Subsequently, Based On The Full Bench Judgment Of This Court In Narayanan & Company v. Commissioner Of Income Tax (223 Itr 209) , The Assessment Was Re-Opened Under Section 147 Of The Income Tax Act And Taxable Income Was Determined At Rs.7,40,790

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC MONDAY, THE 3RD DAY OF DECEMBER 2012/12TH AGRAHAYANA 1934 WP(C).No. 26339 of 2005 (I) --------------------------- PETITIONER(S): --------------- M/S.P.G.MANI & OTHERS, "INDU" POTTEKKAT HOUSE, PLAKKAT LANE DR.A.R.MENON ROAD, TRICHUR-I REPRESENTED BY SRI.P.G.MANI, BY ITS MANAGING PARTNER. BY ADV. SRI.P.BALAKRISHNAN (E) RESPONDENT(S): -------------- 1. THE CHIEF COMMISSIONER OF INCOMETAX, COCHIN. 2. THE INCOMETAX OFFICER,WARD I, RANGE 2, TRICHUR. 3. THE TAX RECOVERY OFFICER, RANGE 2, TRICHUR. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON03-12-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 26339 of 2005 (I) APPENDIX PETITIONER'S EXHIBITS: P1:TRUE COPY OF PETITIONS DATED 13.02.2001 ADDRESSED TO THE 1STRESPONDENT FOR ASST. YEARS 1995-96 AND 1996-97. P2:TRUE COPY OF ORDER UNDER SECTION 119(2)(a) OF THE INCOMETAXACT,1961 IN F.NO.CC.CHN/W1/C-73/2000-01 DATED 3.8.2005 OF THE IST RESPONDENT. RESPONDENTS EXHIBITS:NIL //TRUE COPY// P.A. TO JUDGE. dlk ANTONY DOMINIC, J ........................................ W.P.(C).26339/2005 .............................................. Dated this the 3[rd] day of December, 2012 JUDGMENT Heard the learned counsel for the petitionerand the learned standing counsel appearing for therespondents. 2.The petitioner is a partnership firm. For theassessment years 1995-1996 and 1996-1997, theyfiled returns under the Income Tax Act showingtaxable income of Rs.2,67,230/- and Rs.4,35,230/-respectively. These returns were filed claimingthe status of a firm and were processed underSection 143 of the Income Tax Act. 3.Subsequently, based on the Full Bench judgmentof this Court inNarayanan & Company v.Commissioner of Income Tax (223 ITR 209), theassessment was re-opened under Section 147 of theIncome Tax Act and taxable income was determinedat Rs.7,40,790/- and Rs.11,11,360/- for theassessmentyears1995-1996and1996-1997 respectively, treating the assessee as anAssociation Of Persons instead of a partnershipfirm. The Assessing Officer also levied interestunder Section 234B and C of the Act. Seekingwaiver of the interest thus levied on thepetitioner, they filed Ext.P1 application to thefirst respondent, under Rule 119(2) of the IncomeTax Rules where benefit of the Boards notificationdated 23.05.1996, authorising the first respondentto waive or reduce the interest was claimed. Thatapplication of the petitioner was finally rejectedby Ext.P2 order. It is challenging Ext.P2, thiswrit petition is filed. 4.Among the various provisions of the notification dated 23.5.1995, the benefit claimedwas that provided in paragraph 2 clause (d) thereofwhich reads thus:- “Where any income which was notchargeable to income tax on the basisof any order passed in the case of anassessee by the High Court withinwhose jurisdiction he is assessable to 4.Among the various provisions of the notification dated 23.5.1995, the benefit claimedwas that provided in paragraph 2 clause (d) thereofwhich reads thus:- “Where any income which was notchargeable to income tax on the basisof any order passed in the case of anassessee by the High Court withinwhose jurisdiction he is assessable to income-tax and as a result, he didnot pay income tax in relation to suchincome in any previous year andsubsequently in consequence of anyretrospective amendment of law or asthe case may be, the decision of theSupreme Court in his own case, whichevent has taken place after the end ofany such previous year, in anyassessment or reassessment proceedingsthe advance tax paid by the assesseeduring the financial year immediatelypreceding the relevant assessment yearis found to be less than the amount ofadvance tax payable on his currentincome, the assessee is chargeable tointerest under section 234B or section234C and the Chief Commissioner orDirector General is satisfied thatthis is a fit case for reduction orwaiver of such interest.” 5.This claim was considered and has beenrejected thus:- “The primary condition for invokingclause (d) is that there should be anincome which was not chargeable to taxon the basis of a decision of thejurisdictional High Court which becomestaxable as a result of anyretrospective amendment of law or alater decision of the Supreme Court.There is no such income in this caseand hence clause (d) has noapplication.” It is the correctness of this reasoning adopted by the 1[st] respondent which arise for consideration inthis case. 6.If the provisions of clause (d) are perused,it can be seen that the income must not have beenchargeable to tax on the basis of any order passedby the jurisdictional High Court and it shouldbecome taxable as a consequence of anyretrospective amendment of law or on a decision ofthe Supreme Court. Insofar as the case in questionis concerned, it can be seen that the petitionerwas assessed with the status as a Firm and thatsubsequently, following the judgment of this Courtin Narayanan & Company v. Commissioner of IncomeTax (223 ITR 209), assessment was re-opened and thetax was re-assessed treating the petitioner as anAssociation Of Persons. Therefore, situation ascontemplated in paragraph 2 clause (d) was notavailable to the petitioner to claim the benefitthereof. 7.As held by the Apex Court in Hazi Anwar & Others v. Competent Authority (252 ITR, 1)interest under Section 234A, B & C is mandatory.It is also settled that unless the claim forwaiver or reduction come within the four corners ofthe conditions specified by the Central Government,interest levied under the aforesaid provisionscannot be waived (see in this connection -[Universal Trades Corporation v. ChiefCommissioner of Income Tax & Ors.(249 ITR 291) ].In this case, on facts I have already concludedthat the claim of the petitioner did not comewithin clause 2(d) of the notification relied on.If that be so, the assessee could not have claimedwaiver of interest. Therefore, its rejection byExt.P2 order cannot be said to be illegalwarranting interference in this writ petition. Writ petition fails and is dismissed. Sd/- ANTONY DOMINIC, JUDGE mrcs /true copy/ PA To Judge