S. SUBASH vs COMMISSIONER OF Income Tax and Another

R. Jayasimha Babu, J.

The petitioner is aggrieved by the order of the Commissioner declining to waive the interest for the period to 1984 and limiting the waiver for the

subsequent period only to an extent of 50 per cent. Interest had been levied in respect of the arrears of tax due from the petitioners father for the

assessment years 1956-57, 1968-69 and 1969-70.

The properties of the petitioners father, who died in the year 1981, had been attached in the year 1975, and the father had been called upon to

pay the tax together with the interest due, but he had failed to pay the same during his life time. The default continued even after his demise, the

petitioner-son, who had inherited the properties also not having paid the tax, and the other amounts due. Ultimately, in the year 1996, the

properties were sought to be sold, at which point of time, the assessee paid the tax, and also applied to the Commissioner for waiver of the

interest. The Commissioner, by his order dated 25-3-1997, held that he had no power to waive the interest for any period subsequent to 1-10-

1984, and that, for the period subsequent thereto, the facts of the case did not warrant waiver in excess of 50 per cent. He noticed that there had

not been total co-operation from the assessees side, that the assessee had inherited substantial properties, and that it could not be said that the

rejection of his claim for full waiver, and granting it only in part, would cause genuine hardship.

Learned counsel for the assessee submitted that the Commissioners understanding of section 220(2A) of the Income Tax Act is erroneous.

According to counsel, the word ""paid"" found in that provision would indicate that the power of waiver extended to all amounts paid by the

assessee irrespective of the period, for which, it was payable, and further, that the word ""payable"" referred to all amounts outstanding irrespective

of the period for which the outstanding relates.

Section 220(2A) of the Act was inserted by the Taxation Laws (Amendment) Act, 1984, with effect from 1-10-1984. Prior to the introduction

of the provision, there was no power to waive the interest. The substantive power to waive was thus given to the authority only on and after 1-10-

1984. Interest for the period prior to 1-10-1984, whether paid or payable was not meant to be covered by this provision, as the section in its

terms has not been given retrospective effect. The section is not merely a procedural one, but is a substantive provision dealing with the vesting of

the substantive power by which the authority could waive the recovery of monies otherwise due and payable by the assessee. That power was not

available for being exercised in respect of a period during which the authority did not have the power to waive the interest.

The word ""paid"" was introduced in section 220(2A) of the Act by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, with

effect from 1-4-1987. The object of introducing that term was only to make it clear that the authority is empowered to grant relief not only to those

who had withheld the payment of interest in respect of the period covered by the section, but also those who had promptly paid that interest

despite their eligibility to claim relief, and thereafter, had sought relief in accordance with that provision. The addition of the word ""paid"" was meant

to prevent the likelihood of an honest assessee being denied relief, while a person who had failed to comply with the law would still be eligible for

relief. It was not an amendment which was intended to extend the power to grant relief in respect of a period during which the authority did not

have the power to waive recovery of interest. It is, therefore, not possible to agree with the submission of counsel that the provision is retroactive.

The normal rule of construction of any statutory provision is that its operation is prospective. It is only in case of procedural provisions that in the

absence of any intention to the contrary whether explicit or implicit, such procedural provisions are regarded as being applicable to pending

proceedings, even though such proceedings may have commenced at a point of time anterior to the introduction of the relevant statutory

provisions. Where the statute confers a substantive power for the first time, it cannot be held on any known principle of construction of statute that

such power is meant to be exercised in respect of past periods as well, so as to undo what had been properly done, and confer a benefit which the

plain words of the statute did not intend. It has always been the normal legislative practice to make explicit the intention to make a provision

retrospective in operation wherever a substantive alteration is made in the law. It is only in cases where the amendment is to be regarded as

clarificatory or declaratory that such provision is even in the absence of express language to that effect in the relevant provision, applied even in

respect of matters relating to periods prior to the date of introduction of the provision.

Section 220(2A) of the Act cannot be regarded as a clarificatory or declaratory provision. Prior to the introduction of the provision, there was no

power in the authority named therein to waive interest. The question of clarifying a non-existent power, or to declare the existence of something

which did not exist, therefore, does not arise for consideration.

The Commissioner, therefore, was right in holding that his power u/s 220(2A) of the Act did not extend to the period prior to 1-10-1984. If any

other interpretation were to be effected, it would only open the flood gates for claims by innumerable assessees who had been charged, and who

had paid interest prior to 1-10-1984. No such consequence was provided for when this provision was introduced.

Counsel for the revenue invited the attention of the court to a decision by a Division Bench of the Andhra Pradesh High Court in the case of

Ashok Enterprises Vs. Commissioner of Income Tax and Others, . In that case, the court was concerned with the extent of operation of section

273A of the Act. The court held that the power to waive penal interest conferred by that provision could only be exercised in respect of levies

made after the section came into force, and it did not apply to periods prior to the introduction of that section. Counsel for the revenue also

referred to the decision of a learned single judge of the Calcutta High Court in the case of Saurastra Agencies Pvt. Ltd. Vs. Union of India (UOI)

and Another, , wherein in relation to this very statutory provision, section 220(2A) of the Act, the view taken by the learned judge was similar to

the one taken by me in this petition.

So far as the second aspect of the Commissioners order, viz., limiting the waiver to 50 per cent. is concerned, it was the submission of counsel for

the assessee that in the light of the recent decision of the Apex Court in the case of Jaswant Rai and Another Vs. Central Board of Direct Taxes

and Revenue and Others, , the Commissioner had a duty to grant full waiver in cases where the assessee had fulfilled all the conditions of the

provisions. That decision, however, cannot be of any assistance to the petitioner, as it is not the finding of the Commissioner that all the conditions

of the provision have been in fact fulfilled. As already noticed the Commissioners finding is that there was lack of total co-operation, and that there

was no undue hardship to the assessee. The Commissioner has exercised his jurisdiction within the ambit of the law in limiting the relief to 50 per

cent. That discretion cannot be interfered with by treating this petition as an appeal against his order. Counsel for the revenue in this context relied

on a decision of the Apex Court in the case of Smt. Harbans Kaur etc. Vs. Commissioner of Wealth-tax, Jullundur, , wherein it has been held that

the discretionary order of the Commissioner is not to be interfered with by treating the writ petition as an appeal.

In the circumstances, therefore, no relief can be granted to the petitioner, and the writ petition is dismissed. No costs. consequently W.M.P. No.

11700 of 1997 is also dismissed.