M/S. Eversmile Properties Pvt. Ltd v. The Chief Commissioner Of Income Taxcity-Ii And Another

VISHALSUBHASHPAREKAR Digitally signed byVISHAL SUBHASHPAREKARDate: 2022.02.2216:25:49 +0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.751 OF 2009 M/s. Eversmile Properties Pvt. Ltd. ...Petitioner vs. The Chief Commissioner of Income TaxCity-II and Another ...Respondents Mr. P.J. Pardiwalla, Senior Advocate i/b. Ms. Vasanti Patel, for thePetitioner.Mr. Suresh Kumar, for the Respondents CORAM :K.R. SHRIRAM &N. J. JAMADAR, JJ. DATE : FEBRUARY 18, 2022 P.C.: 1.Petitioner is impugning an order dated 16[th] October, 2008passed by Respondent No. 1 rejecting Petitioner’s application forwaiver of interest chargeable under section 234B and 234C of theIncome Tax Act, 1961 for A.Y. 2005-06. 2.Petitioner is engaged in the business of development andconstruction of immovable properties. The return of income for A.Y.2050-06 was filed declaring total income as NIL in line with returnfor the earlier years. There was a survey conducted under section133A of the Act on 26[th] November, 2005. It is recorded in theimpugned order that Director of Petitioner Mr. Shivkumar Dalmiavoluntarily offered an amount of Rs. 14,00,35,322/- as income for A.Y. 2005-06 and subsequently, revised return for the said A.Y. wasfiled on 9[th] January, 2006 declaring total income at Rs.13,94,30,051/-. The amount of interest payable as per Petitioner’scomputation enclosed with the return aggregated to Rs.76,72,681/-. Taxes totaling to Rs. 5,09,81,264/- attributable to thedisclosure made on account of survey were paid by 31[st] March,2006. 3.The crux of Mr. Pardiwalla’s submission today is thatPetitioner being in the business of development and construction ofimmovable properties, could have adopted either the projectcompletion method of accounting or percentage completion methodof accounting and Petitioner was following the project completionmethod of accounting. In view of the survey conducted, Petitionerdecided to change its accounting policy to avoid protractedlitigation and to buy peace had changed accounting policy topercentage method of accounting. Mr. Pardiwalla submitted thattherefore there was no attempt to not to pay the taxes and it was agenuine error in changing accounting policy. Therefore Petitionerapplied to Respondent No. 1 for waiver of interest under section234B and 234C of the Act. Petitioner made its submissions beforeRespondent No. 1 stating that its case was squarely covered by paragraph 2(d) of the order under section 119(2)(a) dated 26[th]June, 2006 issued by CBDT. 4. The powers of waiver of interest under section 234B and234C of the Act have been delegated by the CBDT to the ChiefCommissioner of Income Tax. The order dated 26[th] June, 2006relied upon by Petitioner’s representative before Respondent No. 1provides that the power of waiver of interest can be exercised onlyupon the fulfillment of certain conditions specified in the orderdated 26[th] June, 2006. Paragraph 2(d) on which Petitioner relied,reads as under: “Where a return of income could not be filed bythe assessee due to unavoidable circumstancesand such return of income is filed voluntarily bythe assessee or his legal heirs without detectionby the Assessing Officer”. 5.This paragraph 2(d) applies in a case where there has been adelay in filing of return of income and cannot apply in a situationwhere the return of income has already been filed. Therefore, weagree with the finding of Respondent No. 1 that said paragraph isnot applicable to Petitioner’s case. 6.In any event, in our view the said order dated 26[th] June, 2006could not apply because the assessment year relevant for this matter is 2005-2006 and the order is dated 26[th] June, 2006 whichwas not in force during the relevant assessment year. “Where a return of income could not be filed bythe assessee due to unavoidable circumstancesand such return of income is filed voluntarily bythe assessee or his legal heirs without detectionby the Assessing Officer”. 5.This paragraph 2(d) applies in a case where there has been adelay in filing of return of income and cannot apply in a situationwhere the return of income has already been filed. Therefore, weagree with the finding of Respondent No. 1 that said paragraph isnot applicable to Petitioner’s case. 6.In any event, in our view the said order dated 26[th] June, 2006could not apply because the assessment year relevant for this matter is 2005-2006 and the order is dated 26[th] June, 2006 whichwas not in force during the relevant assessment year. 7.Mr. Pardiwalla also submitted, as recorded in the impugnedorder, that during the course of hearing, Petitioner’s representativehad raised alternate ground that the case would be covered byearlier instructions on the subject which would be the order dated23[rd] May, 1996. We have considered the order dated 23[rd] May, 1996.Paragraph 2 of the said order provides the classes of income orclass of cases in which the reduction or waiver of interest undersection 234A or 234B of the Act, or as the case may be, section234C can be considered. Paragraph 2 provides for five classes ofincome or classes of cases. In our view, Petitioner’s case will not fallunder any of the classes of income or classes of cases, mentioned inthe order of 1996. 8.In the circumstances, we do not find anything wrong in theorder impugned. 9.Petition dismissed with no order as to costs. (N. J. JAMADAR, J.) (K. R. SHRIRAM, J.)