NEW PUNJAB SKIN CO. vs UNION OF INDIA and Others

N. K. Sud, J.

This writ petition is directed against the order passed by respondent No. 2, Director-General of Income Tax, New Delhi, dated 11-5-1999, rejecting the petition filed by the petitioner seeking waiver of interest levied u/s 158BFA(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

The petitioner is a partnership firm which was subjected to search and seizure operations on 18-6-1997. A notice u/s 158BC of the Act was issued and served on the petitioner on 28-8-1997, requiring it to file the return of income within 15 days. However, the return was filed by the petitioner on 10-2-1998, which was late by four months and 28 days. The tax on the returned income worked out to Rs. 1,80,00,000. The petitioner had filed a letter along with the return in which it had requested that the cash seized from its premises amounting to Rs. 1,09,33,765 may be adjusted in the aforesaid amount of tax. The balance amount of Rs. 70,66,235 was paid by it separately for which the challan was enclosed with the return. The assessment was completed by the Assistant Commissioner of Income Tax, Central Circle-I, Ludhiana, on 31-3-1998, accepting the income declared by the petitioner in its return. However, as the return was late by four months and 28 days, interest u/s 158BFA(1) of the Act was levied which worked out to Rs. 18 lakhs.

The petitioner filed a petition dated 6-8-1998, before respondent No. 2 for waiver of interest levied u/s 158BFA(1) of the Act. The waiver was sought mainly on two grounds. Firstly, that the amount of Rs. 1,09,33,765 was lying in the custody of the department since 18-6-1997, which was even before the issue of the notice for filing the return and as such no interest should have been levied at least on that amount. Secondly, that the delay in filing of the return had taken place only because a lot of time had been consumed in obtaining copies of the documents and other information from the department from the voluminous seized records lying in its custody. In the petition, the petitioner also relied on the circular of the Central Board of Direct Taxes dated 23-5-1996, wherein certain guidelines for waiver of interest leviable u/s 234A of the Act under certain circumstances had been issued.

The said petition was rejected vide the impugned order dated 11-5-1999, on the ground that there was no provision in the Act under which interest levied u/s 158BFA(1) could be waived by respondent No. 2. It was also pointed out that the Board Circular dated 23-5-1996, was of no avail to the petitioner as the same pertained to interest u/s 234A of the Act and not to interest u/s 158BFA(1).

Shri Ajay Mittal, learned counsel for the petitioner, once again relies on the grounds taken by the petitioner in the waiver petition dated 6-8-1998. He conceded that there is no specific provision in the Act under which interest levied u/s 158BFA(1) could be waived. But, according to him, the nature of interest under sections 234A and 158BFA(1) is the same, and, therefore, interest u/s 158BFA(1) could also be waived as per the guidelines given in the Board Circular dated 23-5-1996. He specifically relied on the observations of respondent No. 2 in the impugned order wherein it has been clearly found that the case of the petitioner was covered under the circumstances mentioned in the said circular.

We have given a careful consideration to the arguments advanced on behalf of the petitioner and also examined the relevant provisions of the Act. The only question for our consideration is whether respondent No. 2 was clothed with any power under the Act to waive the interest levied u/s 158BFA(1). No such provision has been brought to our notice. The reliance on the circular of the Board dated 23-5-1996, is clearly misplaced as the same had been issued for the purpose of waiver of interest leviable under sections 234A, 234B and 234C of the Act. This circular was issued by the Board in exercise of its jurisdiction granted u/s 119(2) under which it was specifically empowered to relax the provisions of sections 234A, 234B and 234C of the Act. On the other hand, section 158BFA of the Act had come on the statute book with effect from 1-1-1997, and, as such, the circular, being prior in time, cannot possibly govern the interest leviable under this section. It is pertinent to note that the Legislature in its wisdom did not make a corresponding amendment in sub-section (2) of section 119 to empower the Central Board of Direct Taxes for relaxation of the provisions for levy of interest u/s 158BFA of the Act. At any rate, irrespective of the fact whether the Board could or could not relax the provisions of section 158BFA(1), it is an admitted position that the Board has so far not done so. In this view of the matter, no fault can be found with the impugned order passed by respondent No. 2 holding that he had no power under the Act to waive interest charged u/s 158BFA(1). Counsel for the petitioner has sought to draw support from a decision of this court in SHANTI SARUP SHARMA Vs. COMMISSIONER OF Income Tax AND ANOTHER., . We are afraid that the said authority is of no help to him as it deals with waiver of interest u/s 139(8) of the Act for which the Commissioner had a specific power under the statute.

In view of the above discussion, we find no merit in this petition which is hereby dismissed.