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Judgment
K. Chandru, J.—Heard both sides and perused the records.
The petitioner in this writ petition is seeking to challenge the order of the first respondent dated 30.08.2004 and for a consequential direction not to effect collecting the tax or taking any distraint proceedings against the petitioner. She also wants the refund of the interest levied and collected for the lodgement period.
The petitioner is an assessee and assessed an Individual. She submitted that his return for the assessment year 1994-1994 on 24.11.1997 and the return for the year 1994-96 he submitted it on 12.01.1998. As per the return the petitioner had shown his income as Rs. 3,11,092/- for the year 1994-95 and Rs. 4,72,000/- for the year 1995-1996. The second respondent treated those returns as non-est returns, as they were filed belatedly. A notice u/s 148 of the Income Tax Act (for short I.T. Act) was issued on 17.11.1998 and it was treated, as escaped assessment for the respective years.
In spite of the petitioner objecting to the same, the second respondent assessed the income as an escaped assessment at Rs. 3,40,160/- for the year 1994-1995 and the corresponding tax payable was fixed as Rs. 2,90,467/-. Similarly, the income for the year 1995-1996 was assessed Rs. 4,04,021/- and the corresponding tax was fixed as Rs. 1,59,263/-. The petitioner paid those amounts on various dates. But, it was stated that the second respondent had levied interest invoking Sections 234(A) and 234(B) of the I.T. Act without considering the voluntary nature of return submitted by the petitioner.
It was also submitted by the petitioner that she was a partner in M/s. Sarojini Cotton Mills and there were quarrel between the family members of the petitioner''s husband and other partners of the mill. Because of this, the firm itself was dissolved during the year 1996-1997. The petitioner was a sleeping partner. Therefore, she could not get the accounts from the firm. The interest levied for the lodgement period of the returns of a total sum of Rs. 2,63,113/- was excessive.
The petitioner filed an appeal before the first respondent against the levy of interest. The first respondent dismissed the appeal by an order dated 30.08.2004. Therefore, the petitioner filed the present writ petition. It was also argued that the Board''s circular dated 23.05.1996 regarding waiver of interest was not properly followed.
The writ petition was admitted on 17.10.2004 and an interim-stay was granted for recovery of interest on the same day alone. On notice from this Court, the second respondent has filed a counter affidavit dated 04.03.2005.
In paragraph Nos. 5, 8 and 9 of the counter, it is averred as follows:
I state that the petitioner''s claim that no interest could be charged for the period when the earlier returns were lodged is without any basis. The returns were filed belatedly and were thus treated as non-est in law. When in response to the notice u/s 142(1) the petitioner said the earlier returns may be treated as having been filed in response to the notice, it would only mean that the return has been filed as on that date in response to that notice. The petitioner''s contention that having accepted the earlier return as one filed in response to notice u/s 142(1) would automatically entitle her to a waiver is without any basis in law.
...
I submit that the interest u/s 234A, 234B and 234C are mandatory. The Chief Commissioner derives his power to waive interest from order u/s 119(2)(a) issued by the Central Board of Direct Taxes vide notification F. No. 400/234/95-II(B) dated 23.05.1996. The class of incomes or class of cases in which the reduction or waiver of interest under the above Sections can be considered are enumerated in the notification. Thus, the power to grant waiver is not absolute, bur circumscribed by the Board''s Notification. The impugned order has clearly set out why the condition prescribed are not fulfilled in this case; "the Board empowers the Chief Commissioner of Income Tax to waive interest u/s 234A, 234B and 234C of the Income Tax Act if the conditions specified in Notification F. No. 400/234/95-I.T(b) dated 23.05.1996 are fulfilled. Para 2 specifies 5 conditions. Para 2(a) and 2(b) refers about "Search & Seizure" cases. The instant cases does not fall within that category. Para 2(c) refers to income, which is received, or which accrues after the due date for payment if Advance Tax which was neither anticipated nor contemplated by the assessee. The assessee has not made any such claim. Para 2(d) refers to the jurisdictional High Court judgment which is followed by the assessee but which is later reversed by the Supreme Court. The instant case does not fall within that ambit. Para 2(e) speaks about a return of income filed belatedly due to unavoidable circumstances but voluntarily without detection by the assessing officer. In the instant case though the return filed voluntarily there was no "unavoidable circumstances" in filing the return late.
The impugned order also sets out why the petitioner''s reason for delay in filing the return viz., there were disputes between the partners of Sarojini Cotton Mills and the business was affected cannot be treated an unavoidable circumstances resulting in the delay, since the assessee was only receiving salary and interest from the above firm, and their internal disputes would have no bearing on the same.
In this context, the learned Counsel for the petitioner submitted that if the power of the Commissioner was not exercised properly, even though it may be discretionary, or if it is exercised arbitrarily the Court can interfere in a writ petition filed under Article 226 of the Constitution. In support of his contention, he referred to a Division Bench of this Court in PPN Power Generating Company Limited Vs. PPN (Mauritius) Company and Others, and relied the following passage found in para:22 of the said judgment:
From the above said decisions, it is clear that this Court can interfere with the order of the CLB only if discretionary/inherent powers of the CLB, is exercised arbitrarily or capriciously or perversely or ignored the settled principles of law in granting interlocutory injunction. We can also interfere with the order if we are able to conclude that the CLB has not exercised its power in granting injunction in spite of the availability of facts which are prima facie established by overwhelming evidence and material available on record justifying the grant thereof and occasioned failure of justice and thereby the appellant sustained irreparable injury, but at the same time, the appellate Court cannot reassess the material and reach a conclusion different from one reached by the CLB solely on the ground that if it had considered in a particular manner, it would have come to contrary conclusion.
Per contra, the learned Counsel for the Income Tax Department submitted that the power of the Commissioner to waive interest statutorily payable under the provisions of the I.T. Act, is only based upon the circulars of the Board. In this context, reliance was based upon the decision of the Supreme Court Commissioner of Income Tax, Mumbai Vs. Anjum M.H. Ghaswala and Others, . The relevant portion found in page 16, may be usefully extracted:
...We hold that the Commissioner in exercise of its power u/s 245D(4) and (6) does not have the power to reduce or waive interest statutorily payable under Sections 234A, 234B, 234C except to the extent of granting relief under the circulars issued the Board u/s 119 of the Act.
It was submitted that though the said judgment arose in the context of the discretionary powers of the Settlement Commission, the principles enunciated therein will equally apply to waiver of interest by the respondents functioning under the statutory provisions of the Act.
Further reliance was placed upon the decision in P. Velu Chettiar Vs. Chief Commissioner of Income Tax and Another, . The relevant portion of judgment found in 491 may be usefully extracted below:
Though , it is true, as submitted by counsel, that the return was filed voluntarily and the tax was paid, that by itself does not entitle the assessee to the benefit of waiver. Condition No.5 of the board''s circular further requires that the Commissioner be satisfied about the circumstances which could be regarded as being beyond the control of the tax payer for not filling the return within the stipulated time limit. The fact that the assessee had a taxable income from the year 1994-95, is evident from the order of assessment and the tax paid. No explanation has been given as to why the return was not filed within time for that year. The fact that the assessee had not been assessed to tax earlier, does not by itself constitute a jurisdiction. By filing the return belatedly one cannot claim that fact itself as clothing the person with immunity for the liability for interest.
If it is seen in this context that the reasons given by the petitioner for not filing the return within the time prescribed cannot be acceptable. The further reason that she was a sleeping partner and there was a family dispute cannot be a ground to waive the interest under Sections 243A, 243B and 243C of the I.T. Act. The delay in issuing notices u/s 148 was well within the statuary limit specified under the Act. The petitioner did not file return in response to a notice u/s 148. Only when notice u/s 141(1) was issued on 15.11.1998, the petitioner had responded. Even the unavoidable circumstances pleaded by the petitioner was not acceptable, since the petitioner was drawing salary from the Mills as a parner and therefore, there was no difficulty in assessing her income.
In the light of the same, there is no case made out for interfering with the order of the first respondent. Accordingly, the writ petition stands dismissed. However, there will be no order as to costs.