Wp/5218/2000 Of M/S. Shaiko Tanners And Exporters Mandi Bazar v. Chief Commissioner Of Income Tax

HON’BLE SRI JUSTICE L. NARASIMHA REDDYANDHON’BLE SRI JUSTICE CHALLA KODANDA RAMWRIT PETITION No.5218 OF 2000 ORDER:- (per Hon’ble Sri Justice Challa Kodanda Ram) This writ petition is filed questioning the order dated08.01.1999 of the 1[st] respondent rejecting an application filed by thepetitioner seeking waiver of interest, levied under Section 234A, 234Bof the Income Tax Act, 1961 (for short, “the Act). 2) Petitioner is an assessee on the rolls of the 2[nd] respondent andis in the business of purchase of raw skins, and processing them intofinished leather, and/or converting them into garments and exporting ofthe product to other countries. For the assessment years 1991-92,1992-93, the petitioner filed returns belatedly on 15.12.1995 and on9.1.1996 duly complying with the procedure of audit and filing auditreport under Section 44AB of the Act. After making the assessmentthrough order dated 29.3.1996, the 2[nd] respondent levied interest ofRs.17,37,300/- under Section234A and Rs.20,80,860/- under Section234B of the Act. In the appeals filed by the petitioner, substantial reliefwas granted with respect to tax interest levied under Section 234A and234B of the Act and it came to be reduced to Rs.4,36,400/- andRs.4,79,496/- respectively. 3) The petitioner approached the 1[st] respondent through his letterdated 18.11.1997, seeking waiver of the interest levied under Sections234A and 234B of the Act. Petitioner had set out in detail the reasonsfor the delayed filing of the returns and also for the delayed payment ofadvance tax. The application was rejected by the 1[st] respondentthrough order dated 8.1.1999 on the short ground that the assesseehad been issued notice under Section 148 of the Act on 5.8.1993 andtherefore, the returns filed by him were not voluntary in nature. 4) Sri J.V. Prasad, learned senior counsel appearing on behalf ofthe petitioner contends that the 1[st] respondent had failed to exercisethe discretion vested with him in considering the application forwaiver. He further submits that the reasoning of the first respondentthat the return was filed only after receipt of notice under Section148 ofthe Act, in the facts of the case, is not correct inasmuch as the noticewas issued on 5.8.1993 whereas the returns were filed on 15.12.1993,9.1.1996 i.e., after a lapse of almost 2 to 3 years. According to him, thedelay in filing the returns was on account of the fact that the disputesbetween the partners of the firm, and because of which there was atotal deadlock in the affairs of the firm and that on the disputes beingsettled by virtue of an award dated 31.08.1985 of the Arbitrator, thereturns were filed promptly and without any further delay. Learnedcounsel would further submit that the 1[st] respondent failed toappreciate this subtle distinction. 5) On the other hand, Sri S.R. Ashok, learned senior counsel for thedepartment submits that it is only after receipt of the notice issuedunder Section148 of the Act, that the returns were filed and that recordwould reveal that after repeated notices were issued under Section142(1) on 16.9.1993, 9.12.1993, 3.5.1994 and 10.10.1995 whichyielded no response. It is pleaded that a search under Section 133A ofthe Act was conducted on the business premises of the assessee andit is only after these efforts, that the petitioner filed the returns and assuch it cannot be said that the returns filed voluntarily. He contendsthat the conditions stipulated in the notification dated 23.5.1996 issuedby the C.B.D.T in exercise of its powers under Section 119(2)A of theAct, were not satisfied by the petitioner and as such the rejection of thewavier petition is in order and does not need any interference by thisCourt. 6) It is true that there was delay in filing of return by the petitioner. 6) It is true that there was delay in filing of return by the petitioner. However, in his application dated 15.01.1997 he explained in detailabout various disputes that have arisen between the partners and thereference of the said disputes to the arbitrator as well as to the awarddated 31.9.1995. Even the said award was under challenge by one ofthe parties. It is only after the award that there was some amount ofcoordination and cooperation between the partners which enabled thefirm to get the accounts of the firm audited and thereafter, to file thereturns. The delay is caused on account of these circumstances whichsquarely fall within the conditions stipulated in Clause (e) of para No.2of the notification dated 23.5.1996 of C.B.D.T. We may refer to theClause (e) of para No.2 of the notification. “2………… (e) Where a return of income could not be filed by theassessee due to unavoidable circumstances and suchreturn of income is filed voluntarily by the assessee or hislegal heirs without detection by the Assessing Officer.” 7) The circumstances mentioned by the petitioner squarely fallunder the expression “due to unavoidable circumstances”. Further, thenotice under Section 148 of the Act which was issued in normal courseon 5.8.1993, cannot be said to be basis for the returns filed by thepetitioner. The filing of the returns was not merely on account of thesaid notice, but only on account of the settlement reached between theparties by virtue of the arbitration award dated 31.08.1985. In otherwords, the returns filed can be said to be voluntary and that wouldentitle the petitioner to the benefit under para No.2(e) of thenotification and thereby, the waiver of interest, is levied underSections 234A and 234B of the Act. 8) For the above reasons, the writ petition is allowed. It is directedthat the Commissioner of Income Tax shall take necessary steps in thelight of our findings. There shall be no order as to costs. Miscellaneous Petitions, if any pending in this writ petition shall standclosed. ___________________________ L. NARASIMHA REDDY, J Date:25.06.2014.Gk ____________________________ CHALLA KODANDA RAM, J HON’BLE SRI JUSTICE L. NARASIMHA REDDYANDHON’BLE SRI JUSTICE CHALLA KODANDA RAM WRIT PETITION No.5218 OF 2000 Date:25.06.2014. Gk