Wp(C)/19895/2007 Of Dr.k.m.mehaboob v. Chief Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE S.SIRI JAGAN THURSDAY, THE 21ST DAY OF JUNE 2012/31ST JYAISHTA 1934 WP(C).No. 19895 of 2007 (R) --------------------------- PETITIONER(S): ----------------------- DR.K.M. MEHABOOB, S/O.DR.K. MOIDU, "SHADE", NEAR MALABAR CHRISTIAN COLLEGE, CALICUT. BY ADV. SRI.MILLU DANDAPANI. RESPONDENT(S): -------------------------- 1. THE CHIEF COMMISSIONER OF INCOME TAX, OFFICE OF THE COMMISSIONER OF INCOME TAX, OFFICE OF THE COMMISSIONER OF INCOME TAX, I.S. PRESS ROAD, ERNAKULAM. 2. THE COMMISSIONER OF INCOME TAX, OFFICE OF THE COMMISSIONER OF INCOME TAX, APPELLATE BHAVAN, NORTH BLOCK, KOZHIKODE-673 001. OFFICE OF THE COMMISSIONER OF INCOME TAX, APPELLATE BHAVAN, NORTH BLOCK, KOZHIKODE-673 001. 3. THE TAX RECOVERY OFFICER, OFFICE OF THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-I, CALICUT. BY ADV. SRI.P.K.R.MENON, SR.COUNSEL, GOI (TAXES) BY ADV. SRI.JOSE JOSEPH, SC, INCOME TAXES. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 21-06-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 19895 of 2007 (R) APPENDIX PETITIONER'S EXHIBITS:- EXT.P1COPY OF THE CERTIFICATE/DEMAND NOTICE NO.TR-39/CLT/R1/05-06DATED 27/07/2005 ISSUED BY 3RD RESPONDENT.DATED 27/07/2005 ISSUED BY 3RD RESPONDENT. EXT.P2COPY OF THE RECEIPT ISSUED BY THE 3RD RESPONDENTEVIDENCING THE PAYMENT OF MONEY TOWARDS THEINCOME TAX ARREARS.EVIDENCING THE PAYMENT OF MONEY TOWARDS THEINCOME TAX ARREARS. EXT.P3COPY OF THE RECEIPT ISSUED BY THE 3RD RESPONDENTEVIDENCING THE PAYMENT OF MONEY TOWARDS THE TAX ARREARS.EVIDENCING THE PAYMENT OF MONEY TOWARDS THE TAX ARREARS. EXT.P4COPY OF THE PETITION DATED 23/05/2006 FILED UNDER SEC.220 (2A) BEFORE THE 2ND RESPONDENT BY THE PETITIONER. EXT.P5COPY OF THE EXPLANATION DATED 26/02/2007 FILED BEFORETHE 2ND RESPONDENT BY THE PETITIONER.THE 2ND RESPONDENT BY THE PETITIONER. EXT.P6COPY OF THE ORDER DATED 05/03/2007 OF 2ND RESPONDENTREJECTING EXHIBIT P4 PETITION.REJECTING EXHIBIT P4 PETITION. RESPONDENT'S EXHIBITS:- NIL. //TRUE COPY// P.S. TO JUDGE S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= W.P(C) No. 19895 of 2007 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=Dated this, the 21[st]day of June, 2012. The petitioner was the erstwhile partner of a firm whichbecame defunct. The firm was dissolved in the year 1993. ByExt.P1 certificate dated 27.7.2005, arrears of income tax duefrom the firm for the assessment year 1987-88 was demandedfrom the petitioner. The petitioner submits that the firm wasmanaged by the erstwhile managing partner and the petitionerwas under the impression that at the time of dissolution of thefirm, all taxes payable were duly paid. The petitioner could notalso trace out any documents after 17 years in respect of theassessment as well. The petitioner immediately paid the taxdemanded and submitted an application under Section 220(2A)of the Income-tax Act for waiver from the interest demandedunder Section 220(2) of the Income-tax Act, 1961. But the samewas rejected by Ext.P6 order. It is challenging that order, thepetitioner has filed this writ petition. 2. The learned counsel for the petitioner submits that hedoes not dispute the liability to pay. The petitioner submits thatall the ingredients of Section 220(2A) of the Income-tax Act havebeen satisfied in the petitioner's case and therefore rejection ofthe petitioner's application for waiver of interest under Section220(2A) is clearly unsustainable. 3. With the help of a statement filed on behalf of therespondents, counsel for the Income-tax Departmentvehementally opposes the prayer of the petitioner. He would W.P(C) No. 19895 of 2007 -: 2 :- 2. The learned counsel for the petitioner submits that hedoes not dispute the liability to pay. The petitioner submits thatall the ingredients of Section 220(2A) of the Income-tax Act havebeen satisfied in the petitioner's case and therefore rejection ofthe petitioner's application for waiver of interest under Section220(2A) is clearly unsustainable. 3. With the help of a statement filed on behalf of therespondents, counsel for the Income-tax Departmentvehementally opposes the prayer of the petitioner. He would W.P(C) No. 19895 of 2007 -: 2 :- submit that none of the ingredients of Section 220(2A) aresatisfied in this case and even in Ext.P4 application beforethe Income-tax Commissioner, the petitioner had no suchcase. He would therefore submit that the petitioner is notentitled to waiver of interest. 4. I have considered the rival contentions in detail. 5. Section 220(2A) of the Income-tax Act Reads asfollows: “(2A) Notwithstanding anything contained in sub-section (2) the Chief Commissioner or Commissioner mayreduce or waive the amount of interest paid or payable byan assessee under the said sub-section if he is satisfiedthat-- (i)payment of such amount has caused or wouldcause genuine hardship to the assessee;cause genuine hardship to the assessee;ii.default in the payment of the amount onwhich interest has been paid or was payableunder the said sub-section was due tocircumstances beyond the control of theassessee; andwhich interest has been paid or was payableunder the said sub-section was due tocircumstances beyond the control of theassessee; andiii.the assessee has co-operated in any inquiryrelating to the assessment or any proceedingfor the recovery of any amount due fromhim.”relating to the assessment or any proceedingfor the recovery of any amount due fromhim.” I am of opinion that the question as to whether theseingredients have been satisfied in the petitioner's case hasto be considered in the background of the delay in recoveryitself. Admittedly, the tax demanded is for the assessment W.P(C) No. 19895 of 2007 -: 3 :- year 1987-88. Ext.P1 certificate under Section 222 of theIncome-tax Act was served on the petitioner only on27.7.2005. It is not disputed before me that the firm wasdissolved in 1993. Of course, the petitioner was one of theerstwhile partners of the firm. He would submit that he wasnot aware of the arrears of tax insofar as the firm was beingmanaged by the erstwhile managing partner and thepetitioner is not in possession of any records in relation tothat assessment. He has specifically stated that he wasunder the impression that at the time of dissolution of thefirm, all taxes due have been duly paid. Therefore, therecannot be any doubt that payment of such amount wouldcause genuine hardship to the assessee insofar as thepetitioner has to suffer the burden of the tax by himself.Needless to say, the very same circumstance is more thansufficient to hold that the default in payment was due to thecircumstances beyond the control of the assessee. Thepetitioner immediately on receipt of Ext.P1, paid the taxalso and did co-operate with the proceedings for recovery.There is no case for the respondents that the petitioner hadnot co-operated with the enquiry relating to theassessment as well. Therefore, I am satisfied that all thethree ingredients of Section 220(2A) are fully satisfied inthis case. That being so, the petitioner is entitled to waiverof interest under that Section. Accordingly, Ext.P6 order isquashed. It is declared that the petitioner is entitled to W.P(C) No. 19895 of 2007 -: 4 :- waiver of interest under Section 229(2A) of the Income-taxAct. Therefore, the respondents shall pass appropriateorders in tune with the above declaration expeditiously.The petitioner shall be given all consequential reliefs also. The writ petition is disposed of as above. Sd/- S. Siri Jagan, Judge. Tds/