Dr. K. Parameswaran Nair vs Assistant Commissioner of Income Tax and Another

J.B. Koshy, J.—The petitioner is an assessee on the file of the first respondent. On December 19, 1985, there was a search in the residential premises of the petitioner and also in the hospital run by him. At the time of search, some cash and documents were seized. After search, revised returns were filed and exhibit P-1 is the statement showing additional income, additional tax and interest charged and penalty imposed. The revised tax paid as per the revised assessment was very huge. The petitioner paid the tax and penalty. Thereafter, the petitioner filed a petition for waiver of interest u/s 220(2) of the Income Tax Act. By exhibit P-4, that was rejected. The petitioner requested the Chief Commissioner of Income Tax not to impose interest u/s 220(2) of the Income Tax Act and that was rejected and not only the interest was imposed on the tax but also on the penalty u/s 271(1)(c) and the petitioner''s request for waiver of penalty was rejected by exhibit P-7. According to the petitioner, while passing exhibit P-7 order, the scope of Sub-section (2A) of section 220 was not considered. The Commissioner has power to waive the interest only if the following provisions are satisfied :

"(i) payment of such amount (has caused or) would cause genuine hardship to the assessee ;

(ii) default in the payment of the amount on which interest (has been paid or) was payable under the said sub-section was due to circumstances beyond the control of the assessee ; and

(iii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him." The Commissioner of Income Tax has considered the matter and explained that the additional demands for the assessment years 1980-81 to 1985-86 were paid by the assessee in instalments from December, 1986, to December, 1990, but interest u/s 220(2) was demanded only from June, 1996. The Commissioner of Income Tax held as follows :

"During this period of ten years, the total income returned by the assessee for the assessment years from 1986-87 to 1995-96 came to Rs. 1,10,94,810 after claiming depreciation amounting to Rs. 52,87,300. Thus, including the depreciation the assessee had a total cash availability of Rs. 1,63,82,110 against which the tax liability came to Rs. 53,85,014. In addition, the assessee had paid Rs. 26,87,776 as tax and penalty u/s 271(1)(c) relating to the assessment years 1980-81 to 1985-86. Thus, the total payments came to Rs. 80,72,790 leaving a balance of Rs. 83,09,320, and, therefore, it is not correct to say that the payment of interest u/s 220(2) will cause genuine hardship to the assessee. The assessee''s argument is that a major part of the suppressed income was invested in the hospital building and, therefore, it is not readily available for payment. But, it would indicate that the non-payment of tax was not due to reasons beyond the control of the assessee. I am of the view that the assessee does not satisfy all the conditions prescribed in Sub-section (2A) of Section 220 and, therefore, the petition for waiver is rejected."

It cannot be stated that the Income Tax Commissioner has not considered all the contentions of the petitioner and did not apply his mind. There is no patent illegality or error of jurisdiction. The amount of tax which was payable was paid late and interest was assessed.

Even though hardship is not financial hardship also from the facts and circumstances of the case, the Commissioner came to the finding of fact that there is no genuine hardship. In any event it was clearly found that non-payment of tax in time was not due to any circumstances beyond the control of the assessee. All the three conditions mentioned in Section 220 should be satisfied before granting the waiver. Hence, the second condition was not satisfied. I see no ground to interfere with the above order. There is no patent illegality or error of jurisdiction in the order passed by the Income Tax Officer. This court is not sitting in appeal under Article 226 or 227 of the Constitution of India and is not justified in interfering with the order passed by the Income Tax Commissioner. Accordingly, the original petition is dismissed.