Tushaar Mehta vs Chief Commissioner of Income Tax and Others

P.K. Misra, J.—Petitioner has filed this writ petition challenging the order of the first respondent, dt. 22nd Oct., 2002, rejecting the

application of the petitioner for waiver of interest charged under Sections 234A, 234B and 234C of the IT Act.

In the present case, the respondent No. 1 while considering the petitioner''s application after recounting the facts, has rejected the application by

observing as follows:

.....In the assessee''s petition dt. 19th Aug., 2000 as well as in the written submission filed on 21st Aug., 2002 no reasons have been submitted/for

the belated filing of the return of income for the asst. yr. 1996-97. Hence, the interest charged u/s 234A is confirmed.

Further, in view of the facts cited above, I am unable to accept the assessee''s explanation that he could not anticipate the assessment of the capital

gains as made in the assessment order for 1996-97, since the conditions laid down in Board''s Instructions in F. No. 400/234/95-IT, dt. 23rd

May, 1996 are not satisfied in this case the interest charged under Sections 234B and 234C is also confirmed...

It has been contended that the petitioner could not anticipate the tax liability as he was under the bona fide belief that the transaction was related

to long-term capital gain and not short-term capital gain. It has been further submitted that after assessment was made, even though the petitioner

had filed appeal, he had paid the tax as demanded with a view to pray for waiver of interest as contemplated in the Instruction dt. 23rd May,

1996, issued by the CBDT. It has been further submitted that since the petitioner was under the bona fide belief that the capital gain was a long-

term capital gain and not a short-term capital gain on account of the fact that the petitioner had taken possession, even though the document was

registered on a later date, the prayer for waiver of interest should have been considered. Learned counsel for the petitioner has also placed reliance

upon the decision of this Court reported in D. Kasturi Vs. Commissioner of Income Tax and Another, .

Law is now well settled that while considering the application u/s 119(2)(a) of the IT Act for waiver of interest, the concerned authority is

required to give reasons. It is of course true that discretion is conferred on the respondent No. 1 to deal with the matter. The reasons given by the

respondent No. 1, apart from being very laconic, appear to be mechanical.

Having regard to the facts and circumstances of the case and keeping in view the submissions made, interest of justice would be served by

directing the respondent No. 1 to reconsider the matter and to dispose of the application afresh after giving opportunity of hearing to the petitioner

in accordance with law within a period of three months from the date of communication of this order. It would be open to the petitioner to raise all

his contentions before the appropriate authority.

With the above directions, the writ petition is disposed of. No costs.