Wp/17276/2004 Of D.sridevi v. The Commissioner Of Income Tax

THE HON'BLE SRI JUSTICE DILIP B.BHOSALEANDTHE HON’BLE SRI JUSTICE A.RAMALINGESWARA RAO WRIT PETITION No.17276 of 2004 O R D E R:(per Hon'ble Sri Justice Dilip B.Bhosale) This writ petition by the assessee, under Article 226 of theConstitution of India, is preferred against the order dated 29.01.2004 passed by the Commissioner of Income Tax-VI,Hyderabad whereby her application for waiver of interest for theassessment years 1992-93 and 1993-94, under sub-section (2A) ofSection 220 of the Income Tax Act, 1961 (for short ‘the Act’) had beenrejected. A search under Section 132 of the Act was conducted on07.04.1993 in which it was revealed that the petitioner-assessee wasnot assessed to tax. She admitted, when examined under Section 132(4) of the Act, that she had earned Rs.46,00,000/- by selling the plots ofland at Banjara Hills, Hyderabad. Though she had filed return on13.07.1994 declaring the above income, she did not pay the tax on thesame. It was further revealed that the assessee was owner of 3063Sq.Yards of land bearing plot No.395 at Jubilee Hills, Hyderabad, andshe was also in possession of another 2505 Sq.Yards of land adjacentto this plot. She purchased 3063 Sq.Yards of land for a sum ofRs.41,000/- from Jubilee Hills Co-operative House Building SocietyLtd. This was all revealed during the search. Accordingly, theAssessment Order was passed for the assessment year 1993-94 on25.03.1996 raising the total demand of Rs.53,29,138/- and for theassessment year 1992-93 a sum of Rs.3,84,727/-. It has come onrecord that the assessee had preferred an appeal against the demandof Rs.53,29,138/- before the Commissioner of Income Tax where shegot relief of Rs.6,15,000/-. It has also come on record that after theassessee had filed Return on 13.07.1994, she entered into an agreement with M/s.Image Chit Fund Private Limited on 02.11.1995 forsale of the property and received the total sum of Rs.22,00,000/-. InMay, 1995 she had also given some property as collateral security byway of depositing title deeds to M/s.Prudential Co-operative Bank Ltd.,Secunderabad for availing O.D. facility of Rs.60,00,000/- for aCompany of which her husband-Sri D.Sudhakar Reddy was theManaging Director. In this backdrop, the Commissioner of Income Tax hadconsidered the petition filed by the assessee for waiver of interest andfor the reasons recorded in paragraphs 14, 15 and 16 of the order,dismissed the same. Paragraphs 14, 15 and 16 read thus: “14. We have to see whether the assessee satisfies allthese three conditions so that the waiver of interest can beconsidered sympathetically. No doubt, payment of Interestu/s.220 (2) (or for that matter any tax) would cause hardship toany assessee. But whether the hardship would be genuine ornot is the question to be decided. Unlike other taxes, income-tax is to be paid out of the income earned and therefore therecannot be any hardship to anybody in paying income-tax. If thetax is not paid in time, simple interest has to be paid. If anassessee has earned the income assessed and instead ofpaying taxes, if she has used the income for constructing apalace, should the Revenue waive the interest, saying that itwould cause hardship? No, it can not. “14. We have to see whether the assessee satisfies allthese three conditions so that the waiver of interest can beconsidered sympathetically. No doubt, payment of Interestu/s.220 (2) (or for that matter any tax) would cause hardship toany assessee. But whether the hardship would be genuine ornot is the question to be decided. Unlike other taxes, income-tax is to be paid out of the income earned and therefore therecannot be any hardship to anybody in paying income-tax. If thetax is not paid in time, simple interest has to be paid. If anassessee has earned the income assessed and instead ofpaying taxes, if she has used the income for constructing apalace, should the Revenue waive the interest, saying that itwould cause hardship? No, it can not. 15. We have to also see whether the default in thepayment of the amount was due to the circumstances beyondthe control of the assessee. No doubt apparently the assesseedoes not seem to have any regular income. But where did theincome earned go? If she is a simple housewife without anysource of income, how did she acquire such a big propertywhose present market value would be not less than Rs.6Crores? Where from she got money to start constructing apalace of Rs.61.50 lakhs? What did she do with Rs.60 lakhsborrowed from the Bank and another Rs.22 lakhs taken fromImage Chit Fund (P) Ltd? Above all, where does she getmoney to file writs in the High Court in order to stall theauction? I am of the view that the assessee is pretending to bea person of no means before the Department even though shehas lot of resources. Therefore, I hold that the default in thepayment was not due to the circumstances beyond the control of the assessee. 16. The last condition to be satisfied for waiver of interestis that the assessee should have co-operated in any inquiryrelating to the assessment or any proceeding for the recoveryof any amount due from him. On going through theAssessment Order, I have no reason to come to the conclusionthat the assessee had not co-operated in any inquiry relating tothe asst. However, I cannot say the same in respect of theproceedings for the recovery of the tax due from the assessee. The number of Writ Petitions filed and the number of auctiondates fixed by the Tax Recovery Officer would show that theassessee has been frustrating the recovery proceedingsinitiated by the Department. Therefore, it cannot be said thatthe assessee satisfied any of the three conditions mentionedu/s.220 (2A) and therefore I dismiss the petition.” From perusal of the record, it is clear that the assessee had notpaid the tax on the Return of income, and therefore, the matter wasreferred to the Tax Recovery Officer and the Tax Recovery Officerattached the property and made a sale proclamation on 20.01.1997. The dates of the auction were postponed on several occasions i.e.19.02.1997, 12.03.1997, 10.01.2001, 09.02.2001, 01.03.2001,18.09.2003 and 22.10.2003. On the basis thereof, the Commissionerhas rightly observed that the assessee did not co-operate in theproceedings for recovery of the amount due from her. We are alsosatisfied that the assessee made all efforts to prolong the recoveryproceedings and did not co-operate for its conclusion expeditiously. The record also revealsthat even though the assessee had earned Rs.46,00,000/-, she did notfile Return and pay taxes. She had also acquired a huge plot of landin Jubilee Hills and had mortgaged said property to the Bank andobtained Rs.60,00,000/- as OD facility and had withdrawn the saidamount. She also had entered into an agreement for sale of propertiesacquired by her in Jubilee Hills and took the advance ofRs.22,00,000/-. In this backdrop, the reasons recorded by theCommissioner in paragraphs 14, 15 and 16 of the order for rejecting the assessee’s petition for waiver of interest cannot be faulted. co-operate for its conclusion expeditiously. The record also revealsthat even though the assessee had earned Rs.46,00,000/-, she did notfile Return and pay taxes. She had also acquired a huge plot of landin Jubilee Hills and had mortgaged said property to the Bank andobtained Rs.60,00,000/- as OD facility and had withdrawn the saidamount. She also had entered into an agreement for sale of propertiesacquired by her in Jubilee Hills and took the advance ofRs.22,00,000/-. In this backdrop, the reasons recorded by theCommissioner in paragraphs 14, 15 and 16 of the order for rejecting the assessee’s petition for waiver of interest cannot be faulted. Sub-section (2A) of Section 220 of the Act confers onCommissioner the power to reduce or waive the amount of interestpaid or payable by an assessee under sub-section (2), subject tosatisfaction/compliance of conditions prescribed in clauses (i) to (iii) thereunder. The first clause provides that if paymentof such amount would cause genuine hardship to the assessee theCommissioner can waive the amount of interest; secondly, if default inthe payment of the amount was due to circumstances beyond hiscontrol, and lastly if the assessee has co-operated in the inquiryrelating to the assessment/proceedings for recovery of the amount duefrom him. Having regard to the facts of the case, the assessee cannotbe stated to have complied the conditions stipulated under sub-section(2A) of Section 220 of the Act. In the circumstances, the Writ Petition is dismissed. Noorder as to costs. At this stage, the learned counsel appearing for thepetitioner seeks twelve (12) weeks’ time to enable the petitioner to paythe remaining interest amount. This Court, while admitting the writpetition, had directed the petitioner to deposit 25% of the amount ofinterest, which we are informed, she deposited within the stipulatedtime. In view thereof, the petitioner is allowed to deposit the remaining75% of the amount within a period of twelve (12) weeks from today. Miscellaneous petitions pending in the writ petition, if any, alsostand disposed of. __________________ Dilip B.Bhosale, J ________________________ A.Ramalingeswara Rao, J 28[th] January, 2015.sur