Wp(C)/16821/2013 Of Nimmi John Chackola v. The Chief Commissioner Of Income Tax, Cochin

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE THURSDAY, THE 11TH DAY OF AUGUST 2016/20TH SRAVANA, 1938 WP(C).No. 16821 of 2013 (C) ------------------------------------------- PETITIONER(S) : -------------------------- SMT. NIMMI JOHN CHACKOLA, LEGAL HEIR OF LATE JOHN J.CHACKOLA, "CHACKOLA", CHACKOLA COLONY, PERUMANOOR, THEVARA, KOCHI-682 015. BY SRI.T.M.SREEDHARAN (SENIOR ADVOCATE) ADVS. SRI.V.P.NARAYANAN SMT.BOBY M.SEKHAR SMT.DIVYA RAVINDRAN RESPONDENT(S) : ----------------------------- 1. THE CHIEF COMMISSIONER OF INCOME TAX, 2ND FLOOR, C.R.BUILDINGS, I.S.PRESS ROAD, COCHIN-682 018. 2ND FLOOR, C.R.BUILDINGS, I.S.PRESS ROAD, COCHIN-682 018. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2(1), 3RD FLOOR, C.R.BUILDINGS, I.S.PRESS ROAD, KOCHI-682 018. 3RD FLOOR, C.R.BUILDINGS, I.S.PRESS ROAD, KOCHI-682 018. 3. THE COMMISSIONER OF INCOME TAX-II, C.R.BUILDING, I.S.PRESS ROAD, KOCHI-682 018. C.R.BUILDING, I.S.PRESS ROAD, KOCHI-682 018. 4. THE TAX RECOVERY OFFICER, ALUVA RANGE, K.A.P. COMMERCIAL COMPLEX, RAILWAY STATION ROAD, ALUVA-1. BY ADV. SRI.JOSE JOSEPH, S.C THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03-08-2016, THE COURT ON 11-08-2016 DELIVERED THE FOLLOWING: ------------------------------------------ APPENDIX PETITIONER(S)' EXHIBITS : EXHIBIT P1:TRUE COPY OF THE ASSESSMENT ORDER DATED 28.03.2001 ISSUED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, DIVISION-II, ERNAKULAM.ISSUED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, DIVISION-II, ERNAKULAM. EXHIBIT P2: TRUE COPY OF THE ORDER DATED 21.11.2011 PASSED BY THE FIRST RESPONDENT.THE FIRST RESPONDENT. EXHIBIT P3: TRUE COPY OF THE ORDER DATED 01.12.2011 PASSED BY THE SECOND RESPONDENT.THE SECOND RESPONDENT. EXHIBIT P4: TRUE COPY OF THE APPLICATION DATED 09.02.2012 SUBMITTED BY THE PETITIONER BEFORE THE THIRD RESPONDENT.BY THE PETITIONER BEFORE THE THIRD RESPONDENT. EXHIBIT P5: TRUE COPY OF THE ORDER DATED 19.03.2012 PASSED BY THE 2ND RESPONDENT.THE 2ND RESPONDENT. EXHIBIT P6: TRUE COPY OF ORDER U/S.220(2A) DATED 23.04.2012 PASSED BY THE 3RD RESPONDENT.THE 3RD RESPONDENT. EXHIBIT P7: TRUE COPY OF PETITION DATED 29.06.2012 SUBMITTED BY THE PETITIONER TO THE 3RD RESPONDENT.THE PETITIONER TO THE 3RD RESPONDENT. EXHIBIT P8: TRUE COPY OF LETTER DATED 31.05.2013 ISSUED BY THE 3RD RESPONDENT.THE 3RD RESPONDENT. EXHIBIT P9: TRUE COPY OF LETTER DARTED 21.06.2013 SUBMITTED TO THE 4TH RESPONDENT BY THE PETITIONER.THE 4TH RESPONDENT BY THE PETITIONER. RESPONDENT(S)' EXHIBITS : NIL //TRUE COPY// P.A.TO JUDGE. A.M.SHAFFIQUE, J * * * * * * * * * * * * W.P.C.No.16821 of 2013 ---------------------------------------- Dated this the 11[th] day of August 2016 J U D G M E N T This writ petition is filed seeking for a direction to the 3[rd]respondent to allow waiver of interest amounting toRs.15,06,296/- and for other consequential benefits. EXHIBIT P8: TRUE COPY OF LETTER DATED 31.05.2013 ISSUED BY THE 3RD RESPONDENT.THE 3RD RESPONDENT. EXHIBIT P9: TRUE COPY OF LETTER DARTED 21.06.2013 SUBMITTED TO THE 4TH RESPONDENT BY THE PETITIONER.THE 4TH RESPONDENT BY THE PETITIONER. RESPONDENT(S)' EXHIBITS : NIL //TRUE COPY// P.A.TO JUDGE. A.M.SHAFFIQUE, J * * * * * * * * * * * * W.P.C.No.16821 of 2013 ---------------------------------------- Dated this the 11[th] day of August 2016 J U D G M E N T This writ petition is filed seeking for a direction to the 3[rd]respondent to allow waiver of interest amounting toRs.15,06,296/- and for other consequential benefits. 2.The short facts involved in the writ petition woulddisclose that the assessment was completed with respect to thereturn filed by late John J.Chackola in respect of assessment year1994-95. Ext.P1 is the assessment order dated 28/03/2001.Petitioner, being the legal heir, was prosecuting the matter.Ext.P1 order was modified by a further order dated 17/05/2004.Petitioner remitted the amounts in monthly instalments duringSeptember 2004 to May 2008 aggregating to Rs.26,53,624/-.Thereafter, the petitioner filed application for waiver of interestbefore the 1[st] respondent under Section 234A of the Income Taxof 1961 (hereinafter referred to as the 'IT Act') amounting toRs.3,75,256/- and interest under Section 234B of the Actamounting to Rs.9,38,140/-. The 1[st] respondent, as per Ext.P2order dated 21/11/2011, granted waiver of interest charged under Section 234A of the Act amounting to Rs.3,75,256/-. The claim forwaiver of interest under Section 234B of the Act was rejected. ByExt.P3 order dated 01/12/2011, the total amount payable wascomputed at Rs.22,24,894/- inclusive of interest of Rs.12,86,754/-under Section 220(2) of the Act. Petitioner submitted Ext.P4representation for waiver of interest under Section 220(2) of theAct. In the meantime, petitioner was served with Ext.P5 showingthe computation of amounts pursuant to Ext.P2 order. As perExt.P5, the interest under Section 220(2) of the Act was shown as15,06,296/-. In the meantime, the assessee had already paidRs.22,53,624/-. After waiving the interest under Section 234A,the balance amount payable was 11,31,040/-. The applicationunder Section 220(2A) was allowed as per Ext.P6 order dated23/04/2012. It was observed in Ext.P6 order that the levy ofinterest under Section 220(2) has caused genuine hardship to thepetitioner and the defaulted payment of interest was beyond thecontrol of the petitioner and therefore the balance interestpayable under Section 220(2) of the Act is waived in full. Pursuantto Ext.P6, petitioner submitted a letter dated 29/06/2012 to the3[rd] respondent requesting for waiver of the interest charged, that W.P.C.No.16821/2013 3 is, Rs.15,06,296/-. This was replied by Ext.P8 dated 31/05/2013indicating that waiver was permitted only in respect of thebalance amount payable and therefore petitioner is not entitledfor any relief. 3.The main contention urged by the petitioner is thatwhen interest is waived under Section 220(2A) of the IT Act, theentire interest charged has to be waived. In other words, therecannot be any limit in granting the waiver. The main contention urged by the petitioner is that 4.Learned counsel for the petitioner also placed relianceon the following judgments: i)E.M.Joseph v. Chief Commissioner of Income Tax and Others[(2012) 342 ITR 379]. In this case, the writ petitionwas filed challenging the action of the Commissioner of IncomeTax in limiting the waiver to an amount of Rs.24,408/- which wasthe balance amount due from the deceased assessee. Perusal ofthe judgment indicates that the contention urged in the case isthat no specific reason had been stated to limit the waiver to theamount which remained due and payable. It was held atparagraph 9 as under: The main contention urged by the petitioner is that 4.Learned counsel for the petitioner also placed relianceon the following judgments: i)E.M.Joseph v. Chief Commissioner of Income Tax and Others[(2012) 342 ITR 379]. In this case, the writ petitionwas filed challenging the action of the Commissioner of IncomeTax in limiting the waiver to an amount of Rs.24,408/- which wasthe balance amount due from the deceased assessee. Perusal ofthe judgment indicates that the contention urged in the case isthat no specific reason had been stated to limit the waiver to theamount which remained due and payable. It was held atparagraph 9 as under: “9. In the instant case, what was stated bythe Chief CIT was that certain amounts were alreadypaid by way of adjustment or otherwise and thatcertain amounts remained unpaid. The standingcounsel for the Revenue would also contend thatthe waiver of interest was limited to that remainingunpaidsince the amount adjusted cannot be takento be having been paid. The section not havingmade any such distinction, as found earlier, and byvirtue of the amendment entitling both paid andunpaid interest to be considered for waiver; I am ofthe opinion that the discretion has not beenproperly exercised by the Chief CIT.” ii)Another judgment relied upon is B.M.Malani v. Commissioner of Income Tax and Another[(2008) 306 ITR196 (SC)]. In the above case, the Apex Court considered thequestion as to what would cause genuine hardship. It was heldthat the ingredients of genuine hardship must be determinedkeeping in view the dictionary meaning thereof and the legalconspectus attending thereto. 5.On the other hand, learned counsel for the Revenueplaced reliance on the judgment of the Kerala State CashewDevelopment Corporation Ltd. v Income Tax Officer and W.P.C.No.16821/2013 Another[1990 (186) ITR 521]. It was held that, if thecircumstances are such that a total waiver is called for, that hasto be allowed and it will not be open thereafter to the Income TaxOfficer to deny waiver. It is also held that the quantum ofdeduction to be allowed in a given case must be arrived atobjectively and fairly and that the reduction or waiver is not aright or a matter of course whereas it has to be made on sufficientcause being made out after considering all relevantcircumstances. The levy of interest being compensatory, it has tobe verified whether the delay in filing the returns was on accountof sufficient reasons being shown. 6.There is no doubt regarding the proposition laid downin the cases cited above. Even the learned Single Judge of thisCourt in E.M.Joseph (supra) observed that the Section does notmake any distinction by which there is any restriction imposed onthe Commissioner of Income Tax to consider waiver of the interestthat has been paid and unpaid. In the said case, the learnedSingle Judge proceeded on the basis that the discretion has notbeen exercised properly by the Chief Commissioner of Income Taxand therefore the matter was remitted back. 7.In Kerala State Cashew Development Corporation Ltd (supra), a Division Bench of this Court was concerned with thequestion when the Commissioner of Income Tax refused theprayer of the assessee for waiver of interest levied under Section139(8) of the IT Act, 1961. It was held that when the interestunder Section 139(8) is levied by way of compensation and not byway of penalty, the Officer could waive the interest in its entiretyor reduce the quantum of interest. It was further held that whenthe interest is compensated, it must necessarily follow that theloss sustained by the State is a relevant factor. 8.The Apex Court in B.M.Malani (supra) had consideredthe scope of Section 220(2A) and held at paragraphs 21 and 22as under: 7.In Kerala State Cashew Development Corporation Ltd (supra), a Division Bench of this Court was concerned with thequestion when the Commissioner of Income Tax refused theprayer of the assessee for waiver of interest levied under Section139(8) of the IT Act, 1961. It was held that when the interestunder Section 139(8) is levied by way of compensation and not byway of penalty, the Officer could waive the interest in its entiretyor reduce the quantum of interest. It was further held that whenthe interest is compensated, it must necessarily follow that theloss sustained by the State is a relevant factor. 8.The Apex Court in B.M.Malani (supra) had consideredthe scope of Section 220(2A) and held at paragraphs 21 and 22as under: “21.For interpretation of the aforementionedprovision, the principle of purposive constructionshould be resorted to. Levy of interest is statutory innature, inter alia for re-compensating the revenuefrom loss suffered by non-deposit of tax by theassessee within the time specified there for. The saidprinciple should also be applied for the purpose ofdetermining as to whether any hardship had been caused 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 thoseassets and pay the amount of interest levied. 22.The ingredients of genuine hardship must bedetermined keeping in view the dictionary meaningthereof and the legal conspectus attending thereto.For the 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. and Anr. v. Union of India and Ors.1991 Suppl. (1) SCC 102, para 39; Union of India andOrs. v. Major General Madan Lal Yadav (Retd.)MANU/SC/0355/1996 : [1996] 4 SCC 127 at 142,paragraphs 28 and 29, Ashok Kapil v. Sana Ullah(1996)6 SCC 342 at 345, paragraph 7; Sushil Kumarv. Rakesh Kumar [2003] 8 SCC 673 at 692,paragraph 65, first sentence, Kusheshwar PrasadSingh v. State of Bihar [2007] 11 SCC 447,paragraphs 13 , 14 and 16.” 9.Section 220(2A) reads as under: “220. When tax payable and when assesseedemand in default. xxxx (2A) Notwithstanding anything contained insub-section (2), the Chief Commissioner orCommissioner may reduce or waive the amount ofinterest paid or payable by an assessee under thesaid sub-section if he is satisfied that- (i)payment of such amount has caused orwould cause genuine hardship to the assessee; (ii)default in the payment of the amount onwhich interest has been paid or was payable underthe said sub-section was due to circumstancesbeyond the control of the assessee; and (iii)the assessee has co-operated in anyinquiry relating to the assessment or any proceedingfor the recovery of any amount due from him.” 10.There is no doubt about the proposition that theinterest being charged is compensatory in nature. The powergiven under sub Section (2A) of Section 220 is to reduce or towaive the interest paid or payable. The reasons to reduce orwaive interest, should be either the payment of such amount hascaused or would cause genuine hardship, whether the default in (i)payment of such amount has caused orwould cause genuine hardship to the assessee; (ii)default in the payment of the amount onwhich interest has been paid or was payable underthe said sub-section was due to circumstancesbeyond the control of the assessee; and (iii)the assessee has co-operated in anyinquiry relating to the assessment or any proceedingfor the recovery of any amount due from him.” 10.There is no doubt about the proposition that theinterest being charged is compensatory in nature. The powergiven under sub Section (2A) of Section 220 is to reduce or towaive the interest paid or payable. The reasons to reduce orwaive interest, should be either the payment of such amount hascaused or would cause genuine hardship, whether the default in payment of the amount on which interest has been paid or waspayable was due to the circumstances beyond the control of theassessee and the assessee has co-operated with the enquiryrelating to the assessment or any proceeding for the recovery ofany amount due from him. All these three conditions have to besatisfied. On facts, it has to be verified whether these conditionshave been fulfilled. In Ext.P6 order, it is found that all theconditions under Section 220(2A) for reduction or waiver ofinterest has been satisfied. This was a case in which paymentwas already made in instalments and what remained to be paidwas a portion of interest. The Commissioner, having arrived at afinding, granted waiver for the balance interest payable i.e.Rs.11,31,040/- and did not waive the entire interest, though it wasfound that the petitioner had satisfied all the conditions. Asalready indicated, statute permits reduction of interest or waiverof interest in full. This is a case in which the Commissioner hasfound that the interest payable can be waived thereby reducingthe quantum of interest. Waiver itself is a discretion to beexercised in terms with the statute, and once such a discretionhas been exercised, the scope of judicial review is very limited. I W.P.C.No.16821/2013 do not find any arbitrariness in the discretion exercised by the Commissioner warranting interference. Hence the writ petition is dismissed. (sd/-) (A.M.SHAFFIQUE, JUDGE) jsr