M/S. Ramesh Kumar & Brothers, Sri Ganganagar v. The Commissioner Of Income Tax, Jodhpur & Anr

- 1 - IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANAT JODHPUR. ::: O R D E R M/s. Ramesh Kumar & Brothers, Sri Ganganagar vs. The Commissioner of Income Tax, Jodhpur & Anr. S.B. CIVIL WRIT PETIION NO.694/196 UNDERARTICLE 226 AND 227 OF THE CONSTITUTION OFINDIA. : 17[th] August, 2007 DATE OF ORDER REPORTABLE PRESENTHON'BLE MR. JUSTICE PRAKASH TATIA Mr.LR Mehta ]Mr.Avinash Acharaya ], for the petitioner.Mr.KK Bissa, for the respondents. <><><> BY THE COURT: Heard learned counsel for the parties. The only question urged before this Court is thatwhether the prayer for waiver of the interest under Section215 (4) of the Income Tax Act, 1961 could have beenrejected by the assessing authority only on the ground thatthe Commissioner of Income Tax already granted relief ofreducing the interest by 50% under Section 273A. According to learned counsel for the petitioner theinterest can be levied under Section 215 of the Income TaxAct, 1961 and power has been given to the assessing authority under sub-sec.(4) to reduce or even waive theinterest payable by the assessee. Further power is given tothe Commissioner of Income Tax under Section 273A toreduce or waive the interest but for that purpose one must beentitled to claim reduction of interest or waivement of interestby fulfilling certain condition. The scope of Section 273A isquite different and the Commissioner Income Tax can reduceor waive the interest levied by the assessing authority underSection 215 and also Income Tax Commissioner can reduce orwaive the interest even when the Assessing Authority hasrefused the relief to assessee under sub-section (4) of Section215 of the Income Tax Act, 1961. Inspite of power ofCommissioner of Income Tax under Section 273A, theCommissioner's decision under Section 273A is neitherbinding upon the assessing authority nor relevant whenassessing authority is required to take decision under sub-section (4) of Section 215 of the Income Tax Act, 1961. Learned counsel for the petitioner relied upon judgmentof Kerala High Court delivered in Associated Traders VS.Income Tax Officer & Ors reported in (1989) 180 ITR whereinthough the controversy was different inasmuch as the IncomeTax Commissioner refused to exercise jurisdiction underSection 273A of the Act of 1961 and the appellate authority from order passed by the regular assessment refused toexercise jurisdiction under Section 215(4) of the Act of 1961on the ground that assessee failed to get any relief underSection 273A of the Act of 1961, therefore, the assesseecannot challenge the order of assessing authority denyingbenefit under Section 215(4) by preferring appeal. The KerlaHigh Court held that assessee could have preferred appeal toget relief under Section 215(4) of the Act of 1961 inspite ofrejection of his prayer by Income Tax Commissioner underSection 273A. The Madhya Pradesh High Court in the case delivered inthe Commissioner Wealth Tax Vs. Kakatpure Ginning andPressing Factory reported in (1982) 31 CTR (MP) 287 took theview that scope under two provisions are different. In theaforesaid case, the matter for consideration was under theWealth Tax Act, 1957, but the provision was almost same asis in the Income Tax Act. The Madhya Pradesh High Court inthe case of Bindra & Co. Vs. Commissioner of Income Taxreported in [1987] 165 : ITR 256 observed that provisions ofIncome Tax Act are similar to those of Wealth Tax Act withreference to waiver of penalty and appeal against an order ofpenalty. The Madhya Pradesh High Court in above case heldthat refusal to waive penalty by Commissioner would not affect right to appeal against the order of penalty thereby theappellate authority could have taken a different view than theview taken by the Commissioner under Section 273A. affect right to appeal against the order of penalty thereby theappellate authority could have taken a different view than theview taken by the Commissioner under Section 273A. Learned counsel for the respondent submitted that theIncome Tax Commissioner is highest authority in thehierarchy and he has been given power to reduce and waivethe interest by enacting Section 273A (as it was in forcebefore 1[st] April, 1989) and the Section 273A starts with non-obstante clause making it clear that the Commissioner ofIncome Tax shall have discretion of reduction or waiver ofinterest in a case where interest has already been levied andpaid or where the interest is payable. In view of the above,the assessing authority could not have taken a different viewthan the view taken by the Commissioner of Income Taxunder Section 273A and, therefore, the decision given by theIncome Tax Commissioner under Section 273A was bindingupon the assessing authority and he could not have reducedor waived the interest. I considered the submissions of learned counsel for theparties and perused the facts of the case as well as law laiddown by the various High Court. Section 215 provides, in what circumstances theinterest shall be payable by the assessee. The assessing authority has been given power to pass order levying intereston the due amount and at the same time by sub-section (4)of Section 215 of the Income Tax Act, 1961 the power hasbeen given to the assessing authority to reduce or waive theinterest payable by the assessee under Section 215. Theconditions have been provided under Rule 40 of the IncomeTax Ruels, 1962 and on fulfillment of above conditions by theassessee, the assessee may request for reducing orwaivement of interest. These conditions are as under : - “(1)When the relevant assessment is completedmore than one year after the submission of thereturn, the delay in assessment not beingattributable to the assessee. (2)Where a person is under section 163 treatedas an agent of another person and is assessedupon the latter's income. (3)Where the assessee has income from anunregistered firm assessed under the provisionsof clause (b) of section 183. (4)Where the previous year is the financialyear or any year ending about the close of thefinancial year and large profits are made after the1[st] March (or the 15h March in case where theproviso to section 211 applies), in circumstancewhich could not be foreseen. (5)Any case in which the Deputy Commissionerconsiders that the circumstances are such that areeducation or waiver of the interest payableunder section 215 or section 217 is justified. (6)Nothing contained in this rule shall apply inrespect of any assessment for the assessmentyear commencing on the first day of April, 1989,or any subsequent assessment year.” The assessing authority can, if a case is made out for reducing or waiving the interest payable by the assessee thenhe may pass appropriate order. That is the jurisdictionconferred upon the assessing authority by the statute andrequirement of statute is that there must be decision by theassessing authority itself on the request of assessee made forreducing the interest or waivement of interest completely.The order passed by the assessing authority as a wholeincluding to finding under Section 215(4) is an appealableorder. (6)Nothing contained in this rule shall apply inrespect of any assessment for the assessmentyear commencing on the first day of April, 1989,or any subsequent assessment year.” The assessing authority can, if a case is made out for reducing or waiving the interest payable by the assessee thenhe may pass appropriate order. That is the jurisdictionconferred upon the assessing authority by the statute andrequirement of statute is that there must be decision by theassessing authority itself on the request of assessee made forreducing the interest or waivement of interest completely.The order passed by the assessing authority as a wholeincluding to finding under Section 215(4) is an appealableorder. The power of the Commissioner Income Tax underSection 273A provides that notwithstanding anythingcontained in the Act of 1961 the Chief Commissioner orCommissioner may, in his direction, whether on his ownmotion or otherwise reduce or waive the amount of interest orpayable under various sections including under Section 215 ofthe Act of 1961. Before passing order of waivement ofinterest or even for reducing the interest payable by theassessee, the Income Tax Commissioner is required to satisfyitself that prior to the detection by the Assessing Officer, ofthe concealment of particulars of income or of the inaccuracyof particulars furnished in respect of such income, voluntarilyand in good faith, made full and true disclosure of suchparticulars and also has cooperated in any inquiry relating to the assessment of his income and has either paid or madesatisfactory arrangements for the payment of any tax orinterest payable in consequence of an order passed under theAct of 1961 in respect of the relevant assessment year.There are further conditions prescribed which may guide theCommissioner of Income Tax in the matter of taking adecision for reducing or exonerating the assessee frompayment of interest payable by him. In view of the different scope it is clear that the powerof the assessing authority under Section 215(4) are not takenaway by enacting Section 273A in the Act of 1961, and inview of the proposition of law laid down by the variousjudgment referred above, the assessing authority in this casehas committed error of law by not exercising jurisdictionunder sub-section (4) of Section 215 of the Act of 1961 bydismissing the petitioner's application for waivement ofinterest under Section 215(4) of the Act of 1961 by theimpugned order dated 28[th] Dec., 1995 (Annex.11) merely onthe ground that matter was considered by the Commissionerof Income Tax, Jodhpur under Section 273. In view of the above reasons, the writ petition isallowed, the order dated 28[th] Dec, 1995 (Annex.11) isquashed and set aside and the matter is remanded back to c.p.goyal/- the assessing authority – Asstt. Commissioner of Income Tax,Sri Ganganagar for deciding the same in accordance with theapplication of the petitioner filed under Section 215(4) of theAct of 1961 for the assessment year 1987-88. (PRAKASH TATIA), J.