Wp/29258/2015 Of M/S Mookambika Associates v. Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA, BENGALURU. DATED THIS THE 4 DAY OF SEPTEMBER, 2015 BEFORE THE HON'BLE MR.JUSTICE RAM MOHAN REDDY WRIT PETITION NOS. 29258"29259 OF 2015 (T"IT) BETWEEN: M/S MOOKAMBIKA ASSOCIATES|NO.14, LAKSHMI COMPLEX 3 CROSS, JOURNALIST COLONY BENGALURU-560 OO? REP.BY IT’S PARTNER SRI.T.V.PRABHU | _ PHRTITIONER (BY SRI. M.V.SESHACHALA SENIOR COUNSEL|A/W SRI. ARAVIND V CHAVAN, ADV.) AND: 1.|ASSISTANT COMMISSIONBR.OF INCOME TAX.CENTRAL CIRCLE 2(1)C.R.BUILDINGS,QUEENS ROAD,BBNGALURU-560 OO1.. DO|PRINCIPAL COMMISSIONBR OF I[MCOME-TAX-5 1 KRLOOR C.R.BUILDINGSQUEENS ROAD BBENGALURU-560 OO] 3.TAX RBCOVBRY OFFICHKR-5IMCOME TAX DEPRIMENT|RANGE-4, 4[‘T]KRLOORIMCOME TAX DEPRIMENT|RANGE-4, 4[‘T]KRLOOR UNITTY BUILDING (ANNEX)MISION ROAD.BBENGALURU-560 OO? RESPONDENTS. THRESH WRIT PRTITIONS ARB FILED UNDERARTICLES 2296 & 227 OF CONSTITUIION OF INDIAPRAYING TO QUASH THE ORDER DTD:20.04.2015,|FOR THR ASSKHSSMENT YBEAR 2JOO6-2007 AND ORDDTD:20.04.2015 FOR THE ASSESMENT YEAR 2007-08, BOTHPASE DBYTHESKHCONDRESPONDENT,PRODUCKD ANNBXURB-KB & FAND DIRBCIT THRESPONDENTSTO.GIVE.THEASESOEE,ANAPPORTUNITY OF HBRBARING AND PASS AN ORDEAFRESH BY CONSIDERING THE GROUNDS RAISED IN|THR APPLICATION FOR WAIVER FILED BY THE!ASSEHSSHEU/S|220(2A)dJOF|THEACT,|IN|ACCORDANCE WITH LAW @& ETC., THERESEK WRIT PEITITIONS COMING ON PRILIMINARY HEARING THIS DAY, THE COURT MADE)THR FOLLOWING: | ORDER On 27.38.2015 the following order was passed: “Petitioner, a partnership firm with the|object of carrying on business of real estate did|notfilewithintime1tsreturn fortheassessment years 2006-2007 and 2007-2008,|whence, income tax authorities conducted a)searchoT theassessee’s premises_OTl06.01.2009 under Section 132 ot the Income.Tax Act, 1961 (‘Act’ for short) followed by a)notice under Section 153(c) whereafter on)20.09.2010 petitioner filed return of income for|the assessment year 20060-2007 and 200/2008 declaring total income of41,05,38,750/-|for the assessment year 2006-2007 and)L1,56,00,000/- for the assessment year 2007-2008 inter alia stating that the assessee had)notcommencedtradingbusiness, but|purchased immovable properties during the)assessment year 2006-07, however did not)disclosethe|SOUTCEoT considerationforpurchase of the immovable properties. The,return for the year 2006-2007 was accepted|under Section 143(3) of the ‘Act’, while the) return for the assessment year 2007-2008|income when assessed _ at |42,06,00,000/-OT]30.12.2010.madeademandfor=1,26,75,3060/-. The Prl. Commissioner forIncome Jax issued notice dated 20.04.2015.demandingV63,79,085/- as interest leviedunder Section 220(2) of the Act for the)assessment year 2007-2008. The assessee filed an application on16.03.2015 requesting waiver of interest under|section 220(2) whereaiterwards report was)called from the Assessing Officer which when|filed disclosed that assessee did not make!payment of the demand aiter assessment was|completed, but went in appeal and further that,it was only aiter taking coercive action, by)attaching the bank account and properties of|the assessee, payment of,415,00,000/- wasmade on 11.9.2014 and|41,11,75,3606/- on20.01.2015,andtheASSECSSEEdid|notcooperate during the recovery of tax despitehaving extended ample opportunities. Pri.Commissioner of [Income ‘Tax-V declined taccept the cause shown for hardship to waive interest under Section 220(2) and rejected)application. Hence this petition.Aiter having heard Sri M.V.Seshachala, learned|senior Counsel for petitioner, hearing is)adjourned to O0[89]september 2015 to securefurther instructions.” 2. Today learned Senior counsel submits thatpetitionersufferedgenuine hardshiphencethe|Challenge to the rejection of petitioner’s claim for waiverof interest under Section 220(2) of the Income-tax Act,1961 by orders of even date 20.4.2015 Annexures-Eand F for the assessment years 2006-07 and 2007-08,respectively. interest under Section 220(2) and rejected)application. Hence this petition.Aiter having heard Sri M.V.Seshachala, learned|senior Counsel for petitioner, hearing is)adjourned to O0[89]september 2015 to securefurther instructions.” 2. Today learned Senior counsel submits thatpetitionersufferedgenuine hardshiphencethe|Challenge to the rejection of petitioner’s claim for waiverof interest under Section 220(2) of the Income-tax Act,1961 by orders of even date 20.4.2015 Annexures-Eand F for the assessment years 2006-07 and 2007-08,respectively. 3. As noticed supra, a law abiding citizen isrequired to follow the rule of law by filing income taxreturns within the time stipulated since taxes are anessential element of the economy and well being of thecountry. If this is kept in mind, petitioner, apartnership firm, did not submit its returns for the year 2006-07 and 2007-08 within the time stipulated but didso only after the machinery provided under the IncomeTax Act was put into force i.e. a search conducted andnotice issued, pursuant to which returns were filed on20.9.2010. The conduct of the petitioner speaksvolumes of its commitment to rule of law. The fact that|returns submitted when accepted, petitioner wasrequired to pay tax of414,74,229/- for the assessment|year 2006-07 and|42,06,00,000 for the assessment year.2007-08. Petitioner did not make the paymentsimmediately thereafter but did so only aiter coercivesteps were taken by attaching the Bank accounts andproperty of the petitioner, whence=35 lakhs was paid.on 8&.5.2014 and the balance ot=79,21,973/- on|20.1.2015 for the assessment year 2006-07, while forthe assessment year 2007-08.415 lakhs was paid on11.9.2014 andL1,11,75,366/- on 20.1.2015. Despite)the laxity on the part of the Department in the matter ofrecovery of the taxes by reason of which petitioner was_ in possession of the amounts due and payable as tax foralmost ten years from the assessment year 2006-07, yetagain speaks volumes of the conduct of the petitioner inthe matter of payment of taxes. 4. It regard is had to the aforesaid facts andmaterial dates, the contention that petitioner suffersfrom hardship hence entitled to waiver of interest undersection 220(2) of the Income Tax Act is far fromacceptance. “Hardship” when pressed into service mustbe genuine and must smack of a conduct of a worthycitizen. In the facts and circumstances hardship cannotbe comprehended in favour of the petitioner. Suffice itto state that the Prl. Commissioner of Income Tax Act-V,.Bangalore was fully justified in declining waiver ofinterest at the request of the petitioner. o. The orders impugned cannot be characterized as perverse or arbitrary calling for interference in 1D18A6;1�32�1D/8:3896.:8B�586/�@C86;96A/63.�C.918��8/6A41� !!��32�/01��3.;/6/C/63.�� �1/6/63.;�91G369�32�>186/�:81�81@1A/19�� 4.�� �&'"�������