued. The writ petitioner filed a revisedreturn on 24.04.2006. 2.According to the petitioner, the profit of business shallnot be calculated on the gross interest, but it shall be based onnet interest. On the other hand, the Assessing Authority rejectedthe claim of the petitioner and assessed on the basis of the grossinterest. He has also levied interest for belated payment underSection 234-B of the Act to the tune of Rs.3,64,920/-. Thepetitioner has filed a petition on 12.02.2007 to waive theinterest charged under Section 234-B of the Act to the ChiefCommissioner of Income Tax based on the Notification of theCentral Board of Direct Taxes in F.No.400/234/95-IT(B) dated23.05.1996, as modified by order in F.No.400/234/95-IT(B) dated30.01.1997. The Chief Commissioner of Income Tax rejected thepetition on 27.07.2011. Against which, the petitioner preferredthe present writ petition. 3.The learned counsel for the petitioner would vehementlycontend that the judgment rendered by the High Court of Mumbai onthis aspect as well as the judgment of the High Court of Karnatakain UB GLOBAL CORPORATION LIMITED VS. CHIEF COMMISSIONER OF INCOMETAX [2013 (87) DTR (KAR) 110-ED) was not considered. According tohim, the erroneous computation of the Assessing Authority takingthe gross interest lead to delayed payment of advance tax.Further, payment of advance tax had arisen due to the judgment inThangapandi's Case which came to be delivered on 24.01.2006.Otherwise, there is no necessity to pay advance tax. Hence,payment of advance tax was existing as per the then existingprovision. Therefore, the delay occurred due to the laterdecision. This is beyond the control of the assessee. At the timeof filing the returns, the assessee could not make additionalpayments. Therefore, the Commissioner of Income Tax has power towaive the interest imposed under Section 234-B of the Act and asper Circular issued under Section 119 of the Act. 4.Per contra, it is the contention of the learned counselfor the respondent that the Circular dated 30.01.1997 wassubsequently superseded. Even otherwise, the power to waive theinterest is a delegated power and it shall be made within theframe work of the instructions issued in this regard. The judgmentrelied on by the petitioner pertaining to the subsequent years. Onthe date of passing of the assessment order, those judgments werenot available. Overriding of those judgments subsequently or thesubsequent judgments will not give any right to the petitioner toclaim waiver. The petitioner should have produced the judgments onhttps://hcservices.ecourts.gov.in/hcservices/the previous year of the assessment. Once assessment order is made, the judgment which was rendered subsequently, will not takea retrospective effect and therefore, the claim of the petitionerto waive the interest under Section 234-B of the Act cannot beentertained. Therefore, the claim of the petitioner is notsupported by any judgment, much less, the judgment of theterritorial High Court or Supreme Court and hence, it has to berejected. 5.I have considered the submissions. 6.At the outset, the Assessing Authority can issue a noticeunder Section 154 of the Act which was decided in favour of thepetitioner. Later, the Assessing Authority issued a notice underSection 148 of the Act for the incorrect claim for incorrectdeduction of the profit under Section 143 of the Act. In fact, thepetitioner has filed a revised return on 24.04.2006 with modifiedcomputation. The Assessing Authority has also passed an ordertaking into account the gross profit of the business as an income,negativing the contention of the petitioner that only the netprofit has to be taken for imposing tax. However, it is pertinentto note that the petitioner has not filed any objection or appealagainst that assessment order, but he filed a petition on12.02.2007 only against the imposition of interest under Section234-B of the Act. It is the claim of the petitioner that due tothe later pronouncement of High Court in Chinnapandi's Case, hewas forced to file the revised return. There was deficit inpayment of advance tax which is not under his control andtherefore, he is entitled to waiver. 7.As noted above, the petitioner has accepted theassessment order and it has become final. What remains is only thewaiver of interest imposed under Sections 234-B and 234-D of theAct. Now that he cannot go back and contend that there is wrongfulcalculation in the previous assessment. Both the proceedingsissued under Sections 154 and 148 have attained finality.Therefore, the petitioner cannot question the merit of thoseassessment orders. In other words, he cannot state that there is awrongful calculation which lead to deficit in advance taxpayment.The request for waiver is a discretionary process undercertain circumstances as envisaged under Section 119 of the Act.Section 119 (2) (b) and (c) of the Act empowers the Board to issueinstructions for making deductions and granting waiver of interestunder Section 234-B and 234-D of the Act. 8.Now that the petitioner has made a claim that as per theextant rules prevailing during the assessment year 1999-2000, heneed not pay advance tax. Payment of advance tax arose only due toa subsequent judgment of High Court in Chinnapandi's case on24.01.2006. The subsequent developments were not under the controlof the petitioner. Even though the petitioner has raised ahttps://hcservices.ecourts.gov.in/hcservices/ specific issue on this point, the appellate authority has notdiscussed the issue of delay, rather, proceeded on the basis ofthe judgments of High Courts and Hon'ble Supreme Courts. 8.Now that the petitioner has made a claim that as per theextant rules prevailing during the assessment year 1999-2000, heneed not pay advance tax. Payment of advance tax arose only due toa subsequent judgment of High Court in Chinnapandi's case on24.01.2006. The subsequent developments were not under the controlof the petitioner. Even though the petitioner has raised ahttps://hcservices.ecourts.gov.in/hcservices/ specific issue on this point, the appellate authority has notdiscussed the issue of delay, rather, proceeded on the basis ofthe judgments of High Courts and Hon'ble Supreme Courts. 9.When a specific issue relating to the cause of delay,pursuant to a notice under Section 148 of the Act issued after aperiod of seven years, the Authority is bound to consider the sameand pass a reasonable order as to whether the petitioner isentitled to waiver of interest or not. But in the instant case,the appellate authority mixed up the merits of the case along withthe relevant issue and rejected the claim. Therefore, this Courtis inclined to interfere with the order and remit the matter backto the appellate authority for reconsideration and a furtherdirection is issued to pass a reasoned order after affording anopportunity of personal hearing to the petitioner within a periodof twelve (12) weeks after resumption of regular functioning. 10.The Writ petition is disposed of with the abovedirection. No costs. Assistant Registrar (CS II) / /2021 Sub Assistant Registrar(CS) TK To Chief Commissioner of Income – TaxMadurai. +1 CC to M/s.R.SRINIVASAN, Advocate ( SR-19477[F] dated 17/06/2021) +1 CC to M/s.S.SRIMATHY, Advocate ( SR-19476[F] dated 17/06/2021 ) -PREDELIVERY ORDER MADE IN AS(05.07.2021) 4P 4C https://hcservices.ecourts.gov.in/hcservices/