M/S.tcv Engineering Ltd v. Assistant Commissioner Of Income Tax, Central Circle Ii (2)

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE R.SURESH KUMAR W.P.NOS.4155 AND 4156 OF 2004 M/s.TCV Engineering Ltd.,25, Parameswari Nagar, 1[st] StreetAdyar, Chennai 600 020Rep.by its Director,Mr.C.Mohan ...Petitioner in both W.Ps.Vs. 1. Assistant Commissioner of Income Tax, Central Circle II (2), 108, Nungambakkam High Road, Madras 600 034. 2. Deputy Commissioner of Income Tax, Central Circle II (2), 108, Nungambakkam High Road, Madras 600 034. 3. Commissioner of Income Tax Central Chennai II, 108, Nungambakkam High Road, Madras 600 034. ...Respondents in both W.Ps Prayer: Writ Petitions filed under Article 226 of Constitution ofIndia, praying to call for the records in C.No.1747/6/2002-03/C.II dated 12.08.2003 for the Assessment Years 1996-97 &1997-98 respectively on the file of the 3[rd] respondent and issuea Writ of Certiorari or other appropriate writ, direction ororder quashing the same. For Petitioner : Mr.M.P.Senthil Kumar For Respondents Senior Standing Counsel These writ petitions have been filed seeking to issue awrit of certiorari to call for the records in C.No.1747/6/2002-03/C.II dated 12.08.2003 for the Assessment Years 1996-97 &1997-98 respectively on the file of the 3[rd] respondent and quashthe same. 2. The necessary facts which are required to be noticedfor the disposal of these petitions are as follows: The petitioner/assessee, in respect of the tax due forthe Assessment Year 1996-97 and 1997-98, had applied for thewaiver under Section 220(2A) of the Income Tax Act, 1961,[hereinafter referred to as 'Act']. For the Assessment Year1996-97, the demand was Rs.10,34,719/- and for the AssessmentYear 1997-98, the demand was Rs.3,79,120/- towards the interestpayable under Sections 234-A, 234-B and 234-C. 2.2. The said common application made by the petitionerseeking such waiver had been considered and rejected by therespondent/Revenue, through the impugned order dated 12.08.2003.Challenging the said rejection order of the waiver applicationof the petitioner/assessee, these two writ petitions were filedfor the aforesaid relief for the Assessment Years 1996-97 and1997-98 respectively. 3. Heard Mr.M.P.Senthil Kumar, the learned counselappearing for the assessee, who would submit that, the assesseehad been regularly paying the taxes by way of advance tax andTDS and the demand made by the Revenue for the two AssessmentYears is due under Sections 234-A, 234-B, 234-C and underSection 143(1)(a) adjustment only. The adjustment made underSection 143(1)(a) has already been subject to 20% additionaltax. Therefore, the tax due portion was very low, hence, levyingfurther interest under Section 220 was only an interest oninterest and also as an additional due. Therefore, on thesereasons and for further reasons of genuine hardship that theassessee faced in making the payment of the interest due asdemanded by the Revenue, such waiver application was made by theassessee by invoking Section 226 (2A) of the Act. 4. In this context, the learned counsel appearing forthe assessee would submit that, when the genuine hardship hadbeen projected before the respondent/Revenue, through the saidapplication made in this regard, the said hardship was notconsidered by the respondent/Revenue in proper perspective. 5. He would further submit that, the three conditionsreferred to under Section 220(2A) were satisfied by the assessee https://hcservices.ecourts.gov.in/hcservices/ and inspite of the fact that, all the three conditions had beensatisfied, the respondent had rejected the waiver requestwithout giving any acceptable reason for making such rejection. 4. In this context, the learned counsel appearing forthe assessee would submit that, when the genuine hardship hadbeen projected before the respondent/Revenue, through the saidapplication made in this regard, the said hardship was notconsidered by the respondent/Revenue in proper perspective. 5. He would further submit that, the three conditionsreferred to under Section 220(2A) were satisfied by the assessee https://hcservices.ecourts.gov.in/hcservices/ and inspite of the fact that, all the three conditions had beensatisfied, the respondent had rejected the waiver requestwithout giving any acceptable reason for making such rejection. 6. The learned counsel appearing for the assessee wouldfurther submit that, since the order to be passed under 220 (2A)is a quasi judicial order, the respondent, while making theorder rejecting the request of the assessee, should have appliedhis mind judicially and acceptable reasons should have beengiven as to how and why the assessee is not entitled to seek forthe waiver. 7. The learned counsel for the assessee would furthersubmit that, knowing well that the assessee did not have anysource like liquid cash, deposits, shares or debentures, etc.,and the business of the assess also had been completelyshattered at the relevant point of time, the respondent/Revenue, had not considered those circumstances faced by theassessee as a genuine hardship. 8. The learned counsel would further add that, therespondent/Revenue, even though has found that the assessee washaving only the building as well as the machineries, which,according to the balance sheet, was only worth about Rs.18 lakhsand Rs.45 lakhs respectively, and no other immovable assets werefound for the purpose of exploiting the same to pay the dues asdemanded by the Revenue, has not considered it as a genuinehardship faced by the assessee. 9.The learned counsel for the assessee would furthersubmit that, though Section 220(2A) of the Act, does notexpressly provide an opportunity of being heard be given to theassessee, before taking a decision on the application forwaiver, in view of the development of law in this regard, bynumber of decisions made by the courts, such an opportunityought to have been given to the assessee. However, in the casein hand, no such opportunity, of being heard was given to theassessee, therefore, on that reason also, the order impugned isvitiated. 10. By making these submissions and in support of hiscontentions, the learned counsel for the petitioner/assessee hasrelied upon the following decisions: (i) B.M. Malani vs. Commissioner of Income tax andanother, Supreme Court of India Civil AppealNo.5950 of 2008, equivalent (2008) 219 CTR 0313and (2008) 306 ITR 0196. (ii) Mani vs. Commissioner of Income tax in WP No.6327 of 2006 of High Court of Madras Madurai Benchequivalent to (2010) 231 CTR 0453, (2010) 320 ITR0472.(iii) Poompuhar Shipping Corporation Ltd.,represented by its Chief Managing Director vs.Assistant commissioner of Income Tax Madras andanother in W.P.No.5068 to 5070 of 2004 dated12.10.2017. 11. By relying upon these decisions, Mr.M.P.SenthilKumar, learned counsel appearing for the assessee would contendthat, the situation exactly faced by the assessee during therelevant point of time, while he was making the request forwaiver under Section 220(2-A) of the Act was a genuine hardshipfaced by the assessee and therefore, if the principlesenunciated in the aforementioned cases were applied on the factsof the petitioner/ assessee's case, certainly, the decisiontaken now by the Revenue as reflected in the impugned order,could not have been taken. Therefore, the learned counsel wouldsubmit that, the impugned order is liable to be interfered withfor the above said reasons. 11. By relying upon these decisions, Mr.M.P.SenthilKumar, learned counsel appearing for the assessee would contendthat, the situation exactly faced by the assessee during therelevant point of time, while he was making the request forwaiver under Section 220(2-A) of the Act was a genuine hardshipfaced by the assessee and therefore, if the principlesenunciated in the aforementioned cases were applied on the factsof the petitioner/ assessee's case, certainly, the decisiontaken now by the Revenue as reflected in the impugned order,could not have been taken. Therefore, the learned counsel wouldsubmit that, the impugned order is liable to be interfered withfor the above said reasons. 12. Per contra, Mr.A.P.Srinivas, the learned standingcounsel appearing for the respondent/Revenue, would submit that,the assessee had not even paid section 140-A tax for both theassessment years, for which the waiver was sought for.Moreover, the demand made was the interest payable by theassessee under Section 234A, B and C and therefore, it cannot beconstrued as interest on interest, as the interest componentunder Section 234-A,B and C shall only be construed as taxcomponent. Therefore, the said reasons cited in the applicationsubmitted by the assessee cannot be accepted. 13. Learned Standing counsel would further submit that,in the application dated 31.01.2003, the assessee has mentionedthat the assessee company had been incurring loss for the past 4years, therefore, they were undergoing financial crisis and theassessee could not get any funds due to lack of business even tomeet the day to day expenses, hence the assessee was to beconsidered as if it was facing genuine hardship in making thepayment of interest as demanded. Except this reasoning, nothinghas been stated by the assessee in their application seekingwaiver. 14. In this context, the learned standing counsel wouldfurther submit that, no doubt, the power to be exercised by theRevenue under Section 220(2A) of the Act is a discretionarypower. While exercising such discretionary power, the Revenue has to give reasons to meet the request made by the assessee forwaiver and in doing that exercise, for disposal of theapplication under 220(2A), the officer concerned of the Revenuemust act judicially, as an authority, to be considered in thatcontext, as a quasi judicial authority. In the case in hand,the respondent has acted upon judiciously as a quasi judicialauthority and the reasons have been given specifically as to whythe request of the petitioner for waiver was rejected. 15. In this regard, the learned standing counsel wouldpoint out that, the respondent has stated the reason that theassessee failed to make out the case that, failing in payment ofamount was due to the circumstances beyond the control of theassessee. This conclusion was arrived at by the respondent onlyafter going through the records of the case, as the assessee hadnot established the said factual situation that, he had beengenuinely facing the hardship and the reasons for non paymentwas beyond the control of the assessee, cogently and clearlywith reference to their book of accounts and the cashavailability, etc. 16. The respondent in the impugned order of rejection,has also taken into account the balance sheet of the assessee,which was already available with the Revenue, based on which,the respondent has come to a right conclusion that the assesseewas having immovable property of building and machineries, whichare several times worth than the actual due payable by theassessee. 16. The respondent in the impugned order of rejection,has also taken into account the balance sheet of the assessee,which was already available with the Revenue, based on which,the respondent has come to a right conclusion that the assesseewas having immovable property of building and machineries, whichare several times worth than the actual due payable by theassessee. 17. He would further submit that, therefore only inthat circumstances, the financial hardship projected by theassessee through its application, since was not substantiated byany other evidences to come to a conclusion that, really theassessee had been facing genuine hardship and the non payment ofthe due was because of the reason, which was beyond the controlof the assessee, the Revenue has come to a right conclusion thatthe assessee was not entitled to seek the waiver within themeaning of Section 220(2A) of the Act. 18. In support of his contentions, the learned standingcounsel has relied upon the following decisions. 1. 2006(204) E.L.T. 513 (S.C) (Benara Valves Ltd.,Vs. Commissioner of Central Excise.Vs. Commissioner of Central Excise. 2. (2013) 30 taxman.com 376 (Kerala) (K.C.Mohanan Vs.Chief Commissioner of Income Tax).Chief Commissioner of Income Tax). 3. (2016) 76 taxmann.com 333 (Karnataka) (MookambikaAssociates Vs. Assistant Commissioner of IncomeAssociates Vs. Assistant Commissioner of Income Tax, Central Circle 2 (1), Bengaluru. 4. Division Bench Judgment of this Court in W.A.Nos.2020 to 2024 of 2010 (Chief Commissioner of IncomeTax and another Vs. M/s. Rajanikant and Sons). By relying upon the decisions referred to above, the learnedstanding counsel would contend that, the genuine hardship theoryhas already been considered in number of cases and also thedemand of personal hearing before making a decision underSection 220(2A) of the Act had already been decided. If theprinciples enunciated in the aforesaid decisions are applied tothe facts of the present case, certainly, the order, which isimpugned herein, can be construed as an order of a quasijudicial authority passed after judicious consideration made inthis regard based on the available materials. Therefore, such adiscretionary order, without any plausible reason, cannot beinterfered with, as no acceptable reasons have been projected bythe assessee's side to assail the impugned order. Hence, thelearned standing counsel would submit that, the impugned orderrejecting the claim of the assessee for waiver is fullyjustifiable, hence it requires no interference. 19. I have considered the said submissions made by thelearned counsel for both sides and also perused the materialsplaced before this court. 20. The issue raised herein is pertaining to the twoAssessment Years i.e., 1996-97 and 1997-98. Insofar as theAssessment Year 1996-97, the interest under Section 220 of theAct to the extent of Rs.10,34,719/- and for the Assessment Year1997-98, a sum of Rs.3,79,120/- had been levied and demanded.The said demand was made as there had been a non payment ofinterest under Section 234-A,B,C. 21. When such a demand was made, the assessee hadinvoked Section 220(2A) and made his application on 31.01.2003.Before adverting to the merits of the case as claimed by boththe sides, for easy reference, the relevant provision of the Acti.e. Section 220(2A) is extracted hereunder: “(2A) Notwithstanding anything contained insub-section(2),ThePrincipalChiefCommissioner or Chief Commissioner or PrincipalCommissioner or Commissioner may reduce orwaive the amount of interest paid or payable byan assessee under the said Sub-section if he issatisfied that- (i)payment of such amount has caused or wouldcause genuine hardship to the assessee;cause genuine hardship to the assessee; 21. When such a demand was made, the assessee hadinvoked Section 220(2A) and made his application on 31.01.2003.Before adverting to the merits of the case as claimed by boththe sides, for easy reference, the relevant provision of the Acti.e. Section 220(2A) is extracted hereunder: “(2A) Notwithstanding anything contained insub-section(2),ThePrincipalChiefCommissioner or Chief Commissioner or PrincipalCommissioner or Commissioner may reduce orwaive the amount of interest paid or payable byan assessee under the said Sub-section if he issatisfied that- (i)payment of such amount has caused or wouldcause genuine hardship to the assessee;cause genuine hardship to the assessee; (ii)default in the payment of the amount onwhich interest has been paid or waspayable under the said sub-section was dueto circumstances beyond the control of theassessee; andwhich interest has been paid or waspayable under the said sub-section was dueto circumstances beyond the control of theassessee; and (iii)the assessee has co-operated in anyinquiry relating to the assessment or anyproceeding for the recovery of any amountdue from him.inquiry relating to the assessment or anyproceeding for the recovery of any amountdue from him. Provided that the order accepting or rejectingthe application of the assessee, either in fullor in part, shall be passed within a period oftwelve months from the end of the month inwhich the application is received. Provided further that no order rejecting theapplication, either in full or in part, shallbe passed unless the assessee has been given anopportunity of being heard.Provided also that where any application ispending as on the 1[st] day of June, 2016, theorder shall be passed on or before the 31[st] dayof May, 2017”. 22. On going through the aforesaid provision i.e., subsection 2A of Section 220, it suggests that, the principal ChiefCommissioner or the Chief Commissioner or the PrincipalCommissioner or the Commissioner is vested with the power toreduce or waive the amount of interest paid or payable by theassessee under Sub-section (2), provided, for seeking suchwaiver, the assessee must satisfy three conditions. In short,the first condition is that, the assessee must have genuinehardship, the second condition would be that the non payment wasdue to the circumstances beyond the control of the assessee andthe third and final condition is that the Revenue must have thesatisfaction that the assessee has cooperated in an enquiryrelating to the assessment or any proceeding for the recoveryof any amount due from him. 23. Therefore, when the officer concerned, who has beenvested with the power under Sub section 2A as referred to above,has to consider the waiver application by satisfying that thethree conditions imposed in the sub section are satisfied by theassessee. Here, on a perusal of the impugned order, it is found that, only for non satisfaction of condition No. 1 and 2, thewaiver application has been rejected. The Revenue/respondentdid not say anything about the alleged non satisfaction of thethird condition, namely, the cooperation of the assessee withthe Revenue. Therefore, we can take it that, the thirdcondition has already been fulfilled by the assessee in thiscase. 23. Therefore, when the officer concerned, who has beenvested with the power under Sub section 2A as referred to above,has to consider the waiver application by satisfying that thethree conditions imposed in the sub section are satisfied by theassessee. Here, on a perusal of the impugned order, it is found that, only for non satisfaction of condition No. 1 and 2, thewaiver application has been rejected. The Revenue/respondentdid not say anything about the alleged non satisfaction of thethird condition, namely, the cooperation of the assessee withthe Revenue. Therefore, we can take it that, the thirdcondition has already been fulfilled by the assessee in thiscase. 24. In respect of the other conditions, i.e.,conditions No.1 and 2, it mainly require that the difficultyfaced by the assessee for non paying the demand of interest wasdue to genuine reason and also due to the reason which arebeyond the control of the assessee. When this aspect has to beascertained, the fact situation projected by the assessee,should have been carefully examined. Here, in the case in hand,as has been pointed out by the standing counsel for Revenue, therespondent has satisfied that the assessee has not produced orhas not satisfied through records cogently and clearly withreference to the book of accounts and cash availability that theassessee has faced genuine hardship and the reason for nonpayment was beyond the control of the assessee. 25. In the impugned order, it has also beenspecifically mentioned as the reason for rejection of the waiverby the respondent that, based on the balance sheet of theassessee, which was available with the Revenue, it was foundthat, the assessee was having immovable property of building aswell as machineries worth about Rs.18 lakhs and 45 lakhsrespectively. These are all the main reasons given by theRevenue in the impugned order and by citing these reasons, therespondent has come to the conclusion that the condition Nos.1and 2 had not been satisfied by the assessee and therefore hewas not entitled to seek for waiver under Section 220(2A). 26. In this context, as projected by the learnedcounsel appearing for both sides, the decisions cited by them,regarding the aspect of genuine hardship and also regarding theaspect of the manner under which the Revenue has to considerthe waiver application and the order to be passed in the waiverapplication to contain all the reasons, have to be ascertained.The learned counsel for the assessee as well as the Revenuerelied upon B.M. Malani case cited supra, where, the Hon'bleSupreme Court has given a detailed findings about the threeconditions imposed under 220(2A) and also the term "genuinehardship". The following findings given by their Lordships canbe usefully referred to herein: 5.Section 220(2A) of the Act contains anon-obstante clause. It confers a jurisdictionupon the Chief Commissioner or Commissioner to reduce or waive the amount of interest paid orpayable by an assessee thereunder, if he issatisfied that: (i) Payment of such amount has caused or wouldcause genuine hardship to the assessee; (ii) Default in the payment of amount on whichinterest has been paid or was payable under thesaid sub-section was due to circumstancesbeyond the control of the assessee; and (iii) Assessee has co-operated in any inquiryrelating to the assessment or any proceedingfor the recovery of any amount due from him. 6. The submission of Mr. Verma is that nonencashment of demand draft worth Rs. 10 lakhsas also non-selling of the shares andsecurities as prayed for by the appellantcaused genuine hardship to the assessee, insupport whereof reliance has been placed on theNew Collins Concise English Dictionary, Wordsand Phrases Permanent Edition Vol. 18 andBlack's Law Dictionary. (i) Payment of such amount has caused or wouldcause genuine hardship to the assessee; (ii) Default in the payment of amount on whichinterest has been paid or was payable under thesaid sub-section was due to circumstancesbeyond the control of the assessee; and (iii) Assessee has co-operated in any inquiryrelating to the assessment or any proceedingfor the recovery of any amount due from him. 6. The submission of Mr. Verma is that nonencashment of demand draft worth Rs. 10 lakhsas also non-selling of the shares andsecurities as prayed for by the appellantcaused genuine hardship to the assessee, insupport whereof reliance has been placed on theNew Collins Concise English Dictionary, Wordsand Phrases Permanent Edition Vol. 18 andBlack's Law Dictionary. It was furthermore submitted that had theshares and securities been sold when therequest therefor was made, which was worth Rs.30 lakhs at the relevant time, the tax burdenof the appellant would have been reduced;particularly when after adjusting the amount ofRs.117.04 lakhs deposited by the appellant,only a sum of Rs. 40.73 lakhs remained due. 7. Ms. Rajni Ohri Lal, learned counselappearing on behalf of the respondents,however, drew our attention to the nature ofthe business, the appellant had been carryingon and the magnitude thereof to contend thatthe appellant did not suffer any genuinehardship. 8. The term `genuine' as per the NewCollins Concise English Dictionary is definedas under: `Genuine' means not fake or counterfeit, real,not pretending (not bogus or merely a ruse)" https://hcservices.ecourts.gov.in/hcservices/ For interpretation of the aforementionedprovision, the principle of purposiveconstruction should be resorted to. Levy ofinterest although is statutory in nature, interalia for re-compensating the Revenue from losssuffered by non-deposit of tax by the assesseewithin the time specified therefor. The saidprinciple should also be applied for thepurpose of determining as to whether anyhardship had been caused or not. A genuinehardship would, inter alia, mean a genuinedifficulty. That per se would not lead to aconclusion that a person having large assetswould never be in difficulty as he can sellthose assets and pay the amount of interestlevied. The ingredients of genuine hardship must bedetermined keeping in view the dictionarymeaning thereof and the legal conspectusattending thereto. For the said purpose,another well--known principle, namely, a personcannot take advantage of his own wrong, mayalso have to be borne in mind. The saidprinciple, it is conceded, has not been appliedby the courts below in this case, but we maytake note of a few precedents operating in thefield to highlight the aforementionedproposition of law. [See Priyanka Overseas Pvt.Ltd. & Anr. v. Union of India & ors. 1991Suppl. (1) SCC 102, para 39, Union of India &ors. v. Major General Madan Lal Yadav (Retd.)(1996) 4 SCC 127 at 142, paras 28 and 29,AshokKapil v. Sana Ullah (dead) & ors. (1996) 6 SCC342 at 345, para 7, Sushil Kumar v. RakeshKumar (2003) 8 SCC 673 at 692, para 65,first sentence, Kusheshwar Prasad Singh v.State of Bihar & ors. (2007) 11 scc 447, paras13, 14 and 16). Thus, the said principle, in our opinion,should be applied even in a case of thisnature. A statutory authority despite receiptof such a request could have kept mum. Itshould have taken some action. It should haveresponded to the prayer of the appellant. However, another principle should also be bornein mind, namely, that a statutory authoritymust act within the four corners of thestatute. Indisputably, the Commissioner has thediscretion not to accede to the request of the https://hcservices.ecourts.gov.in/hcservices/ Thus, the said principle, in our opinion,should be applied even in a case of thisnature. A statutory authority despite receiptof such a request could have kept mum. Itshould have taken some action. It should haveresponded to the prayer of the appellant. However, another principle should also be bornein mind, namely, that a statutory authoritymust act within the four corners of thestatute. Indisputably, the Commissioner has thediscretion not to accede to the request of the https://hcservices.ecourts.gov.in/hcservices/ assessee, but that discretion must bejudiciously exercised. He has to arrive at asatisfaction that the three conditions laiddown therein have been fulfilled before passingan order waiving interest. Compulsion to pay any unjust dues per se wouldcause hardship. But a question, however, wouldfurther arise as to whether the default inpayment of the amount was due to circumstancesbeyond the control of the assessee." 27. The learned counsel appearing for the assesseeheavily relied upon the judgment in Mani vs. Commissioner ofIncome Tax cited supra, where he relied upon the followingparagraphs, which are extracted. "22.ThisCourtin P.Ramasamyv.Commissioner of Income Tax reported in 1999(237) ITR held that pursuit of remediesavailable to the assessees under the Act cannotbe construed as non co-operation with thedepartment, unless the pursuit has been of acantankerous nature, obstructive or evasive. 23. The Honurable Supreme Court in KrishanLal v. Union of India reported in 1998 (230) ITR85 held that when an application is filed undersub Section (2A) of 220 of the Act, theauthority concerned is called upon to take aquasi- judicial decision and if it is satisfiedthat the reasons contained in the applicationwould bring the case under Clauses (i), (ii) and(iii) of Section 220(2A), then it has powereither to reduce or waive the amount ofinterest. It was further held that even thoughin the said sub-section it is not stated thatreasons are to be recorded in the order decidingsuch an application, the same should be decidedby a speaking order and the Principles ofnatural justice in this regard would be clearlyapplicable. It was further held that suchdecision which has been taken by the authorityunder Section 220(2A) can be subjected tojudicial review by filing a petitionunder Article 226 of the Constitution of India. 24. A Division Bench of Kerala High Courtin G.T.N Textiles Limited v. Deputy Commissionerof Income Tax reported in 1996 (217) ITR 653held that it is a condition precedent that all the three conditions laid down in Section 220(2A) should be satisfied for getting a relief ofwaiver. 25.TheHonourableSupremeCourtin Carborundum Universal Limited v. CentralBoard of Direct Taxes) reported in 1989 (V180)171 while analysing the scope of Section 220(2A) held that when a statutory provision doesnot exclude natural justice, the requirement ofaffording an opportunity of being heard can beassumed, particularly when the proceedings arequasi-judicial. 26. A Division Bench of this Court in AuroFood Limited, Pondicherry v. The Commissioner ofIncome Tax, Tamil Nadu reported in 2005 1 MLJ 79was considering the aspect as regards the mannerin which the power to be exercised under Section220(2A) of the Act. By placing reliance of thedecision of the Kerala High Court (referredsupra), the Honourable Division Bench held thatwhen ever an application is filed seeking waiverof interest, it is incumbent on the part of thequasi-judicial authority to record reasons inhis order. While reiterating such principles,the Honourable Division Bench of this Court inthe cases of Kanchipuram Silk Handloom Weavers'Co-Operative Marketing Society Limited andM.Ganesan's case (referred supra), had directedthe matter tobe considered afresh since reasonshave not been recorded. 27. The legal position as regards the scopeand power under Section 220(2A) having beenanalayased as above, if the impugned order isperused, it reveals that the respondent afternarrating the facts of the matter, has statedthat a perusal of the records and in particularthe tax recovery officers report dated27.07.2005 shows that the assessee has nothonoured the installment payment provided by theJoint Commissioner of Income Tax, the assesseehas not co-operated in the payment ofinstallment granted and thus one of theconditions stipulated in clause (iii) of 220(2A)has not been fulfilled. Therefore, waiverapplication is rejected. 28.. to 33..... 34. Thus, in terms of the law laid down inthe judgments referred supra, the respondent isbound to consider the petition, as to whetherthe petitioner fulfilled all the threeconditions laid down under Section 220(2A) andrecord reasons as to how the petitioner is notentitled to the waiver of penal interest. Theimpugned order does not satisfy the tests laiddown by the Hon'ble Supreme Court and thisCourt, as referred supra and therefore, theimpugned order deserves interference. For theforgoing reasons, the impugned order is liableto be set aside and accordingly it is set aside.The respondent is directed to consider the claimof the assessee with regard to waiver ofinterest afresh and pass a considered orderafter giving sufficient opportunity to thepetitioner in accordance with law, within aperiod of two months from the date of receipt ofa copy of this order. It is needless to statethat the petitioner shall co-operate in thehearing so afforded by the respondent." He would also rely upon the decision in M/s.Poompuhar ShippingCorporation Ltd., cited supra, where, paragraph 10 of thejudgment is very much relied upon by him, which reads thus:"10. With regard to financial difficulty,the second respondent would state that thepetitioner has a fixed deposit of a sum ofRs.4.4 Crores and they also earned interestincome and the said fixed deposit is maintainedspecifically in connection with Kanniyakumariferry service, which is a matter of nationalimportance and the fixed deposit has to bemaintained for the purpose of acquiring theferry and cannot be diverted for any otherpurpose. Thus, the observation with regard tofinancial condition of the petitioner is alsofactually in-correct. Thus, for the abovereasons, this Court has no hesitation to holdthat the petitioner has fulfilled all the threeconditions contained under Section 220(2A) ofthe Act and thus, entitled for waiver ofinterest." 28. At the same time, the learned standing counselappearing for the respondent/Revenue, apart from citing thedecision in B.M.Malani's case, had also cited three otherdecisions referred to above. The judgment in Benara Valves Ltd., cited supra has been referred to by the learned standingcounsel, where the following passages are relied upon: 28. At the same time, the learned standing counselappearing for the respondent/Revenue, apart from citing thedecision in B.M.Malani's case, had also cited three otherdecisions referred to above. The judgment in Benara Valves Ltd., cited supra has been referred to by the learned standingcounsel, where the following passages are relied upon: "Two significant expressions used in theprovisions are "undue hardship to such person"and "safeguard the interests of Revenue".Therefore, while dealing with the applicationtwin requirements of considerations i.e.consideration of undue hardship aspect andimposition of conditions to safeguard theinterest of Revenue have to be kept in view.As noted above there are two importantexpressions in Section 35(F). One is unduehardship. This is a matter within the specialknowledge of the applicant for waiver and hasto be established by him. A mere assertionabout undue hardship would not be sufficient.It was noted by this Court in S. Vasudeva v.State of Karnataka and Ors. (AIR 1994 SC 923)that under Indian conditions expression "Unduehardship" is normally related to economichardship. "Undue" which means something whichis not merited by the conduct of the claimant,or is very much disproportionate to it. Unduehardship is caused when the hardship is notwarranted by the circumstances. For a hardship to be 'undue' it must be shownthat the particular burden to have to observeor perform the requirement is out of proportionto the nature of the requirement itself, andthe benefit which the applicant would derivefrom compliance with it. The word "undue" adds something more than justhardship. It means an excessive hardship or ahardship greater than the circumstanceswarrant." 29. The next judgment relied upon by the learnedstanding counsel for Revenue is Mookambika Associates case citedsupra, where the following passages are relied upon:"6. The relevant material considered by theauthority is that there is no proof produced toshow that the payment of interest would causegenuine hardship to the assessee. The matterrests on the aspect of no proof. Even theassessee, in the application has not producedany documentary evidence to show the genuinehardship was to be caused. Even if it is https://hcservices.ecourts.gov.in/hcservices/ considered for the sake of examination that theIncome-tax Department attached the property andfreezed the bank account and the attachmentcontinued until the amount as per theassessment order was paid, then also theexercise of statutory power for enforcement ofthe recovery by attachment of property or byfreezing of bank account cannot be said as avalid ground to treat it as genuine hardship.Such hardship as pleaded has to be due tocircumstances other than enforcement of anylaw. If the enforcement of law is to betreated as hardship, the very purpose of ruleof law would be frustrated. Therefore, we areinclined to observe that such hardship shouldbe on the ground other than enforcement of law.7. The only ground contended in theapplication was with regard to attachment ofproperty by way of enforcement of law by thedepartment. No other ground which may fallunder the head of genuine hardship wascontended. 8. Apart from the above, the schedule ofthe properties which were attached as per thedocumentsproducedbythepetitionersthemselves at Annexure-”G” shows that there arehuge immovable properties totally 12 in numberin the peripheral area of Bangalore City.Therefore, if a person is having large numberof immovable properties and can pay the amountof interest by sale or realization of moneyfrom the property, it cannot be said to be agenuine hardship as sought to be canvassed. Onthe contrary, the quantum of amount ofRs.45,11,093/- is a tip in the iceburg incomparison to huge value of 12 propertiesbelonging to the assessee. If the person hasthe capacity to pay, may be by out of hismovable or immovable properties and inspite ofthat the ground is contended as of hardship,same cannot be termed as genuine hardship. Ifsuch hardship is treated as genuine hardship,it would defeat the purpose of consideration ofthe genuine hardship." 30. Yet another judgment of the Kerala High Courtrelied upon by the learned standing counsel is K.C.Mohanan'scase, where the following passages were relied upon: https://hcservices.ecourts.gov.in/hcservices/ "5. In so far as this case is concerned,reading of the impugned order shows that thefirst respondent has specifically found thatthis is not a case where the assessee hadestablished that payment of interest would causegenuine hardship to him. This conclusion is onthe basis that the assessee is a partner in twofirms doing business in liquor and also in afirm running a theatre. It is also found thatasseessee has substantial agricultural incomeand that he owns 5.22 acres of coconut gardenand 1.10 acres of cashew plantation. These factsfound by the first respondent in Ext.P9 orderare not even contended to be incorrect. If thatbe so, on the materials available before thiscourt, I am unable to infer that the payment ofinterest by the assessee would cause any genuinehardship justifying invocation of powerunder Section 220 (2A) of the Act. Consequently,Ext.P9 order challenged in W.P.(C) No. 14634/08has to be upheld. 6. This view taken by me is fortified bythe fact that levy of interest under Section220 (2) is for delay in payment of tax for theperiods subsequent to completion of assessment.One of the contention raised by the assesseethat non-payment was due to circumstances beyondhis control is that the assessment wasnecessitated on account of addition of taxableincome of the firm of which he is a partner.This reason may justify delay in filing thereturns but not delay in the payment of tax forthe post assessment period. If that be so, thesecond requirement of Section 220 (2A) ofexistence of circumstances beyond the control ofthe assessee is also established." 31. He also relied upon the decision of a DivisionBench of this court, in Chief Commissioner of Income Tax andanother vs. M/s. Rajanikant and Sons in W.A.Nos.2020 to 2024 of2010, where, I am also one of the party. I have given myanxious consideration to the findings given in the decisionsreferred to above and also the law laid down therein. 32. In B.M.Malani's case, the word genuine has beenexhaustively explained, especially in the context of section 220(2A). The hardship faced by the assessee, need not be the merehardship, but, it should be a genuine hardship. In thiscontext, in Benara Valves Ltd., the Supreme Court has made it https://hcservices.ecourts.gov.in/hcservices/ clear that, in Indian context, the undue hardship is normallyrelated to economic hardship and undue means something which isnot merited by the conduct of the claimant or is very muchdisproportionate to it. 32. In B.M.Malani's case, the word genuine has beenexhaustively explained, especially in the context of section 220(2A). The hardship faced by the assessee, need not be the merehardship, but, it should be a genuine hardship. In thiscontext, in Benara Valves Ltd., the Supreme Court has made it https://hcservices.ecourts.gov.in/hcservices/ clear that, in Indian context, the undue hardship is normallyrelated to economic hardship and undue means something which isnot merited by the conduct of the claimant or is very muchdisproportionate to it. 33. Here, in the case in hand, according to theassessee, the undue hardship faced by the assessee was that,there had been no business for four years consecutively, withthe result, the assessee did not have any source to make thepayment as demanded under Section 234A, 234B, 234C. When thatsituation was prevailing, the assessee made an application forwaiver explaining the hardship faced by the assessee as agenuine hardship. 34. In the context, after having analysed the said pleamade by the assessee, the respondent has found, based on thebalance sheet of the assessee, that the assessee was having abuilding worth Rupees 18 lakhs and machineries worth Rupees 45lakhs. From the said finding, it become clear that, apart fromthese immovable properties of building and machineries, whichare the basic immovable/movable properties to run the industryor business of the assessee, no other source had been found outby the Revenue. 35. However, the said findings given by the Revenue wasfully supported by Mr.A.P.Srinivas, learned standing counselappearing for the Revenue by citing the decision of MookambikaAssociates. In Mookambika's case, it was factually found that,the assessee was having huge immovable properties totally 12 innumbers in the peripheral area of Bangalore City and the totaldemand was only rupees Rs.45,11,093/- which, according to thelearned Judges, was only a tip in a iceberg, in comparison tothe huge value of assets belonging to the assessee. 36. Only in that context, the learned Judges had cometo the conclusion that, the hardship projected by the assesseein that case, cannot be construed as a genuine hardship andtherefore, the assessee did not fulfill the condition underSection 220(2A), therefore, the rejection of the waiverapplication was justified in that case. 37. However, here in the case in hand, it is thefinding of the respondent that, except the land and machineries,no other immovable property had been shown in the account of theassessee. Therefore, the said decision referred to by thelearned standing counsel on facts, cannot be made applicable tothe present facts of the case. 38. The learned standing counsel would also heavilyrely upon the decision made in, K.C.Mohanan Vs. ChiefCommissioner of Income Tax, case. In that case also, it was afactual finding that, the assessee, apart from being the ownerand partner of the business for which the assessment was made,has also been a partner in two firms, which were doing businessin liquor and also was running a theatre. In view of the saidalleged business undertaken by the assessee in that case, theground of genuine hardship projected by the assessee wasrejected and accordingly, the genuine hardship justifying theinvocation of power under Section 220(2A) of the Act, in thatcase, was rejected and such rejection was upheld. 39. However, in the case in hand, there is no suchfinding given by the respondent in the impugned order that, theassessee, apart from the said business, is having any otherbusiness whatsoever, any other firm or company or doing anyother business on his own, therefore, the said case also, cannotbe factually made applicable to the present case. 39. However, in the case in hand, there is no suchfinding given by the respondent in the impugned order that, theassessee, apart from the said business, is having any otherbusiness whatsoever, any other firm or company or doing anyother business on his own, therefore, the said case also, cannotbe factually made applicable to the present case. 40. At the same time, the learned counsel appearing forthe assessee has very much relied upon Mani's case i.e. Mani v.Commissioner of Income tax, where, the learned Judge of thisCourt, after having analysed the case law, has come to theconclusion that, the rejection made by the Revenue in the waiverapplication under Section 220(2A) of the Act was notjustifiable. 41. In the said decision, the learned Judge also hadrelied upon the decision of the Hon'ble Supreme Court inCorborundum Universal Ltd., Vs. CBDT (1989) 80 CTR SC 85, wherethe scope of Section 220(2A), after having been analysed, it washeld