Wp(C)/20563/2009 Of M.surendran v. Commissioner Of Income Tax & Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM MONDAY, THE 8TH DAY OF DECEMBER 2014/17TH AGRAHAYANA, 1936 WP(C).No.20563 of 2009 (M) --------------------------------------- PETITIONER: ------------------- M.SURENDRAN,AGED 56 YEARS,S/O.MADHAVAN,RESIDING AT 'SUBINA', 4/4799,A.G.ROAD,CALICUT-32. BY ADV.SRI.P.GOPINATH RESPONDENT'S: ------------------------ 1. THE COMMISSIONER OF INCOME TAX,AAYAKAR BHAVAN,MANAMCHIRA,CALICUT. 2. THE INCOME TAX OFFICER,CIRCLE-1,CALICUT. 3. THE TAX RECOVERY OFFICER,RANGE-1,CALICUT. 4. THE BRANCH MANAGER,LIFE INSURANCE CORPORATION OF INDIA, BRANCH-III,CALICUT. 5. THE ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-1,RANGE-1,CALICUT. R1 TO R3 & R5 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX R4 BY ADV.SRI.LAL GEORGE. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08-12-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.20563 of 2009 (M) --------------------------------------- APPENDIX PETITIONER'S EXHIBITS: EXT.P1:TRUE COPY OF INTERIM ORDER IN C.M.P NO.11950/2000 IN O.P.NO.153/2000 DATED 7.3.2000. EXT.P2:TRUE COPY OF THE LETTER DATED 14.8.2003 FROM THE 4TH RESPONDENT TO THE 2ND RESPONDENT. RESPONDENT TO THE 2ND RESPONDENT. EXT.P3:TRUE COPY OF THE LETTER NO.AKPPS 4228K DATED 24.10.2005 FROM THE 2ND RESPONDENT TO THE PETITIONER. THE 2ND RESPONDENT TO THE PETITIONER. EXT.P4:TRUE COPY OF THE LETTER TR NOS.142 TO 146 & 300/98-99 DATED 27.7.2006 FROM THE 3RD RESPONDENT TO THE PETITIONER. DATED 27.7.2006 FROM THE 3RD RESPONDENT TO THE PETITIONER. EXT.P5:TRUE COPY OF THE LETTER NO.TR NOS.142 TO 146 & 300/98-99 DATED 23.1.2007. DATED 23.1.2007. EXT.P6:TRUE COPY OF THE LETTER NO.TR 42 TO 146/02-02 & 300/98-99 DATED 10.3.2009. DATED 10.3.2009. EXT.P7:TRUE COPY OF THE LETTER DATED 12.3.2006 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER. RESPONDENT TO THE PETITIONER. EXT.P8:TRUE COPY OF THE LETTER DATED 13.3.2009 FROM THE PETITIONER TO THE 4TH RESPONDENT. TO THE 4TH RESPONDENT. EXT.P9:TRUE COPY OF THE LETTER DATED 16.3.2009 FROM THE 4TH RESPONDENT TO THE 2ND RESPONDENT. RESPONDENT TO THE 2ND RESPONDENT. EXT.P10:TRUE COPY OF THE PETITION SUBMITTED BY THE PETITIONER TO THE 1ST RESPONDENT ON 24.3.2009. 1ST RESPONDENT ON 24.3.2009. EXT.P11:TRUE COPY OF THE JUDGMENT IN WPC NO.10056/2009(B) DATED 27.3.2009 OF THE HIGH COURT OF KERALA. DATED 27.3.2009 OF THE HIGH COURT OF KERALA. EXT.P12:TRUE COPY OF THE NOTE DATED 19.6.2009 SUBMITTED BEFORE THE 1ST RESPONDENT. 1ST RESPONDENT. EXT.P13:TRUE COPY OF THE NOTE DATED 19.6.2009 SUBMITTED BEFORE THE 1ST RESPONDENT. 1ST RESPONDENT. EXT.P14:TRUE COPY OF THE PETITION DATED 22.6.2009 BEFORE THE 5TH RESPONDENT. RESPONDENT. EXT.P15:TRUE COPY OF LETTER NO.TR/142 TO 146/TR02/CLT/02-03 DATED 29.6.2009. DATED 29.6.2009. WP(C).No.20563 of 2009 (M) --------------------------------------- EXT.P16:TRUE COPY OF THE INTIMATION DATED 26.3.2009. EXT.P17:TRUE COPY OF THE ORDER C.NO.CIT/WP(C)/CIT/CLT/9/09-10 DATED 19.6.2009. RESPONDENT'S EXHIBITS:NIL //TRUE COPY// P.S. TO JUDGE pk C.K. ABDUL REHIM, J.--------------------------- W.P.(C)No.20563 of 2009 ------------------------------- Dated this the 8[th] day of December, 2014 JUDGMENT Main challenge in this writ petition is against Ext.P17 order passed by the 1[st]respondent rejecting anapplication submitted by the petitioner under Section 220(2A) of the Income Tax Act,1961, claiming waiver ofinterest on the tax amount leviable on the 'additionalconveyance allowance' paid to the petitioner by the 4[th]respondent, with respect to the assessment years 1994-1995 to 1999-2000. EXT.P17:TRUE COPY OF THE ORDER C.NO.CIT/WP(C)/CIT/CLT/9/09-10 DATED 19.6.2009. RESPONDENT'S EXHIBITS:NIL //TRUE COPY// P.S. TO JUDGE pk C.K. ABDUL REHIM, J.--------------------------- W.P.(C)No.20563 of 2009 ------------------------------- Dated this the 8[th] day of December, 2014 JUDGMENT Main challenge in this writ petition is against Ext.P17 order passed by the 1[st]respondent rejecting anapplication submitted by the petitioner under Section 220(2A) of the Income Tax Act,1961, claiming waiver ofinterest on the tax amount leviable on the 'additionalconveyance allowance' paid to the petitioner by the 4[th]respondent, with respect to the assessment years 1994-1995 to 1999-2000. 2. There existed a dispute as to whether the'additional conveyance allowance' paid by the 4[th]respondent is part of the salary and it is taxable income ornot. An association representing the Development Officersof LIC had approached this court challenging the levy oftax on the above said additional allowance. ThroughExt.P1 interim order this court directed the LIC of India todeduct the tax at source and to keep the same in a W.P.(C)No.20563 of 2009 2 suspense account. Ultimately the said writ petition wasdismissed holding that the allowance in question formspart of the salary with respect to which tax can be levied.Based on the said decision the amount of tax kept by the4[th] respondent in relation to the petitioner was transferredto the Income Tax Department, on 14/08/2003. But thedepartment claimed interest on the said amount of tax,calculated from the respective due dates onwards.Exts.P3 to P5 are the demand notices issued in thisregard. By virtue of Ext.P6 notice the 3[rd] respondentintimated that recovery steps will be initiated on theevent of failure to pay the amounts demanded. At theinstance of the petitioner certain clarifications were issuedregarding the payments made and also with respect tocrediting of the amounts deducted. Ultimately thepetitioner submitted Ext.P10 request before the 1[st]respondent seeking waiver of the interest demanded,under Section 220(2). The said application wasconsidered by the 1[st] respondent pursuant to a directionissued by this court in Ext.P11 judgment. Ext.P17 is the W.P.(C)No.20563 of 2009 3 order passed. The 1[st] respondent found that the totalamount sought to be waived is Rs.1,90,900/-, and thathe is not satisfied about the nature of hardships whichwill be caused to the petitioner. It was found that thepetitioner had shown a fairly good income ofRs.20,65,000/- for the assessment year 2008-2009,which is indicative of the fact that payment ofRs.1,90,900/- would not cause any hardships to thepetitioner. Finding that there exists no prima faciereason for waiver of the interest, in exercise of powervested under Section 220(2A) the application wasrejected. The petitioner had also submitted Exts.P12,P13 before the 1[st] respondent and P14 before the 5[th]respondent seeking rectification of the demand on thebasis that the tax deducted and kept under the suspenseaccount was not given proper credit and also claimingadjustment of refundable amounts. Therefore thepetitioner is challenging Exts.P17 and also seekingdirection to the 1[st] respondent to consider his requestsunder Ext.P13 and P14, in this writ petition. W.P.(C)No.20563 of 2009 4 W.P.(C)No.20563 of 2009 4 3. With respect to the waiver of interest byexercising powers vested under Section 220(2A), it iscontended by the petitioner that, the reasoningmentioned in Ext.P17 is not legal and sustainable. Merefact that the petitioner had returned an income ofRs.20,65,000/- for any previous year cannot be taken asa ground to hold that there is no genuine hardships to thepetitioner if he is compelled to pay the interest claimed.Learned counsel for the petitioner argued that, thediscretionary power vested on the 1[st] respondent withrespect to allowing waiver cannot be exercised based onthe assets of the assessee. Learned counsel had placedheavy reliance in this regard on a decision of theHonourable Supreme Court inB.M.Malani V.Commissioner of Income-Tax and Another [(2008)306 ITR 196 (SC)]. The Honourable Apex Courtobserved that, a genuine hardship inter alia means agenuine difficulty. Conclusion that a person having largeassets would never be in difficulty as he can sell thoseassets and pay the amount, cannot be accepted. The W.P.(C)No.20563 of 2009 5 ingredients of genuine hardships must be determinedkeeping in view of meaning of the word 'genuine'contained in the dictionary and under the legal conspectusattending thereto. There, the well known principlenamely, a person cannot take advantage of his ownwrong, may have to be borne in mind. It is held thatcompulsion to pay any unjust dues per se would causehardship. But question to be considered is as to whetherthe default in payment of the amount was due tocircumstances beyond the control of the assessee. 4. Learned counsel had also placed reliance on adecision of the Madras High Court in J.JaylalithaV.Commissioner of Income-Tax And Others [2000(244) ITR 74]. In page 88 itis held therein that, theCommissioner exercising jurisdiction under Section 220(2A) has to consider whether the assets were in theform of cash or they were realisable assets. It is foundthat the assessee is a wealth tax payer is not a relevantcircumstance to establish that the payment of interestwould not cause genuine hardships to the petitioner. W.P.(C)No.20563 of 2009 6 5. It is pertinent to consider that the provisions contained under Section 220 (2A) enumerate the reasons to be satisfied for waiver of interest, which are as follows; (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; and (iii)the assessee has co-operated in any inquiryrelating to the assessment or any proceedingfor the recovery of any amount due from him.relating to the assessment or any proceedingfor the recovery of any amount due from him. 6. Standing Counsel appearing for the Department contended that, all the three reasons mentioned inSection 220(2A) are cumulative in nature and all of themhas to be satisfied to consider a case of waiver of interest.It is contended that, in Malani's case (cited supra) thefactual circumstances was entirely different. There theassessee does not have any realizable assets, but on theother hand requested the Department to liquidate thesecurities recovered, for the purpose of payment of thetax dues. But the Department had failed to act on suchrequest. Under such circumstances the Apex Court found W.P.(C)No.20563 of 2009 7 that, mere ownership of assets is not a sufficient reasonto reject the request for waiver of interest. 6. Standing Counsel appearing for the Department contended that, all the three reasons mentioned inSection 220(2A) are cumulative in nature and all of themhas to be satisfied to consider a case of waiver of interest.It is contended that, in Malani's case (cited supra) thefactual circumstances was entirely different. There theassessee does not have any realizable assets, but on theother hand requested the Department to liquidate thesecurities recovered, for the purpose of payment of thetax dues. But the Department had failed to act on suchrequest. Under such circumstances the Apex Court found W.P.(C)No.20563 of 2009 7 that, mere ownership of assets is not a sufficient reasonto reject the request for waiver of interest. 7. In the case at hand, there is evidence that thetax was deducted at source and kept in a suspenseaccount based on the interim directions issued by thiscourt. It is further evident that on the dismissal of thewrit petition the tax amount deducted and keptseparately was remitted to the Department. But the factremains that there occurred delay in realising the amountof tax for a considerable period, not due to any laches ordereliction on the part of the Department in taking anyprompt action. On the other hand, the petitioner,through the Association, was unsuccessfully challengedthe levy and had consequently delayed the payment ofthe tax due. It is contended that the Department hadsuffered loss in not realising the tax amount within itsdue time. While considering the question of waiver allthe three grounds under Section 220(2A) have to betaken note of cumulatively. Even though it can becontended that the delay occurred because of pendency of W.P.(C)No.20563 of 2009 8 the writ petition, it cannot be contended that the defaultoccurred due to any circumstances beyond control of theassessee. This is because of the fact that, challengeagainst levy of the tax was raised only at the instance ofthe assessee and the assessee had failed in suchchallenge. Therefore it cannot be said that genuinehardship was caused because of the payment of theinterest on amounts defaulted, on the basis that it wasdue to circumstances beyond the control of the assessee.Further, it is to be noticed that, in Ext.P17 the rejectionof consideration for waiver is made not only on the basisof the assets of the petitioner, as in the case of thefactual situation prevailing in Malani's case (supra). Onthe other hand, the 1[st] respondent had clearly found thatthe income conceded with respect to the last assessmentyear is fairly good, which can be taken as a justifiablereason to hold that no genuine hardships will be causedto the petitioner if he is compelled to pay the interest tothe tune of Rs.1,90,900/-. Under such circumstances,this court do not find any illegality or impropriety in the W.P.(C)No.20563 of 2009 9 order passed by the 1[st] respondent in Ext.P17. 8. In Exts.P13 and P14 the petitioner hadrepresented before the 1[st] and 5[th] respondents that thedemand need to be rectified based on the contention thatall payments were not given proper credit and that thedemand of interest was not calculated on the basis ofproper credits. So also he has contended that theadjustments of refundable amount was made withoutfollowing procedure contemplated in the relevant statute.These are matters which need to be considered by the 1[st]respondent and an appropriate decision need to be takenbased on such requests. This court is of the opinion thatinterest of justice can be achieved by directing the 1[st] and5[th] respondents to consider Exts.P13 and P14 and to takean appropriate decision thereon. 9. Under the above mentioned circumstances, thiswrit petition is disposed of on the following terms: (i) Challenge against Ext.P17 fails and the same is hereby repelled. 9. Under the above mentioned circumstances, thiswrit petition is disposed of on the following terms: (i) Challenge against Ext.P17 fails and the same is hereby repelled. (ii) The respondents 1 and 5 are directed to W.P.(C)No.20563 of 2009 10 consider Exts. P13 and P14 representations and to takean appropriate decision with respect to the requestsmade therein, after affording an opportunity to thepetitioner for personal hearing, at the earliest possible,at any rate, within a period of three months from the dateof receipt of copy of the judgment. 10. Interim order of stay granted by this courtagainst recovery of the amounts due will continue till adecision is taken by the respondents 1 and 5 as directedabove. Sd/- C.K. ABDUL REHIM JUDGE MJL