Pardeep Aggarwala v. Commissioner Of Income Tax

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. Pardeep Aggarwala. Vs. Commissioner of Income Tax. C.W.P. No.3789 of 2011Date of decision: 3.3.2011 -----Petitioner. -----Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Binderjit Singh, Advocatefor the petitioner. --- ADARSH KUMAR GOEL, J. 1. This petition seeks quashing of order dated 6.5.2010,Annexure P-12, passed by the Commissioner of Income Taxunder Section 264 of the Income Tax Act, 1961 (for short, “theAct”). 2. Case of the petitioner is that during pendency ofassessment proceedings for the assessment year 1983-84 underSection 143(3) of the Act, the petitioner vide letter dated 5.3.1986surrendered a sum of `55,000/- by way of additional incomestating that the surrender was being made to buy peace andsubject to no penal action. The petitioner relied upon circulardated 17.2.1986 stating that if a voluntary surrender was made,penalty and prosecution will be waived. In view of the saidsurrender vide order dated 14.3.1986, the surrendered amount was added to the income of the assessee and demand noticewas issued for recovering the amount with interest due underSections 139(8) and 215/217 of the Act. The petitioner disputedliability to pay part of the amount and sought waiver relying uponthe amnesty scheme as per circular dated 17.2.1986. Theapplication was rejected by the Assessing Officer vide orderdated 12.9.1986. The petitioner, thereafter, applied to theCommissioner for waiver of interest which was followed by astatutory revision under Section 264 of the Act, which wasrejected on 12.11.1987. However, the said order was set asideby this Court vide order dated 17.9.2009 in C.W.P. No.1202 of1988 M/s Jay Bee Industriesv. CITon the ground that theCommissioner had not passed a speaking order and a fresh orderwas directed to be passed. In compliance of the said order,impugned order dated 6.5.2010 has been passed holding thatthere was no ground for waiver. Though the petitioner filed anappeal before the Tribunal, the same was withdrawn, as theappeal was not maintainable. In the writ petition, ground forchallenging the impugned order is that as per circular, penaltyand prosecution were to be waived in case of a voluntarysurrender and thus, there was a valid ground for waiving interest. 3. We are unable to accept the submission. Penalty andprosecution stand on different footing from interest. The interestis a statutory liability and is compensatory in nature. Under theIncome Tax Rules, 1962 (for short, “the Rules”), there are provisions for waiver of interest in certain situations. Under Rule40 of the Rules, grounds for waiver of interest are: delay inassessment within the stipulated period for reasons notattributable to the assessee, if the assessee is an agent of anyother person and is assessed upon the income of the principal,where the assessee has income from unregistered firm assessedunder Section 183(b), where assessment is on large profitscovered under proviso to Section 211 and any other case wherecircumstances may justify. There is also provision for reductionor waiver of interest under Rule 117A of the Rules for the reasonsmentioned therein. Neither of the said rules apply to thepetitioner. In the impugned order, it has been mentioned thatcase of the petitioner was not covered by circular dated17.2.1986 relied upon by the petitioner. Even if the said circularapplied, waiver could be either from penalty or prosecution andnot from interest unless case for waiver was made out as per anyprovision or circular. 4. In absence of any violation of right of the petitioner,we do not find any ground to interfere with the impugned order. The petition is dismissed. (ADARSH KUMAR GOEL) JUDGE March 03, 2011ashwani ( AJAY KUMAR MITTAL ) JUDGE