M/S.liberty Equipments Private Limited v. The Principal Commissioner Of Income Tax –

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR. JUSTICE K.RAVICHANDRABAABU M/s.Liberty Equipments Private Limited,Represented by its Managing Director,R.Aravindhan,No.373, SIDCO Industrial Estate,Ambattur,Chennai – 600 098. ... Petitioner Vs. 1. The Principal Commissioner of Income Tax – 4, 301, Wanaparthy Block, 121, Mahatma Gandhi Road, Nungambakkam, Chennai – 600034. 2. The Income Tax Officer, Corporate Ward – 4(4), Chennai. ... Respondents Prayer : Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ ofCertiorarified Mandamus to call for the records on the filesof the Respondents in PAN: and quash the impugnedorder in C.No.85/Waiver of interest u/s. 220(2)/PCIT– 4/2017-18 dated 31.12.2018 passed by the 1[st] Respondent as illegal andwithout jurisdiction and consequently direct the 1[st] respondentto waive an amount of Rs.26,82,187/- levied as interest u/s.220(2) of the Act. For Respondents : Mrs.Hema MuralikrishnanSenior Standing Counsel This writ petition is filed challenging the order of thefirst respondent dated 31.12.2018, rejecting the applicationfiled by the petitioner for waiver of interest under Section220(2A) of the Income Tax Act, 1961. 2. The following are the short facts and circumstanceswhich have driven the petitioner to file the present writpetition :- In respect of the Assessment Year 2010-11, an order waspassed on 28.03.2014, wherein and whereby, the AssessingOfficer imposed the tax liability as well as other statutoryliabilities on the petitioner thereby, computing the total taxpayable as Rs.1,05,76,151/-. The petitioner challenged thesaid order of assessment before the Commissioner of Income Tax(Appeals). The said Appellate Authority by order dated31.07.2017 partly allowed the appeal and reduced the taxliability. Consequent to the order passed by the AppellateAuthority, the Assessing Officer through his proceedings dated04.09.2017, passed a giving effect order, wherein and whereby,he made a demand of arrears of tax liability as Rs.97,22,499/-and interest at Rs.26,82,187/-. The petitioner paid the taxliability on 16.09.2017. Thereafter, the petitioner filed theWaiver Petition on 13.12.2017 under Section 220(2A) of theIncome Tax Act, 1961, by contending that the assessee companyis still making losses and is not financially sound to makethe interest payment under Section 220 (2) as evident from thereturn of Income filed for the succeeding years and that theassessee has cooperated with the Revenue in the assessmentproceedings and that the default in payment of the taxliability was due to circumstances beyond the control of theassessee. The said application was rejected by the firstrespondent through the impugned order dated 31.12.2018. 3. The respondents filed a counter affidavit disputingthe claim of the petition for waiver and supporting the orderimpugned in this writ petition. 4. Mr.R.Sivaraman, learned counsel appearing for thepetitioner submitted that the first respondent while rejectingthe application filed under Section 220(2A) of the said Act,has not considered the reasons stated in detail in the WaiverApplication, more particularly, with regard to the unduehardship being faced by the petitioner Company and that thedelayed payment of tax was due to the circumstances beyond thecontrol of the assessee. Thus, the learned counsel contendedthat the Commissioner has proceeded to pass the impugned orderof rejection, only by stating that the Directors of theassessee Company could have easily made the payment ofinterest, when they themselves have given loans to theassessee to the tune of Rs.42,00,000/- for making the payment 4. Mr.R.Sivaraman, learned counsel appearing for thepetitioner submitted that the first respondent while rejectingthe application filed under Section 220(2A) of the said Act,has not considered the reasons stated in detail in the WaiverApplication, more particularly, with regard to the unduehardship being faced by the petitioner Company and that thedelayed payment of tax was due to the circumstances beyond thecontrol of the assessee. Thus, the learned counsel contendedthat the Commissioner has proceeded to pass the impugned orderof rejection, only by stating that the Directors of theassessee Company could have easily made the payment ofinterest, when they themselves have given loans to theassessee to the tune of Rs.42,00,000/- for making the payment of income tax. The learned counsel invited this Court'sattention to Section 220(2A) of the Income Tax Act andsubmitted that when the petitioner/assessee, through theirapplication for waiver, has pleaded and satisfied all thethree parameters referred to in the above said provision, thefirst respondent ought to have considered the applicationfavorably and granted the waiver of interest. 5. On the other hand, the learned senior standing counselappearing for the respondents/Revenue after reiterating thecontentions raised in the counter affidavit submitted that thefirst respondent has rightly taken note of the fact that theDirectors of the assessee Company have given loans to theassessee for making payment of Income Tax and therefore, theassessee Company could have also paid the interest of makingsuch arrangement with the Directors. Thus, the learnedcounsel contended that the order of the first respondent doesnot require any interference. 6. Heard both sides and perused the materials placedbefore this Court. 7. The petitioner is aggrieved against the rejection oftheir Waiver Application for payment of interest. It is seenthat in respect of the relevant Assessment Year 2010-11, anorder of assessment was passed on 28.03.2014 and the assesseefiled the appeal before the Commissioner of Income Tax(Appeals) immediately on 22.04.2014, questioning entire tax.The appeal itself came to be disposed of only on 31.07.2017,granting partial relief to the petitioner/assessee. It isseen that the Appellate Authority has reduced the taxliability of the petitioner. The said order of the AppellateAuthority was given effect to by the Assessing Officer on04.09.2017 by raising a demand of arrears of tax ofRs.97,22,499/- and interest under Section 220(2) ofRs.26,82,187/-. It is claimed by the petitioner that theentire tax liability has been paid within 30 days from thedate of receipt of the giving effect order. Their dispute iswith regard to the interest claimed. Therefore, the petitionerfiled the Waiver Petition dated 13.12.2017 under Section 220(2A) of the Income Tax Act, 1961. 8. Perusal of the Waiver Petition filed before the firstrespondent, placed in the typed set of papers before thisCourt, indicates that the petitioner has stated some reasonsand circumstances also by enclosing some documents in supportof such contentions, justifying their claim for waiver ofinterest. 9. This Court, at this stage, is not inclined to go intosuch contentions and express any view as of now, since thisCourt, is of the view that it is for the first respondent to 8. Perusal of the Waiver Petition filed before the firstrespondent, placed in the typed set of papers before thisCourt, indicates that the petitioner has stated some reasonsand circumstances also by enclosing some documents in supportof such contentions, justifying their claim for waiver ofinterest. 9. This Court, at this stage, is not inclined to go intosuch contentions and express any view as of now, since thisCourt, is of the view that it is for the first respondent to consider and decide all those contentions afresh, as theimpugned order does not reflect anywhere as to theconsideration of those contentions raised by the petitioner indetail, except to state that the petitioner borrowed loan fromthe Directors and paid the tax and therefore, the petitionerCompany could have easily made the payment of interest also,as demanded by the Department. In my considered view, whileconsidering the application for waiver of interest, the firstrespondent should apply his mind, as to whether the petitionerhas satisfied the three conditions provided under Section 220(2A) of the said Act in order to grant waiver. Therefore,application of mind of the first respondent should be apparenton the face of the order passed under Section 220 (2A) of thesaid Act. 10. In other words, the factual contentions raised by thepetitioner touching upon the three said parameters ought to bedealt with by the first respondent in detail and thereafter,to pass a speaking order as to whether those contentions areacceptable or not. To put it precisely, the first respondentwhile passing the order under Section 220 (2A) of the Act, hasto consider the scope of Section 220 (2A) aswell as the reasons and circumstances stated by theassessee for exercising such power for waiver and thereafter, to pass aspeaking order touching upon those contentions raised by thepetitioner in detail, by giving a finding as to whether theassessee has satisfied those parameters or not. 11. In this case, as I find that the first respondent haspassed the rejection order only on the ground that theDirectors of assessee Company have given loans to the assesseeand that the assessee has been receiving a rental income ofRs.1,12,500/- per month, he has not adverted to any of thecontentions raised by the assessee in the waiver applicationin order to decide as to whether, the petitioner is entitledfor waiver or not. Therefore, this Court, is inclined toremit the matter back to the first respondent to reconsiderthe matter afresh and pass orders on the merits and inaccordance with law. It is also made clear that this Court,at this stage, is not expressing any view on the merits of theclaim made by the petitioner for waiver of interest, as it isfor the first respondent to consider and decide the same, byapplying the parameters provided under Section 220 (2A) of thesaid Act. 12. Accordingly, this writ petition is allowed and theimpugned order is set aside. Consequently, the matter isremitted back to the first respondent for passing order onmerits and in accordance with law afresh, after giving dueopportunity of personal hearing to the petitioner. Needless to say that it is for the petitioner to satisfy the firstrespondent with relevant documents, at the time of hearing, insupport of the claim. The first respondent shall pass suchfresh order within a period of six weeks from the date ofreceipt of a copy of this order. No costs. Connectedmiscellaneous petitions are closed. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar sniTo1. The Principal Commissioner of Income Tax – 4, 301, Wanaparthy Block, 121, Mahatma Gandhi Road, Nungambakkam, Chennai – 600034.2. The Income Tax Officer, Corporate Ward – 4(4), Chennai. +1cc to Mr.R.Sivaraman, Advocate, SR.89055+1cc to Mr.Hema Muralikrishnan, Advocate SR.88183 PM(CO)CB(28/11/2019) W.P.No.5633 of 2019