M/S.n.haridas And Co v. Chief Commissioner Of Income-Tax-V

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 27.02.2007 CORAM THE HON'BLE MR.JUSTICE P.D.DINAKARANANDTHE HON'BLE MRS.JUSTICE CHITRA VENKATARAMAN w.P.No.19996 of 2003 &WP.M.P.No.24985 of 2003 M/s.N.Haridas and Co.,4/2, Mandapan Cross Road,Kilpauk, Chennai-10 ...PetitionerVs. 1. Chief Commissioner of Income-tax-V, 121, Mahatma Gandhi Road, Chennai-34. 2. The Income-tax Officer XIV (4), 121, Mahatma Gandhi Road, Chennai-34....Respondents writ petition filed under Article 226 of theConstitution of India for the issue of writ ofCertiorarified Mandamus calling for the orders passed bythe first respondent in C NO. CC V/24 (76)/2002-2003 dated28.11.2002 for the assessment year 94-95 to 97-98 quash thesame and to direct the first respondent to waive theinterest lived under Section 234 B and 234 C of the IncomeTax Act, 1961. For petitioner :Mr.D.Anand for M/s. Pathy and PathyFor respondents:Mr.N.Muralikumaran, Sr.SC for IT. (ORDER of the Court was made by P.D.DINAKARAN,J.) The petitioner, a firm, is dealing in construction andsale of flats. One N.Haridas was its Managing Partner.With a view to avail the benefit of Voluntary Disclosure ofIncome Scheme, 1997, the Managing Partner Haridas made https://hcservices.ecourts.gov.in/hcservices/ declaration on 31.3.1997. But, he fell ill and he wasdiagnosed of brain cancer. He became bedridden and died on20.2.1998. In that melee, the tax could not be paid by thepetitioner. 2. The 2[nd] respondent issued a notice under section 148of the Income-tax Act, 1961 and on the basis of revisedreturn filed by the petitioner, reassessment was made. Thepetitioner paid the tax due and sought for waiver ofinterest levied under section 234(B) and (C) of the Income-tax Act, but the 1[st] respondent rejected the same. Hence,the petitioner has come forward with this petition to quashthe order of the first respondent dated 28.11.2002rejecting the claim of the petitioner for waiver ofinterest. 3. Learned counsel appearing for the petitionercontends that when the tax was demanded under the VoluntaryDisclosure of Income Scheme, the Managing Partner of thepetitioner firm fell ill and subsequently died due to braincancer and hence, the petitioner could not pay the tax asdemanded, but the respondent department without taking intoaccount the unavoidable circumstances, levied interestwhich is erroneous, illegal and against law. 4. Concededly, the petitioner has paid the tax asdemanded by the department after reassessment. Originally,the petitioner sought to avail the benefit of VoluntaryDisclosure of Income Scheme, 1997, but when the taxdemanded under the said scheme, it is contended, theManaging Partner of the petitioner fell ill andsubsequently, he died due to cancer. The said factualposition is not disputed by the respondents in the counteraffidavit. 5. Though the respondents claim that the levy of interestis mandatory in the case of default on the part of theassessee to pay tax demanded, it is not disputed that thefirst respondent, if satisfied on the facts andcircumstances of the case, can reduce or waive interest.But, in the impugned order, the first respondent, withoutgoing into the merits of the case, observed that he is notempowered to waive the interest on the facts of the caseandwithinthemeaningofthenotificationF.No.400/234/95/IT(B) dated 23.5.1996 governing waiver ofinterest. 5. Though the respondents claim that the levy of interestis mandatory in the case of default on the part of theassessee to pay tax demanded, it is not disputed that thefirst respondent, if satisfied on the facts andcircumstances of the case, can reduce or waive interest.But, in the impugned order, the first respondent, withoutgoing into the merits of the case, observed that he is notempowered to waive the interest on the facts of the caseandwithinthemeaningofthenotificationF.No.400/234/95/IT(B) dated 23.5.1996 governing waiver ofinterest. 6. On the other hand, a reading of the notificationF.No.400/234/95/IT(B) dated 23.5.1996, as found in thecounter affidavit, shows that the Chief Commissioner, thefirst respondent herein, can waive or reduce interest, ifhe is satisfied that it is a fit case to do so on thefacts and circumstances. That apart, the petitioner hasproduced a copy of notification in F.No.400/29/2002/IT(B),dated 26.6.2006, which supersedes the earlier notificationdated 23.5.1996, in which it is stated that the ChiefCommissioner can consider the case of assessee for waiveror reduction of interest if he is satisfied that on thefacts and circumstances, it is a fit case for doing so. 7. But, the first respondent in the impugned order hasmerely observed that the condition prescribed in thenotification dated 23.5.1996 is not satisfied, withoutgoing into the unavoidable circumstances of the case. Weare of the view that the first respondent should have takennote of the unavoidable circumstance, viz., the suddendemise of the Managing Partner at the time when the taxunder the Voluntary Disclosure of Income Scheme wasdemanded. Further, the petitioner filed revised return onreceipt of notice under section 148 of the Income-tax Actand paid tax accepting the reassessment. We thereforehold that the first respondent is not correct in rejectingthe claim of the petitioner for waiver of interest withoutproperly appreciating the facts and circumstances of thecase. Accordingly, the impugned order is liable to be setaside. Considering the fact that twelve years have passed,the earliest assessment year being 1994-95 and that theassessee has already paid tax as per the reassessment, weare inclined to direct the first respondent to waive theinterest levied in the impugned order, instead ofremitting the matter back to the first respondent. In fine, the writ petition is allowed setting asidethe impugned order passed by the first respondent dated28.11.2002. The first respondent is directed to waive theinterest levied in the impugned order. No costs.Connected WP.M.P. is closed. na. Sd/Asst.Registrar /true copy/Sub Asst.RegistrarTo1. The Chief Commissioner of Income-tax-V, 121, Mahatma Gandhi Road, Chennai-34.2. The Income-tax Officer XIV (4), 121, Mahatma Gandhi Road, Chennai-34.+ one cc to Mr. N. Muralikumaran, Senior Standing Counselfor IT (SR NO. 12)\jrg(co)nm(13.03.07) W.P.No.19996 of 2003