Wa/4435/2015 Of M/S Mookambika Associates v. Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23 DAY OF NOVEMBER, 20160) PRESENT THE HON'BLE MR. JUSTICE JAYANT PATEL| ANT) THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR WRIT APPBRAL Nos.44354436/2015 (T"IT) BETWEEN: M/s.MOOKAMBIKA ASSOCIATESNO.14, LAKSHMI COMPLEX3 CROSS, JOURNALIST COLONY|BENGALURU - 560 0OO2REP. BY ITS PARINER. SRI.T.V.PRABHU _. APPKRLLANT (BY SRI.ARAVIND V CHAVAN, ADVOCATE) AND: Ll.ASSISTANT COMMISSIONER OF INCOME TAX. CENTRAL CIRCLE 2 (1), C.R.BUILDINGS QUEENS ROAD, BENGALURU -560 OO1. iaPRINCIPAL COMMISSIONBR OF INCOME TAX -51 FLOOR, C.R.BUILDINGSQUEENS ROAD, BENGALURU -560 OO1.1 FLOOR, C.R.BUILDINGSQUEENS ROAD, BENGALURU -560 OO1. 3.TAX RBCOVEBRY OFFICEKR - INCOME TAX DBKRPARTMENINCOME TAX DBKRPARTMEN RANGE-4, 4 KRLOOR,UNITY BUILDING (ANNEX), MISSION ROADBENGALURU —- 560 OO] .. RESPONDENTS THESE WRIT APPEALS ARE FILED U/S 4 OF THE|KARNATAKA HIGH COURT ACT PRAYING TO SKBT ASIDE THEORDER PASSED IN THE WRIT PETITION 29258-29259/2015)DATED 04/09/2015.| THRSK APPEALS COMING ON FOR PRELIMINARY HBARINGTHIS DAY,JAYANT PATEL J.,MADE THERE FOLLOWING: ORDER The present appeals are directed against the order dateda[3.]september 2015 passed by the learned Single Judge,whereby the learned single Judge for the reasons recorded inthe order has dismissed the petitions. 2. We have heard Mr.M.V.Sheshachala, learned Senior Counsel appearing for Mr.Aravind A.Chavan, learned Counselfor the appellant. — 3. The contention raised on behalf of the appellant was_ that no reasons are recorded for rejecting the application filedunder Section 220(2) of the Income Tax Act. It is also submitted that the principal ground contended was that asthe Income Tax Department had attached the property in theyear 2010, for a period of five years until the attachment waslifted, the appellant could not continue with the businessactivity and on account of the same, if the appellant is calledupon to pay the interest, such would cause hardship to the |appellant. It has been submitted that the learned Singlejudge did not consider the aforesaid aspects. Hence, thisCourt may consider the present appeals. 4. So far as the power of waiver iS concerned, asprovided under Section 220(2A) of the Act, the liability to payinterest may be waived if the hardship is satisfactorily |demonstrated before the competent authority. Furtherhardship is an aspect which can be considered keeping inview the financial status of the person concerned. When onespeaks for financial status, it would include moveable as wellas immovable property of the person concerned. The second aspect as provided under Section 220(2A) is that if the defaultof payment was due to circumstances beyond control of theassessee, then the power may be exercised. Third ground isthat if the assessee has co-operated in the enquiry relating toassessment or any proceedings for recovery, then alsodiscretion may be exercised for waiver of interest. _ o. If the facts of the present case are considered, thelearned Single Judge has recorded that though return wasrequired to be filed by the assessee but he did not file. It isonly aiter search proceeding, the returns were filed underSection 153-C of the Act. The assessment was made in theyear 2010 but the assesseee even thereafter did not pay theamount as per the demand made. Coercive steps were takenby attaching the property of assessee. Inspite of coercivesteps for attachment of the property being taken, alter aperiod of about five years, the amount of tax as per theassessment order which includes interest prior to the o. If the facts of the present case are considered, thelearned Single Judge has recorded that though return wasrequired to be filed by the assessee but he did not file. It isonly aiter search proceeding, the returns were filed underSection 153-C of the Act. The assessment was made in theyear 2010 but the assesseee even thereafter did not pay theamount as per the demand made. Coercive steps were takenby attaching the property of assessee. Inspite of coercivesteps for attachment of the property being taken, alter aperiod of about five years, the amount of tax as per theassessment order which includes interest prior to the assessment has been paid. The fact that no return was filedwell in time and fact that it is only after search proceedings,returns were filed and fact that after the assessment wasmade, no amount of tax was paid and the fact that thecoercive steps had to be taken, all would go to show that itwas not a case where the assessee had co-operated in theenquiry or the proceedings of assessment for recovery of theamount due to him. 6The relevant material considered by the authority is that there is no proof produced to show that the payment otinterest would cause genuine hardship to the assessee. The|matter rests on the aspect of no proof. Even the assessee, in the application has not produced any documentary evidence|to show the genuine hardship was to be caused. Even if it isconsidered for the sake ot examination that the Income-tax|Department attached the property and freezed the bank|account and the attachment continued until the amount as) per the assessment order was paid, then also the exercise ofstatutoryPOWCTfor.enforcementoT|theTeCCOVETYby attachment of property or by freezing of bank account cannotbe said as a valid ground to treat it as genuine hardship. |such hardship as pleaded has to be due to circumstancesother than enforcement of any law. If the enforcement of lawis to be treated as hardship, the very purpose of rule of lawwould be frustrated. Therefore, we are inclined to observethat such hardship should be on the ground other than|enforcement of law. 7. The only ground contended in the application was with |regard to attachment of property by way of enforcement of lawby the department. No other ground which may fall under|the head of genuine hardship was contended.| 8. Apart from the above, the schedule of the propertieswhich were attached as per the documents produced by thepetitioners themselves at Annexure-“G” shows that there are| huge immovable properties totally 12 in number in theperipheral area of Bangalore city. Therefore, if a person ishaving large number of immovable properties and can pay theamount of interest by sale or realization of money from theproperty, it cannot be said to be a genuine hardship assought to be canvassed. On the contrary, the quantum ofamount of Rs.49,11,093/- is a tip in the iceburg incomparison to huge value of 12 properties belonging to theassessee. If the person has the capacity to pay, may be byout of his movable or immovable properties and inspite of thatthe ground is contended as of hardship, same cannot betermed as genuine hardship. If such hardship is treated asgenuinehardship,1TwoulddefeatthepurposeoT|consideration of the genuine hardship. 9. The learned counsel for the petitioner-appellant reliedupon the decision of the Apex Court in the case ofB.IM.Malanit .vs. Commissioner of Income Tax and another reported at (2008) 306 ITR 0196 to contend that in the saidcase the property was available, inspite of the same the ApexCourt found that there was no proper consideration and thematter was remanded. 9. The learned counsel for the petitioner-appellant reliedupon the decision of the Apex Court in the case ofB.IM.Malanit .vs. Commissioner of Income Tax and another reported at (2008) 306 ITR 0196 to contend that in the saidcase the property was available, inspite of the same the ApexCourt found that there was no proper consideration and thematter was remanded. 10. We may record that in the said decision, the facts ofthe case show that the appellant-assessee had volunteeredthat the securities be sold and the Apex Court found that whythe said request of the assessee could not be acceded to wasnot explained. The Apex Court also found that it was avoluntary act on the part of the assessee and therefore, in thelight of the same, the observations were made by the ApexCourt. In the present case, there is no volition whatsoeverhas been shown by the appellant-assessee to offer any portionof the property out of 12 immovable properties for payment ofthe amount. Hence, the said decision is of no help to theappellant. 11. In the another decision of the Apex Court in the)case ofKishan lal .vs. Union of India and anotherreported at (1998) 230 ITR OO85, the decision was takenwithout recording any reasons whatsoever and the saidaspect is reflected in the facts of the said case and therefore,the Apex Court found that the order is without recording otthe reasons and therefore, the matter was remanded to the|competent authority. In the present case, it cannot be said|that no reasons are recorded touching upon the ground|germane to the exercise of power. One is for non-cooperationof the appellant-assessee in the recovery proceedings and|another is no proof produced to show genuine hardship to theassessee. Hence, the said decision would be of no help to theappellant-assessee. 12. If the aforesaid is considered, read with the reasonsrecorded by the learned Single Judge, we do not find that theview taken by the learned single Judge can be said to be an| erroneous exercise of the judicial discretion which may call for interference in an intra-Court appeal. Hence, no case is made out for interference. Therefore, the appeals are dismissed. Yn. /*alb/ Sd/-. JUDGE Sd/-| JUDGE