Wp/2464/2019 Of Shri Mansukhlal Pitalia v. The Principal Commissioner Of Indome Tax & Another Indore, Dated 10.04.2019

HIGH COURT OF MADHYA PRADESH: BENCH AT INDOREW.P. No.2464/2019Mansukhlal Pitalia v/s The Principal Commissioner of Indome Tax &AnotherIndore, dated 10.04.2019 Shri P. M. Choudhary, learned senior counsel alongwith Shri Anand Prabhawalkar learned counsel for thepetitioner. Ms. Veena Mandlik, learned counsel for therespondents. The petitioner before this Court has filed this presentwrit petition being aggrieved by the order dated 04.12.2018passed by the Principal Commissioner of Income Tax,Ujjain under Section 220 (2) of the Income Tax Act, 1961. The facts of the case reveal that a search was carriedout by the income tax authorities under Section 132 of theIncome Tax Act, 1961 on 26-27.06.2002 at the petitioner'spremises and during the search certain papers, diaries,Hundis were found in possession of the petitioner. Theywere seized by the income tax authorities. The AssessingOfficer issued a notice under Section 158BC of the IncomeTax Act, 1961 to the petitioner to file return of income forthe block period 01.04.1996 to 26.06.2002. The petitioner has filed return disclosing theundisclosed income of Rs.49,68,000/- and the tax payablethereon, was worked out to Rs.30,40,416/-. An assessmentorder was passed on 17.06.2004 assessing income theincome of the petitioner at Rs.3,26,52,820/- and the tax wasdetermined to be payable at Rs.2,02,33,320/-. Thepetitioner's grievance is that assessing authority hascalculated the interest at Rs.33,31,465 under Section 220 (2) of the Income Tax Act, 1961 and a demand has beenissued for Rs.37,90,835/-. The petitioner's contention is that since the levy oninterest was on the higher side, it was causing greathardship to the petitioner. The petitioner approached theCommissioner / Principal Commissioner for waiver of theinterest by filing an application dated 29.12.2015 underSection 220 (2A) of the Income Tax Act, 1961 and the samehas been rejected by the impugned order. Learned senior counsel for the petitioner has placedreliance upon a judgment delivered by the Hon'ble SupremeCourt in the case of B.M. Malani v/s Commissioner ofIncome Tax reported in 306 ITR 196 (SC)/[2008]. Reliancehas also been placed upon a judgment delivered by the HighCourt of Madras in the case of Vellor Electronics &Engineering (P.) Ltd. v/s Assistant Commissioner ofIncome Tax reported in [2011] 237 CTR 63 (Madras). Aprayer has been made for quashment of the impugned order. A reply has been filed in the matter and it has beenargued before this Court on behalf of the Income TaxDepartment that the petitioner is not entitled for any reliefof any kind, as three conditions laid down under Section220 (2) of the Income Tax Act, 1961 are not satisfied at all. The operative paragraph i.e. paragraphs 4, 5, 6 and 7of the impugned order dated 04.12.2018 reads as under:- “4.Opprotunities of being heard were granted tothe assessee by this office letters dated 28.02.2018and 18.09.2018 fixing the case for hearing on06.03.2018 and 04.10.2018 respectively. Letters wereduly served upon the assessee. In compliance to theabove letters, Shri I.M. Jain, AR of the assessee attended and filed written submission along with copyof the return of income, assessment orders, CIT(A)'sorder, ITAT's order, High Court's order, appeal effectorder etc. The AR of the assessee also filed copy ofvarious case laws in his support. It is furthercontended that after the search & seizure operation,the assessee's only source of income is dalali and hefiled return of income for the AY 2012-13 declaringtotal income of Rs.85,610/-. Therefore, , interestliability may be waived. 5.As per the provisions of section 220(2) of theIncome Tax Act, three conditions are laid down whichare as under:- (i)Payment of such amount has caused orwould cause genuine hardship to assessee; (ii)Default in the payment of the amount onwhich interest has been paid or was payable attended and filed written submission along with copyof the return of income, assessment orders, CIT(A)'sorder, ITAT's order, High Court's order, appeal effectorder etc. The AR of the assessee also filed copy ofvarious case laws in his support. It is furthercontended that after the search & seizure operation,the assessee's only source of income is dalali and hefiled return of income for the AY 2012-13 declaringtotal income of Rs.85,610/-. Therefore, , interestliability may be waived. 5.As per the provisions of section 220(2) of theIncome Tax Act, three conditions are laid down whichare as under:- (i)Payment of such amount has caused orwould cause genuine hardship to assessee; (ii)Default in the payment of the amount onwhich interest has been paid or was payable under the said sub-section was due tocircumstances beyond the control of thecircumstances beyond the control of the assessee, and (iii)The assessee has co-operated in anyenquiry relating to assessment or any proceeding for recovery of any amount duefrom him. 6.The assessee did not furnish any evidencewhich could justify his request for waiver of interest.In view of the above, the assessee failed to justify thathis case was falling under the conditions as mentionedin section 220(2) of the Income Tax Act, 1961. Theassessed does not fulfill the conditions mentioned insub-clauses (i), (ii) and (iii) of section 220(2A), as isevident from the facts of the case. 7.In view of the above and after looking to thefacts and circumstances of the case, the request of theassessee for waiver of interest of Rs.39,40,270 isherebyrejected. This Court has carefully gone through Section 220 (2)of the Income Tax Act, 1961. The payment of amounttowards interest certainly causes hardship to an assessee,but on this ground alone, the interest cannot be waived. Thepresent case is a case of a assessee, who was a defaulter,who has suppressed his income and only after search andseizure operation, the department was able to find out the concealment of income by the assessee. It is a case of aperson, who was with a calculative motive, evading thepayment of income tax and in those circumstances, thedepartment has carried out search and seizure operation andwas able to unearth the concealed income. It is not a casewhere on account of some genuine bonafide mistake, theassessee was not able to pay the tax dues. In the present case, it can never be said that theassessee was not able to pay the tax due to thecircumstances beyond the control of the of the assessee. Itis a case of willful evasion of payment of income tax andsuch willful evasion can never said to be due to thecircumstances beyond the control of the assessee, andtherefore, this Court is of the considered opinion that thePrincipal Commissioner of Income Tax was justified inpassing the impugned order. The Apex Court in the case of B.M. Malani (supra) inparagraph – 8 has held as under:- “8. The term `genuine' as per the New CollinsConcise English Dictionary is defined as under: “Genuine' means not fake or counterfeit, real,not pretending (not bogus or merely a ruse)” For interpretation of the aforementionedprovision, the principle of purposive constructionshould be resorted to. Levy of interest although isstatutory in nature, inter alia for re-compensating therevenue from loss suffered by non-deposit of tax bythe assessee within the time specified therefor. Thesaid principle should also be applied for the purposeof determining as to whether any hardship had beencaused or not. A genuine hardship would, inter alia,mean a genuine difficulty. That per se would not leadto a conclusion that a person having large assetswould never be in difficulty as he can sell those assets and pay the amount of interest levied. “Genuine' means not fake or counterfeit, real,not pretending (not bogus or merely a ruse)” For interpretation of the aforementionedprovision, the principle of purposive constructionshould be resorted to. Levy of interest although isstatutory in nature, inter alia for re-compensating therevenue from loss suffered by non-deposit of tax bythe assessee within the time specified therefor. Thesaid principle should also be applied for the purposeof determining as to whether any hardship had beencaused or not. A genuine hardship would, inter alia,mean a genuine difficulty. That per se would not leadto a conclusion that a person having large assetswould never be in difficulty as he can sell those assets and pay the amount of interest levied. The ingredients of genuine hardship must bedetermined keeping in view the dictionary meaningthereof and the legal conspectus attending thereto. Forthe said purpose, another well--known principle,namely, a person cannot take advantage of his ownwrong, may also have to be borne in mind. The saidprinciple, it is conceded, has not been applied by thecourts below in this case, but we may take note of afew precedents operating in the field to highlight theaforementioned proposition of law. [See PriyankaOverseas Pvt. Ltd. & Anr. v. Union of India & ors.1991 Suppl. (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 SCC 342at 345, para 7, Sushil Kumar v. Rakesh Kumar(2003)8 SCC 673 at 692, para 65, first sentence, KusheshwarPrasad Singh v. State of Bihar & ors. (2007) 11 scc447, paras 13, 14 and 16). Thus, the said principle, in our opinion, shouldbe applied even in a case of this nature. A statutoryauthority despite receipt of such a request could havekept mum. It should have taken some action. It shouldhave responded to the prayer of the appellant. However, another principle should also beborne in mind, namely, that a statutory authority mustact within the four corners of the statute. Indisputably,the Commissioner has the discretion not to accede tothe request of the assessee, but that discretion must bejudiciously exercised. He has to arrive at a satisfactionthat the three conditions laid down therein have beenfulfilled before passing an order waiving interest. Compulsion to pay any unjust dues per sewould cause hardship. But a question, however, wouldfurther arise as to whether the default in payment ofthe amount was due to circumstances beyond thecontrol of the assessee. Unfortunately, this aspect of the matter has notbeen considered by the learned Commissioner and theHigh Court in its proper perspective. The Departmenthad taken the plea that unless the amount of tax duewas ascertainable, the securities could not have beensold and the demand draft could not have beenencashed. The same logic would apply to the case ofthe assessee in regard to levy of interest also. It is one thing to say that the levy of interest on the ground ofnon-payment of correct amount of tax by itself can bea ground for non-acceding to the request of theassessee as the levy is a statutory one but it is anotherthing to say that the said factor shall not be taken intoconsideration at all for the purpose of exercise of thediscretionary jurisdiction on the part of theCommissioner. Appellant volunteered that thesecurities be sold. Why the said request of theappellant could not be acceded to has not beenexplained. It was a voluntary act on the part of theappellant. It was not even a case where sub-Section (3) ofSection 226of the Act was resorted to. As the offerwas voluntary, the authorities of the Departmentsubject to any statutory interdict could haveconsidered the request of the appellant. It wasprobably in the interest of the revenue itself to realizeits dues. Whether this could be done in law or not hasnot been gone into.” It was not even a case where sub-Section (3) ofSection 226of the Act was resorted to. As the offerwas voluntary, the authorities of the Departmentsubject to any statutory interdict could haveconsidered the request of the appellant. It wasprobably in the interest of the revenue itself to realizeits dues. Whether this could be done in law or not hasnot been gone into.” This Court has carefully gone through the judgmentdelivered by the Apex Court. In the present case, theassessee, at every stage, has challenged the order passed bythe authorities. It is not a case where the assessee was readyto deposit the income tax. After the assessment order waspassed by the Assessing Officer pursuant to the seizureoperation, the Commissioner, keeping in view the conductof the petitioner, has exercised its discretion judiciously andthe three conditions laid down under Section 220 (2A) ofthe Income Tax Act, 1961 have not been fulfilled enablingthe Commissioner to waive out the interest. Every person ishaving certain compulsion while paying interest and thatcannot be the sole ground for allowing the application inrespect of waiver of the interest. In the considered opinion of this Court, keeping inview the judgment delivered by the Apex Court as well asthe parameter laid down by the Apex Court, the assessee is not entitled for any relief of whatsoever kind. Accordingly, the present writ petition standsdismissed.Certified copy as per rules. (S.C. SHARMA) J U D G E (VIRENDER SINGH) J U D G E Ravi Digitally signed by Ravi Prakash Date: 2019.04.16 17:23:12 +05'30'