Chief Commissioner of Income Tax and Others vs Dr. K.M. Mehaboob

C.N. Ramachandran Nair, J.—Revenue is in appeal against judgment of the learned Single Judge declaring respondents eligibility for complete waiver of default interest payable under s. 220(2) of the IT Act. At admission stage advocate Sri Millu Dandapani took notice and opposed the writ appeal. We have heard both standing counsel for the appellant and counsel appearing for the respondent. After hearing both sides and on going through the judgment, we notice that on facts the findings of the learned Single Judge are not disputed by the Department. However, the contest is on the legal proposition that it is the satisfaction of the statutory authority that entitles the defaulter for waiver and not that of the High Court. On the legal question we agree with the standing counsel that it is for the CIT or the Chief CIT to consider with reference to facts on record as to whether all the three conditions stated in s. 220(2A) are satisfied and if so, to grant partial or full waiver. In fact, waiver can be directly proportionate to the extent of satisfaction of conditions. However, in this case the facts are unique in as much as the learned Single Judge found that for 16 years after completion of assessment, Department did not try to trace the partners of the defunct/defaulter firm and for the first time notice of demand was served on the respondent in 2005 by virtue of his liability as partner of dissolved firm under s. 189(3) of the IT Act. It is further on record that within one month from date of service of notice, the respondent made full payment. We, therefore, do not find on facts anything irregular, illegal or improper on the part of the Single Judge to direct appellants to grant full waiver of default interest. Strangely the Act does not provide for payment of collection of minimum compensatory interest for delayed payment and what is provided under s. 220(2A) is waiver of full interest payable under s. 220(2) of the Act, if satisfied. Consequently we dismiss the writ appeal.