Anand Samrat Company vs The Commissioner of Income Tax and Others

S.R. Nayak, J.—The petitioner-assessee being aggrieved by the order of the Commissioner of Income Tax, Andhra Pradesh-II, Hyderabad, the 1st respondent herein dated 21.2.2000 made u/s 220(2A) of the Income Tax Act (for short `the Act'') rejecting the application of the petitioner filed under the said Section for waiver of the interest levied u/s 220(2) filed this writ petition assailing the validity of the same.

The 1st respondent has rejected the application of the petitioner on two grounds. The 1st ground is that on an earlier occasion, the petitioner had filed an application on 27.11.1987 and that application was rejected by his predecessor by his order dated 25.02.1988 and therefore the second petition filed by the petitioner if it is entertained would tantamount to an application seeking review of the earlier order dated 25.02.1988 and such a course is impermissible. The second reason assigned by the 1st respondent to reject the application is that a major portion of the arrears were collected by the Tax Recovery Officer only by way of sale of land, and that fact shows that the assessee did not cooperate in the proceedings for the recovery of amounts due from it.

It is true that the assessee had filed petition u/s 220(2) of the Act on 27.11.1987 before the proceedings reached finality. It is also true that that application of the petitioner was considered by the 1st respondent and reached the same on 25.02.1988. That order reads :

"Proceedings of the Commissioner of Income Tax : Andhra Pradesh-III, Hyderabad

Shri D. Lakshminarayana, Commissioner of Income Tax

Hqrs.III/2(57)/87-88Dt : 25.2.1988

Sub:- Waiver petition - M/s. Anand Samrat and Co. West Maredpally, Sec''bad - Asst. Year 1983-84 - Reg.

ORDER UNDER SEC.220(2A) OF THE I.T.ACT, 1961

The assessee by its petition dt.27.11.1987 has sought for waiver of interest of Rs.3,44,970/- charged u/s.220(2) for the assessment year 1983-84.

On examination of the records and after perusal of the report of the ITO, I am satisfied that the assessee has not fulfilled the conditions laid down u/s 220(2A). In view of this, the assessee''s petition is rejected.

Sd/- (D. Lakshminarayana) Commissioner of Income Tax, Andhra Pradesh-III, Hyderabad"

As could be seen from this order, there is absolutely no reference to the case set out by the petitioner in his application nor any reason is disclosed in support of the decision taken by the 1st respondent. The order is as bald as it could be.

It is pertinent to note that the order that may be made by the Commissioner of Income Tax u/s 220(2A) of the Act is a statutory order and it is liable to be reviewed by the Constitutional Courts under Article 226 and Article 136 of the Constitution of India. If the statutory authority does not disclose reasons in support of the decision, then it becomes very practically impossible for the Constitutional Courts to know what are the reasons that have gone into the decision-making. In that view of the matter, the statutory authorities are bound to disclose reasons in support of their decisions or orders. Be that as it may, we cannot appreciate the view taken by the Commissioner of Income Tax Act that the rejection of the earlier application dated 27.11.1987 filed by the petitioner would come in the way of he considering the second application dated 28.4.1992. The second petition was filed only when the proceedings attained the finality. In that view of the matter, there was no legal embargo for the 1st respondent to decide the application on merits. In the impugned order also, the Commissioner except stating that the petitioner did not cooperate in the proceedings for the recovery of amounts due from them, has not disclosed any reason, as to how he has reached such a conclusion. On the other hand, it is very pertinent to notice the statement made by the petitioner in the application dated 28.4.1992. The relevant portion of the application reads :

"1. We are dealing in real estate and the firm was started on 1.10.1981, practically without any investment by any of the partner.

That on 2.7.1982 a search and seizure operations was conducted. After the raid all our business activity came to a stand still and after paying the land lords for the lands purchased and having spend for the development etc., we were left with no cash except for unsold lands. We also submit that this state of affairs is known to the learned Income Tax Officer. The unsold lands were surrendered on our own volition to the learned Income Tax Officer as security towards the Tax liability that may accrue, to show our good faith.

That your Honour were kind enough to allow us to sell these lands in parts of credit and entire sale proceeds against the taxes payable. By doing so the entire demand was cleared off and some excess sums were also credited in our name for which we are highly grateful.

We humbly submit that since we have earnestly tried and have cleared the entire demand, the interest levied u/s 220(2) of the Rs.2,53,413/- may kindly be waived for which act of kindness, we shall remain ever grateful."

The petitioner has stated in the application that with the permission of the Commissioner, he sold the lands and credited the entire sale proceeds towards the tax payable by it. In addition, it is stated in the affidavit that during the course of enquiry before the 1st respondent culminating in the impugned order, the petitioner produced proof i.e., relevant documents, the copies of which are produced before us at Page Nos.36 to 55 of the material papers to establish hardship. From the impugned order, we do not find any reference to them. The 1st respondent being a statutory authority and since is exercising quasi judicial power, is legally bound to consider all relevant pleadings and materials and pass appropriate reasoned order. In that view of the matter, we think that it is a fit case where the Court should set aside the impugned order and remand the proceedings to the 1st respondent with a direction to dispose of the application of the petitioner dated 28.04.1992 afresh on consideration of the case of the petitioner as set out in the application and the supporting materials produced by it.

In the result, we allow the writ petition and quash the impugned order. The proceedings shall stand remitted to the 1st respondent with a direction to dispose of the petition dated 28.4.1992 filed u/s 220(2A) of the Act afresh in accordance with law and in the light of this order within a period of two months from the date of receipt of a copy of this order. Till then, the Income Tax authorities are directed not to take any coercive steps, and the interest paid by the petitioner during the pendency of the proceedings before the Income Tax authorities and this Court shall abide by the decision of the Commissioner to be made in pursuance of this order.