Section 119(2)(a) provides relaxation regarding certain provisions in the public interest such as waiver or reduction of interest under 234A, 234B, 234C, 234E, penal consequences etc.
Text of Section 119(2)(a)
(a) the
Board may, if it considers it necessary or expedient so to do, for the purpose
of proper and efficient management of the work of assessment and collection of
revenue, issue, from time to time (whether by way of relaxation of any of the
provisions of sections 115P, 115S, 115WD, 115WE, 115WF, 115WG, 115WH, 115WJ,
115WK, 139, 143, 144, 147, 148, 154, 155, 158BFA, sub-section (1A) of section
201, sections 210, 211, 234A, 234B, 234C, 234E, 234F, 270A, 271, 271C, 271CA and
273 or otherwise, general or special orders in respect of any class of incomes
or fringe benefits or class of cases, setting forth directions or instructions
(not being prejudicial to assessees) as to the guidelines, principles or
procedures to be followed by other income-tax authorities in the work relating
to assessment or collection of revenue or the initiation of proceedings for the
imposition of penalties and any such order may, if the Board is of opinion that
it is necessary in the public interest so to do, be published and circulated in
the prescribed manner for general information;
Who can
waive or reduce interest?
The CBDT
directed that the Chief Commissioner of Income-tax or Director General of
Income-tax may reduce or waive interest charged under Section 234A or Section
234B or Section 234C. However, no reduction or waiver of such interest shall be
ordered unless assessee has filed the return of income for the relevant
assessment year and has paid the entire income-tax due on the income as
assessed. The authorities may also impose any other conditions as deemed fit
for the said reduction or waiver of interest.
[A] When interest can be waived or reduced?
The interest
levied under the relevant provisions of the Income-tax Act can be reduced or
waived by the tax authorities prescribed above in the circumstances listed
below.
(a) In case of search
& seizure
(i)
Interest
under Section 234A can be waived or reduced by the tax authorities where books
of account and other incriminating documents have been seized and the assessee
was unable to furnish the return of income for the previous year, during which
the search and seizure has taken place. The waiver or reduction in interest is
provided if tax authorities are satisfied that the delay in furnishing such
return of income cannot reasonably be attributed to the assessee.
(ii) Interest under Section 234B or 234C
can be waived or reduced if assessee fails to pay the advance tax due to
seizure of cash by Income-tax department during the course of search and
seizure operation.
(b) In case income is
received or accrued belatedly
Interest under
Section 234C can be waived or reduced by the tax authorities where any income
(other than 'capital gains') is received or accrued after due date of payment
of first or subsequent instalments of advance tax which was neither anticipated
nor was in the contemplation of the assessee. Such reduction or waiver of
interest is granted provided advance tax on such income is paid in the
remaining instalment, and tax authorities are satisfied that this is a fit case
for reduction or waiver of the interest.
(c) In case of
subsequent change of law
Interest under
Section 234B and Section 234C can be waived or reduced by the tax authorities
where any income was not chargeable to tax on basis of any order passed by the
jurisdictional High Court, but subsequently due to retrospective amendment of
law or decision of Supreme Court or Larger Bench of jurisdictional High Court
(which was not challenged before the Supreme Court and has become final), the
advance tax paid by the assessee is found to be less than the amount of advance
tax payable on his current income. Such waiver or reduction of interest is
allowed when tax authorities are satisfied that this is a fit case for
reduction or waiver of such interest.
(d) In case return it
is not filed due to unavoidable circumstances
Interest under
Section 234A can be waived or reduced by the tax authorities where a return of
income could not be filed by the assessee due to unavoidable circumstances and
such return of income is filed voluntarily by the assessee or his legal heirs
without detection by the Assessing Officer.
[B] Period for which waiver can be allowed
The Chief CIT
and Director General has the discretion to waive or reduce interest for such
period as he thinks fit. Such waiver or reduction shall be allowed subject to
the condition, that the assessee has disclosed the relevant income in the
return of income or has otherwise disclosed the same before the Assessing
Officer and the tax attributable to said income has been paid. However, in
cases where any income accrues or arises for any previous year due to the
operation of any order of a Court passed after the close of the said previous
year, interest shall be reduced or waived for the period as under:
(a) In respect of Section 234A interest
Waiver or
reduction of interest levied under Section 234A can be allowed from the date
immediately following the due date for furnishing of return till the end of the
month in which the relevant order giving rise to the relevant income is passed.
(b) In respect of Section 234B interest
Waiver or
reduction of interest levied under Section 234B can be allowed from April 1 of
the relevant assessment year till the end of month in which the relevant order
giving rise to the relevant income is passed.
(c) In respect of Section 234C interest
Waiver or
reduction of interest levied under Section 234C can be allowed for the period
as mentioned in relevant section.
[C] Quantum of interest to be waived
The quantum of interest to be reduced
or waived shall be difference between:
(i)
Interest
computed for the period as referred to above with reference to tax on the total
income inclusive of the relevant income; and
(ii) Interest computed for the same period
with reference to the tax on the total income as reduced by the relevant
income.
CBDT Order
F. No. 400/129/2002-IT(B)], Dated 26.06.2006
In exercise of the powers
conferred under clause (a) of sub-section (2) of section 119 of
Income-tax Act, 1961, Central Board of Direct Taxes, hereby directs that the
Chief Commissioner of Income-tax and Director General of Income-tax may reduce
or waive interest charged under section 234A or section 234B or section 234C of
the Act in the classes of cases or classes of income specified in paragraph 2
of this Order for the period and to the extent the Chief Commissioner of
Income-tax/Director General of Income-tax may deem fit. However, no reduction
or waiver of such interest shall be ordered unless the assessee has filed the
return of income for the relevant assessment year and paid the entire
income-tax (principal component of demand) due on the income as assessed. The
Chief Commissioner of Income-tax or Director General of Income-tax may also
impose any other conditions as deemed fit for the said reduction or waiver of
interest.
2. The class of
incomes or class of cases in which the reduction or waiver of interest under
section 234A or section 234B or, as the case may be, section 234C can be
considered, are as follows :
(a) Where
during the course of proceedings for search and seizure under section 132 of
the Income-tax Act, or otherwise, the books of account and other incriminating
documents have been seized, and the assessee has been unable to furnish the
return of income for the previous year, during which the action under section
132 has taken place, within the time specified in this behalf, and the Chief
Commissioner/Director General is satisfied, having regard to the facts and
circumstances of the case, that the delay in furnishing such return of income
cannot reasonably be attributed to the assessee.
(b) Any
income chargeable to income-tax under any head of income, other than Capital
gains is received or accrued after due date of payment of the first or
subsequent instalments of advance tax which was neither anticipated nor was in
the contemplation of the assessee, and the advance tax on such income is paid
in the remaining instalment or instalments, and the Chief Commissioner/Director
General is satisfied on the facts and circumstances of the case that this is a
fit case for reduction or waiver of the interest chargeable under section 234C
of the Income-tax Act.
(c) Where
any income was not chargeable to income-tax in the case of an assessee on the
basis of any order passed by the High Court within whose jurisdiction he is
assessable to income-tax, and as result, he did not pay income-tax in relation
to such income in any previous year, and subsequently, in consequence of any
retrospective amendment of law or the decision of the Supreme Court of India,
or as the case may be, a decision of a Larger Bench of the jurisdictional High
Court (which was not challenged before the Supreme Court and has become final),
in any assessment or reassessment proceedings the advance tax paid by the
assessee during such financial year is found to be less than the amount of
advance tax payable on his current income, and the assessee is chargeable to
interest under section 234B or section 234C, and the Chief
Commissioner/Director General is satisfied that this is a fit case for
reduction or waiver of such interest.
(d) Where
a return of income could not be filed by the assessee due to unavoidable
circumstances and such return of income is filed voluntarily by the assessee or
his legal heirs without detection by the Assessing Officer.
3. The
class of cases referred to in paragraphs 2(a) and 2(d) are
specified only for the purposes of waiver of interest charged under section
234A of the Income-tax Act.
4. Earlier
Orders under section 119(2)(a) dated 23.05.1996 and 30.01.1997 on the
subject stand superseded by this Order. If any petition in the past has been
rejected because the Board had not issued this direction earlier, such petition
may be reconsidered and decided in accordance with this Order. If any petition
in the past was allowed in accordance with the Orders under section 119(2)(a)
dated 23.05.1996 and 30.01.1997, such Orders allowing waiver should not be
reopened/revised as per the guidelines contained in this Order.
CBDT Circular No. 783, Dated 18.11.1999
Clarification
regarding waiver of interest claimed on the basis of Press Note dated 21.05.1996
1. The
Board by an order [vide F. No. 400/234/95-IT(B)], dated 23.05.1996,
indicated the class of income or class of cases in which reduction or waiver of
interest under sections 234A, 234B and 234C would be considered by the Chief Commissioner of Income-tax and Director General of
Income-tax. Prior to the issue of the order a Press Note was released on 21.05.1996
with a view to give wide publicity to the major step contemplated by the Board
towards mitigating hardship in genuine cases.
2. However,
the instances have come to the notice of the Board where certain claims have
been made on the basis of para 2(v) of the Press Note seeking waiver of
interest for non-payment of advance tax. Para 2(e) of order dated 23.05.1996
contains no such stipulation. It is hereby clarified the making any
claim for waiver of interest based on the Press Note dated 21.05.1996 is not
sustainable. A Press Note is basically intended to give a broad idea in
advance to the public at large regarding a policy/step under formulation. To
treat a Press Note as a final legal document and to make any claim on the basis
of it as against the contents of the final document is not maintainable.
3. The
Board hereby reiterates that all requests for waiver of interest are to
be considered by the Chief Commissioner of Income-tax and the Director-General
of Income-tax within the parameters laid down by Boards order dated 23.05.1996
read with the order dated 30.01.1997.
CBDT Order F. No. 400/234/95-IT(B), Dated
30.01.1997
Subject : Reduction or waiver of interest charged
under section 234A/234B/234C - Modification in Order F. No. 400/234/95-IT(B),
dated 23.05.1996
The Board has issued an
order vide F. No. 400/234/95-IT(B), dated 23rd May, 1996,
indicating the class of income or class of cases in which reduction or waiver
of interest under section 234A, 234B or 234C as the case may be could be
considered by Chief Commissioner of Income-tax and Director General of
Income-tax. Clause d of para 2 of the said order read as under
:
Where any
income which was not chargeable to income-tax on the basis of any order passed
in the case of an assessee by the High Court within whose jurisdiction he is
assessable to income-tax, and as a result, he did not pay income-tax in
relation to such income in any previous year and subsequently, in consequence
of any retrospective amendment of law or as the case may be, the decision of
the Supreme Court, in his own case, which event has taken place after the end
of any such previous year, in any assessment or re-assessment proceedings the
advance tax paid by the assessee during the financial year immediately
preceding the relevant assessment year is found to be less than the amount of
advance tax payable on his current income, the assessee is chargeable to
interest under section 234B or section 234C and the Chief Commissioner or
Director General is satisfied that this is a fit case for reduction or waiver
of such interest.
2. In
partial modification of this para of the Order, the Central Board of Direct
Taxes has decided that there shall be no condition that the decision of the
High Court or the Supreme Court, as referred to therein, must be given in the
assessees own case. Also the condition that any retrospective amendment of law
or the decision of the Supreme Court or the jurisdictional High Court must have
been made after the end of the relevant year stands withdrawn.
3. If any petition in the past has been rejected because the Board had not issued this modification, the same may be reconsidered and decided in accordance with this modification read with the order dated 23rd May, 1996.
Press Note : Dated 21.05.1996
Prior to 1989, taxpayers
who had failed to furnish the return of income within the specified time-limit
or had paid inadequate or not paid advance tax within the stipulated time-limit
were charged penal interest for such defaults and also subjected to penalty
proceedings. The Direct Tax Laws (Amendment) Act, 1987 inserted new sections
234A, 234B and 234C in the Income-tax Act from assessment year 1989-90 to
provide for penal interest at higher rates for the defaults in late furnishing
of the return of income, defaults in payment of advance tax and for deferment
of advance tax respectively and omitted separate penalty provisions for these
defaults. The interest payable under these sections was mandatory and there was
no provision for reduction or waiver of the penal interest, as was provided
specifically in this behalf prior to 1989. As a result, several taxpayers faced
unintended hardships in certain circumstances.
2. The
Central Board of Direct Taxes, in exercise of powers, specified in section
119(2)(a) has decided to authorise Chief Commissioners and Directors-General
(Investigation) to reduce or waive penal interest charged under the aforesaid
sections in the following circumstances, namely:
(i) where,
in the course of search and seizure operation, books of account have been taken
over by the Department and were not available to the taxpayer to prepare his
return of income;
(ii) where,
in the course of search and seizure operation, cash had been seized which was
not permitted to be adjusted against arrears of tax or payment of advance tax
instalments falling due after the date of the search;
(iii) any
income other than Capital gains which was received or accrued after the date of
first or subsequent instalment of advance tax, which was neither anticipated
nor contemplated by the taxpayers and on which advance tax was paid by the
taxpayer after the receipt of such income;
(iv) where,
as a result of any retrospective amendment of law or the decision of the
Supreme Court after the end of the relevant previous year, certain receipts
which were hitherto treated as exempt, become taxable. Since no advance tax
would normally be paid in respect of such receipts during the relevant
financial year, penal interest is levied for the default in payment of advance
tax;
(v) where
return of income is filed voluntarily without detection by the Income-tax
Department and due to circumstances beyond control of the taxpayer such return
of income was not filed within the stipulated time-limit or advance tax was not
paid at the relevant time.
3. The
Chief Commissioners and Directors-General are being authorised to reduce or
waive penal interest under sections 234A, 234B and 234C with reference to
assessment year 1989-90 and any subsequent assessment year subject to certain
specified conditions. This is a major step taken by the Central Board of Direct
Taxes to mitigate the hardships in deserving cases.
CBDT Order : F. No. 400/234/95-IT(B), Dated 23.05.1996.
In exercise of the powers
conferred under clause (a) of sub-section (2) of section 119 of the
Income-tax Act, 1961, the Central Board of Direct Taxes hereby direct that the
Chief Commissioner of Income-tax and Director-General of Income-tax may reduce
or waive interest charged under section 234A or section 234B or section 234C of
the Act in the classes of cases or classes of income specified in paragraph 2
of this order for the period and to the extent the Chief Commissioner of
Income-tax/Director-General of Income-tax deem fit. However, no reduction or waiver
of such interest shall be ordered unless the assessee has filed the return of
income for the relevant assessment year and paid the entire tax due on the
income as assessed except the amount of interest for which reduction or waiver
has been requested for. The Chief Commissioner of Income-tax or the
Director-General of Income-tax may also impose any other conditions deemed fit
for the said reduction or waiver of interest.
2. The
class of incomes or class of cases in which the reduction or waiver of interest
under section 234A or section 234B or, as the case may be, section 234C can be
considered, are as follows :
(a) Where
during the course of proceedings for search and seizure under section 132 of
the Income-tax Act, or otherwise, the books of account and other incriminating
documents have been seized and for reasons beyond the control of the assessee,
he has been unable to furnish the return of income for the previous year during
which the action under section 132 has taken place, within the time specified
in this behalf and the Chief Commissioner or, as the case may be,
Director-General is satisfied having regard to the facts and circumstances of
the case that the delay in furnishing such return of income cannot reasonably
be attributed to the assessee.
(b) Where
during the course of search and seizure operation under section 132 of the
Income-tax Act, cash is seized which is not allowed to be utilised for payment
of advance tax instalment or instalments as they fall due after the seizure of
cash and the assessee has not paid fully or partly advance tax on the current
income and the Chief Commissioner or the Director-General is satisfied that the
assessee is unable to pay the advance tax.
(c) Where
any income chargeable to income-tax under any head of income, other than
Capital gains is received or accrues after the due date of payment of the first
or subsequent instalments of advance tax which was neither anticipated nor was
in the contemplation of the assessee and the advance tax on such income is paid
in the remaining instalment or instalments and the Chief Commissioner or
Director-General is satisfied on the facts and circumstances of the case that
this is a fit case for reduction or waiver of interest chargeable under section
234C of the Income-tax Act.
(d) Where
any income which was not chargeable to income-tax on the basis of any order
passed in the case of an assessee by the High Court within whose jurisdiction
he is assessable to income-tax, and as a result, he did not pay income-tax in
relation to such income in any previous year and subsequently, in consequence
of any retrospective amendment of law or, as the case may be, the decision of
the Supreme Court in his own case, which event has taken place after the end of
any such previous year, in any assessment or reassessment proceedings the
advance tax paid by the assessee during the financial year immediately
preceding the relevant assessment year is found to be less than the amount of
advance tax payable on his current income, the assessee is chargeable to
interest under section 234B or section 234C and the Chief Commissioner or
Director-General is satisfied that this is a fit case for reduction or waiver
of such interest.
(e) Where a return of income
could not be filed by the assessee due to unavoidable circumstances and such
return of income is filed voluntarily by the assessee or his legal heirs
without detection by the Assessing Officer.
3. The
Chief Commissioner of Income-tax/Director-General of Income-tax may order the
waiver or reduction of interest under sections 234A, 234B and 234C under this
order with reference to the assessment year 1989-90 or any subsequent
assessment year but shall not so reduce or waive penal interest in those cases
where waiver or reduction of such interest has been rejected in the past on the
merits of the case. If any petition in the past has been rejected because the
Board had not issued this direction earlier, these may be reconsidered and
decided in accordance with this order.
Notification : F. No. 212/495/92-IT(A-II)], Dated
02.05.1994.
In exercise of the powers
conferred under clause (a) of sub-section (2) of section 119 of the Income-tax
Act, 1961, the Central Board of Direct Taxes hereby direct that in cases where
any income accrues or arises for any previous year due to the operation of any
order of a Court, statutory authority or of the Government (other than an order
of assessment, appeal, reference or revision passed under the provisions of the
Income-tax Act, 1961) passed after the close of the said previous year (such
income and the order hereinafter referred to as the relevant income and the
relevant order respectively) interest under sections 234A, 234B and 234C shall
be reduced or waived by the Chief Commissioner of Income-tax/Director-General
of Income-tax subject to the conditions, for the period and to the extent
mentioned hereunder, namely :
(i) Conditions
(a) the relevant
income is disclosed in a return of income furnished for the said previous year
or is otherwise disclosed to the Assessing Officer; and
(b) the tax
attributable to such income has been paid;
(ii) Period
(a) in respect of
interest under section 234A from the date immediately following the due date
for furnishing the return of income for the relevant assessment year till the
end of the month in which the relevant order giving rise to the relevant income
is passed;
(b) in respect of
the interest under section 234B, from the first day of April of the relevant
assessment year till the end of the month in which the relevant order giving
rise to the relevant income is passed;
(c) in respect of
interest under section 234C, for the period mentioned in that section;
(iii) Extent
of interest to be reduced or waived
The quantum of interest to
be reduced or waived shall be the difference between :
(a) the
interest computed for the period mentioned at (ii) above with reference
to the tax on the total income inclusive of the relevant income; and
(b) the
interest computed for the same period with reference to the tax on the total
income as reduced by the relevant income.
2. Waiver
or reduction under this order shall be allowed with reference to the relevant
orders passed on or after the 1st day of April, 1989.
Maintainability of pending
application for waiver of interest under sections 234B and
234C is to be decided as per Notification in force as on date of filing of
application
Assessee-foreign company received
payments for execution of a project in India. Assessee filed return for
relevant assessment year and paid self assessment tax. Assessing Officer levied
interest by invoking sections 234B and 234C for non-payment of advance tax and
deferred advance tax. Subsequently, assessee filed application for waiver of
interest which was rejected by Commissioner - Single Judge relied on
Notification F. No. 400/234/95-IT(B), dated 23.05.1996 and granted relief to
assessee. Revenue contended that said notification was superseded by
Notification F. No. 400/129/2002-IT(B), dated 26.06.2006 and relief could not
be granted to assessee. Notification dated 26-6-2006 whereby reason of
'unavoidable circumstances' was excluded from applicability, when waiver was
sought undersections 234B and 234C was not clarificatory as it introduced a new
condition taking away a vested right under earlier notification and thus, it
could be applied only to cases where an application was filed after 26.06.2006.
Assessee had right to apply for waiver as per notification dated 23.05.1996 by
invoking clause 2 (e) which empowered an assessee to apply for waiver and since
application was filed in 2003 and assessee was found eligible to apply for
waiver on date of application, application could not be thrown out as not
maintainable because of a subsequent notification, [In favour of assessee] (Related
Assessment year : 2000-01) – [Chief Commissioner of Income-tax v. Van Oord
ACZ Marine Contractors BV (2022) 141 taxmann.com 30 (Mad.)]
Pursuant
to survey conducted upon assessee, it admitted an undisclosed income, however,
no advance tax was paid on said admitted income, assessee could not claim waiver of interest
under sections 234B and 234C
A survey
undersection 133A was conducted upon assessee company during which assessee had
admitted certain amount as unaccounted. Assessment was concluded undersection
143(3) levying interestundersections234A, 234B and 234C. Assessee contended
that books and documents were impounded during survey and same were not
available to assessee despite several requests which caused delay in filing
return of income and, further, return of income was filed voluntarily by
assessee without any detection by Assessing Officer, thus, impugned interest
levied upon assessee was to be deleted. It was noted that indeed, on detection
made at time of survey, assessee had admitted tax liability and filed return of
income. However, no advance tax was paid on admitted income. In these
circumstances, utmost, delay caused in filing return if to be attributed to
impounding of documents during survey proceedings, interest under section 234A
for default committed in filing return of income would be waived of, but not
interest leviable under sections 234B and 234C for default in payment of
advance tax and for deferment of advance tax. [Partly in favour of assessee] (Related
Assessment years : 2009-10 and 2010-11) – [Shankarlal Jain v. Chief
Commissioner of Income Tax, Bengaluru (2020) 273 Taxman 477 : 116 taxmann.com
607 (Karn.)]
Assessee
was under a legal and financial disability for a long period due to subsistence
of winding up order, no interest would be payable under sections 234A, 234B and
234C for aforesaid period
Assessee-company
became financially too weak to defend itself even during proceedings of winding
up. In reassessment order, tax liability was determined and interest under sections
234A and 234B was levied on assessee. In meantime, assessee-company was sought
to be wound up by its creditors, and on 18.06.2001 order of winding up was
passed by High Court. Subsequently, another order was passed on 27.10.2006 for
reconstruction and revival of assessee’s operations; thus, assessee-company was
under a legal disability during period between 18.06.2001 and 27.10.2006. Assessee,
during aforesaid period, was under control of Court and official liquidator. Interest
under sections 234A, 234B and 234C was to be waived for period between 18.06.2001
and 27.10.2006 i.e., during subsistence of winding up order. [Partly in favour
of assessee] (Related Assessment year : 1995-96 to 1997-98) – [Tvl. Sanmac
Motor Finance Ltd. v. Chief Commissioner of Income Tax, Chennai (2020) 271
Taxman 51 : 116 taxmann.com 437 (Mad.)]
Settlement Commission in
exercise of its power undersection 245D(4) and (6) does not have power to
reduce or waive interest statutorily payable under sections 234A, 234B and 234C
On application,
Settlement Commission passed an order making addition and waiving interest under
sections 234A, 234B and 234C. Thereafter, on rectification application,
Settlement Commission rectified its order of waiving interest. High Court set
aside rectified order of Settlement Commission. Thereafter, on revenue’s questioning its
legality, High Court modified order passed by Settlement Commission. Said issue
had been considered by two Constitution benches of Supreme Court and it was
held that Settlement Commission in exercise of its power under section 245D(4)
and (6) does not have power to reduce or waive interest statutorily payable
under sections 234A, 234B and 234C. Since these two decisions were rendered
after Settlement Commission passed orders, impugned orders of Settlement
Commission be set aside and case be remanded to Settlement Commission to decide
issue afresh. Further High Court committed jurisdictional error since rectified
order of Settlement Commission was already held bad in law on ground that it
was passed under section 154, and thus, same was neither in existence for any
purpose and nor it could be relied upon by High Court much less for making it a
part of their order. [Matter remanded] – [Kakadia Builders (P)
Ltd. v. ITO (2019) 412 ITR 128 : 262 Taxman 268 : 103 taxmann.com 53 (SC)]
There was bona fide
dispute which directly related to assessability of assessee to tax and due to
same assessee did not file its return, assessee was entitled to waiver of
interest under section 234A
The assessee approached
the Chief Commissioner under Section 119(2)(a) for waiver of interest. The
assessee in his application for waiver stated that he was under the bonafied
belief that he had no taxable income and therefore not required to file a
return. The Chief Commissioner had rejected the petition for waiver on the
grounds that the assessee failed to voluntarily file its return but the return
were filed consequent upon a survey conducted under Section 133A and issuance
of notice under section 148 and tax on the assessed income was not paid which
was a pre-condition for waiver of interest. On writ the Court held that the
property continued to be in the name of the HUF i.e. it remained undivided and
there were serious civil disputes between the family members. Thus, when the
property continues to remain undivided, the assessee cannot anticipate the
accrual/receipt of such income hence the assesse was right in the belief that
he had no taxable income. The High Court also held that the return was filed
well before the issuance of notice under section 148 and merely because there
was a survey counducted in premises can not be stated that the ROI was not
voluntatily filed by the assesse. Hence the assesse would be entitle to waiver
of interest levied under section 234A. the High Court also observed that the
circular (Circular No. 400/234/95 dated 30.01.1997) issued by the Board
empowering the Chief Commissioner to consider the waiver petition for waiver of
interest under Section 234A as well as Section 234B would show that even in
cases covered by section 234B and even though these provisions are compensatory
in nature, special orders for grant of relaxation could be passed. It was
further held that the dispute with regard to the division of property was a
bona fide dispute which directly relates to the assessability of the petitioner
to tax. Therefore, if the petitioner is entitled for waiver of interest under
Section 234A for the reasons set out above, the question of payment of advance
tax nor a portion thereof will not arise and therefore, the petitioner is
entitled for waiver of interest under Section 234B and 234C as well. [In favour
of assessee] (Related Assessment years : 1997-98 and 1998-99) – [R. Mani v.
Chief Commissioner of Income-tax, Tiruchirappalli (2018) 406 ITR 450 : 302 CTR
250 : 253 Taxman 3 : 164 DTR 114 (Mad.)]
Assessee had made disclosures only
after detection pursuant to search, thus, disclosure was not a voluntary
disclosure before department, assessee could not claim waiver of interest under
sections 234A, 234B and 234C by invoking Circular No. 400/29/2002
During the course of
search undersection 132, the assessee had given a statement on oath
undersection 132(4). The sworn statement was recorded and subsequently, the
Assessing Officer issued notice undersection 148. The assessee did nothing
thereafter, but after several notices were issued, the assessee filed return
and subjected for assessment. The assessee filed an application for waiver of
interest levied upon it under sections 234A, 234B and 234C. The Chief
Commissioner rejected the application of the assessee. On writ:
The assessee had given a
statement on oath undersection 132(4) during the course of search undersection
132. Disclosure was made only after detection pursuant to the search.
Therefore, it is clear that the petitioner’s disclosure is not a voluntary
disclosure before the department. The sworn statement was recorded and
subsequently, the Assessing Officer issued notice undersection 148. The
assessee did nothing thereafter, but it appears that after several notices were
issued, the assessee filed return and subjected for assessment. In the
background of the conduct of the assessee it has to be seen as to whether the
assessee is entitled to the waiver of the statutory interest payable
undersections 234A, 234B and 234C.
The Division Bench in
the case of Chief CIT v. Rajanikant & Sons (2017) 396 ITR 171 : 249
Taxman 122 : 83 taxmann.com 162 (Mad.) while, considering the scope and
ambit of Circular dated 26-6-2006 took note of the circumstances under which
the Chief Commissioner and/or the Director General of Income Tax would have
power to reduce or waive interest.
The discretion conferred
upon the respondent is clearly circumscribed and set out in paragraphs 2(a) to
2(d) of the circular dated 26.06.2006. The right to claim waiver of the
interest is not a statutory right given to the assessee but based on the
circular and therefore, strict interpretation of the circular has to be done.
Facts of the case
clearly reveals that the assessee did not fall under any of the clauses 2(a)
and 2(d) of the circular, dated 26.06.2006. Therefore, the respondent was fully
justified in not exercising his discretion and waiving the interest levied.
Thus, there is no error in the impugned order. Accordingly, the writ petition
fails and dismissed. - [In favour of revenue] (Related Assessment years : 1989-90
and 1990-91) - [A. Kuberan v. Chief Commissioner of Income-tax, Chennai (2018)
254 Taxman 189 : 89 taxmann.com 179 (Mad.)]
Commissioner
rejected assessee’s application for waiver of interest under sections 234A,
234B and 234C holding that in view of assessee’s failure to deduct TDS while
making contractual payments, disallowance of said payments and levy of interest
was automatic in terms of Instruction F No. 400/129/2002-IT (B), dated 26.06.2006,
order so passed did not require any interference
During relevant
year assessee made contractual payments to workers without deducting tax at
source. Assessing Officer thus
disallowed said payments undersection 40(a)(ia). He also charged interest under
sections 234A, 234B and 234C on account of such disallowance. Assessee filed an
application before Chief Commissioner seeking waiver of interest - Chief
Commissioner held that he had no discretion under CBDT Instructions dated 26.06.2006
inasmuch as assessee during contemporary period itself very well knew that
non-deduction/remittance would be disallowable for want of deduction of tax at
source undersection 40(a)(ia). He thus rejected assessee’s application holding
that levy of interest under sections 234A, 234B and 234C was automatic and same
could not be waived. Since impugned order passed by Chief Commissioner was in
accordance with CBDT Instructions dated 26.06.2006, same did not require any
interference. [In favour of revenue] (Related Assessment year : 2005-06) - [Gaonkar Mines v. Additional Commissioner
of Income-tax, Udupi (2018) 252 Taxman 158 : (2017) 88 taxmann.com 92 (Karn.)]
Once
assessee had paid reassessed tax along with interest under sections 234A, 234B
and 234C after reassessment order was passed, assessee could not claim waiver
of such interest invoking Circular No. 400/29/2002, dated 26.06.2006
Assessee was
under impression that sales to an Santacruz Electronics Export Processing Zone (SEEPZ)
unit was ‘deemed export’ and claimed deduction undersection 80HHC. In
reassessment, said claim was denied, thus raising tax liability. Pursuant to
reassessment, assessee paid reassessment tax along with interest under sections
234A, 234B and 234C as demanded. Later on assessee filed petition for waiver of
interest paid under sections 234A, 234B and 234C on basis of CBDT Circular No.
400/29/2002 dated, 26.06.2006. Said circular makes it clear that no reduction
or waiver of such interest shall be ordered unless assessee has filed a return
of income and has paid entire income tax. Since in instant case, reassessed tax
was paid only after revenue had passed reassessment order, assessee could not
be allowed waiver of interest under sections 234A, 234B and 234C. [In favour of
revenue] (Related Assessment years : 1997-98 to 2000-01 and 2003-04) – [Chief
Commissioner of Income-tax, Chennai v. Rajanikant & Sons (2017) 396 ITR 171
: 298 CTR 479 : 249 Taxman 122 : 83 taxmann.com 162 (Mad.)]
Assessee-company,
belonging to jurisdiction of Karnataka, under bona fide belief that order of
Kerala High Court in CIT v. A.V. Thomas & Co. Ltd. (1997) 225 ITR 29 : 93
Taxman 695, insofar as it related to extending the benefit of deduction
undersection 80HHC, was available to it and, thus during relevant year did not
pay the advance tax, since assessee belonged to Karnataka and not to Kerala,
benefit of Order F. No. 400/234/95-IT(B), dated 30.01.1997 regarding waiver of
interest was not available to assessee
The assessee-company,
under the bona fide belief that the judgment of the Single Judge in CIT v.
A.V. Thomas & Co. Ltd. (1997) 225 ITR 29 : 93 Taxman 695 (Ker.),
insofar as it related to extending the benefit of deduction undersection 80HHC,
was available to it during the previous year 2000-2001 did not pay the advance
tax during the three quarters ending December, 2000 and thereafter wards.
Subsequently, the Apex Court in IPCA Laboratory Ltd. v. DCIT (2004) 266 ITR
521 : 135 Taxman 594 (SC) declared the law over applicability of
section 80HHC, following which the court by order allowed the appeal of the
Revenue disentitling the assessee to the deduction. The Assessing Officer
passed an order levying interestundersection 234B for the delay in making
payment, which led the assessee to file an application for waiver of interest
invoking Order F. No. 400/234/95-IT(B), dated 30.01.1997 as modified by Order
F. No. 400/129/2002-IT(B), dated 26.06.2006 undersection 119(2)(a), for short ‘Order’.
The waiver application was rejected by the revenue. The assessee filed a writ
petition raising question as to whether the petitioner, an assessee in the
State of Karnataka, is entitled to maintain a claim for reduction of waiver of
interest under section 234B pursuant to paragraph 2(c) of the ‘Order’, on the
premise that its income for the assessment year 2001-02, was not chargeable to
Income-tax undersection 80HHC, in the light of the order in A.V. Thomas &
Co. Ltd. (supra) of High Court of Kerala. The Single Judge decided the issue in
favour of the assessee by observing that to avail benefit under said circular
decision of High Court or Supreme Court need not be in case of assessee but
could be in case of any other case.
Held that as is clear
from the clause 2(c) of the Board's Order F. No. 400/234/95, dated 30.01.1997,
if any order is passed by the High Court within whose jurisdiction the assessee
is not assessable to income-tax, then the benefit of the circular is not
available to the assessee. The said circular is carefully worded making it
clear that it is only when a judgment of the High Court within whose
jurisdiction the assessee is assessable is not liable to pay tax or if the
Supreme Court of India declares the laws, it is the law for the whole country
and then only the assessee would be entitled to have such benefit. Therefore,
the Single Judge was not justified in extending the benefit of the said
circular when it was not applicable to the case of assessee. [In favour of
revenue] (Related Assessment
year : 2001-02) - [Chief Commissioner of Income-tax, Bangalore v. UB Global
Corporation Ltd.
(2017) 378 ITR 461 : 79 taxmann.com 329 (Karn.)]
Refuses Section 234C waiver plea; Income stands
accrued on passing of favourable Supreme Court order
Canbank Financial Services Ltd. is a
wholly owned subsidiary of Canara Bank. For the relevant Assessment year
2014-15, it was observed that Supreme Court vide order dated July 15, 2013
dismissed HSBC’s appeal (who owed money to assessee) against Bombay High Court order directing HSBC to pay assessee a
certain amount. Supreme Court thus directed HSBC to pay an amount of Rs. 102
Cr. to assessee. The resultant profit-amount became taxable to assessee under
section 115JB. The amount was ultimately received by assessee on October 3,
2013 subsequent to the due date for advance tax payments for 1st and 2nd
quarter to assessee. Hence in view of the above assessee did not pay advance
tax on the same for 1st two quarters. However, interest under section 234C was
charged due to non-payment of advance tax on the aforesaid amount. Aggrieved,
assessee filed petition under section 119(2)(a) seeking waiver of interest under section 234C before CCIT (Chief Commissioner of
Income Tax). CCIT contended that amount received by assessee was deemed to have
been accrued/anticipated when Supreme Court passed order on July 15, 2013
dismissing HSBC’s appeal. CCIT also contended that assessee received that
amount well before the review petition was dismissed by Supreme Court. CCIT
thus held that, assessee was liable for advance-tax payment due on quarter
ending September 15, 2013. Thus, CCIT denied interest waiver for aforesaid
amount. However since liability of advance-tax payment does not arise in June
15, 2013, CCIT granted partial interest waiver for the same. Aggrieved,
assessee filed a writ petition before Karnataka High Court.
Before High Court,
assessee contended that, review petition filed by HSBC before SC against order
dated July 15, 2013 was pending. In view of the above, assessee contended that
accrued income for paying advance tax on September 15, 2013 (2nd Quarter) could
not be anticipated. This assessee held that CCIT ought to have granted waiver
with respect to interest under section 234C for last quarter.
High Court noted the
CBDT circular of June 2006 read with Section 234C as quoted by CCIT. High Court
held that interest waiver can be granted only with respect to income which was
neither anticipated nor was in the contemplation of the assessee and the
advance tax on the remaining income was duly paid by the assessee. High Court
held that when Supreme Court passed order favourable to assessee on July 15,
2013 directing HSBC to release the amount to assessee, it became assessable to
tax under section 115JB. High Court rejected assessee’s contention that it
could not anticipate the accrual of income under section 115JB. High Court held
that assessee should have paid advance tax on the accrued income for quarter
ending September 15, 2013. High Court thus held that, since the aforesaid tax
was not paid Section 234C stood attracted.
High Court noted that
CCIT had already granted 100% waiver for non-payment of tax for quarter ending
June 15, 2013 deserved by assessee. Further High Court held that, just because
merely review petition was filed by HSBC which was subsequently dismissed,
assessee should not have prayed for waiver of interest under section 234C. Thus,
by holding CCIT’s order as perfectly just and legal, High Court dismissed
assessee’s writ petition. [In favour of revenue] (Related Assessment year :
2014-15) – [Canbank Financial Services Ltd. v. CCIT [TS-427-HC-2017(KAR)] - Date
of Judgement : 21.08.2017 (Karn.)]
Official Assignee need not go before
Central Board of Direct Taxes praying for waiver of interest under
sections 234A, 234B and 234C as Insolvency Court itself can consider question
of waiver of interest in terms of power conferred undersection 7
of Presidency Towns Insolvency Act, 1909
A lady by name 'T', who
was a partner in a firm that owned a cinema theatre, was adjudged as an
insolvent and her share in the partnership firm and in the properties were
brought to sale by the Official Assignee. Out of the sale proceeds, the
Official Assignee set apart one portion representing capital gains tax. Thereafter,
the Official Assignee came up with three applications before the Insolvency
Court. The prayer in said application was to direct the Commissioner (TDS) to
waive the interest that may be payable for the relevant assessment years under sections
234A, 234B and 234C. The Judge, sitting in Insolvency Court, directed the
Assessing Authority to pass an order of assessment on merits before the cut off
date. The Judge also gave liberty to the Official Assignee to file appropriate
applications for waiver of interest before the Appropriate Authority.
The assessee thus filed instant
appeal contending that the Insolvency Court itself had the power and
jurisdiction to grant waiver and that there was no necessity for the Official
Assignee to approach any other authority under the Act for grant of waiver.
It appears from the
express language of section 7 that the Insolvency Court has full power to
decide (i) all questions of priorities and (ii) all other questions whatsoever.
The questions that could be decided by the Insolvency Court could be of law or
of fact. These questions may arise in the case of insolvency coming within the
cognizance of the Court. Alternatively, these questions may be considered by
the Court itself to be expedient or necessary to be decided for the purpose of
doing complete justice or making a complete distribution of property.
Section 178, whose
provisions are given overriding effect upon the provisions of any other law for
the time being in force by virtue of sub-section (6), deals with the liability
of the Liquidator to set apart amounts that are payable to the department. Sub-section
(4) of section 178 makes a Liquidator personally liable, if he failed to set
apart an amount, which may become due and payable by a company-in-liquidation
to the department.
While there is no
impediment for a statutory authority like an Assessing Officer to perform the
statutory duty imposed upon him, the question of distribution of the sale
proceeds of the assets of the company-in-liquidation or the assets of the
insolvent, is vested only upon the Official Liquidator or the Official Assignee,
as the case may be. The Official Liquidator functions within the control of the
Company Court and the Official Assignee functions and discharges his duties
within the control of the Insolvency Court.
Unfortunately for the
Department, section 178 deals only with the obligation on the part of the
Official Liquidator to set apart a liability. The question as to whether
interest in certain circumstances can be waived or not, is not a matter covered
by section 178, to enable the department to take advantage of the overriding
effect conferred under sub-section (6).
Even if it is assumed
for a minute that the Official Assignee makes an application for waiver of
interest before the Central Board of Direct Taxes, in case where the Central
Board of Direct Taxes rejects said application for waiver, the Official
Assignee will have to necessarily come up only before the Insolvency Court
undersection 85. Even if he does not come up, the amount payable to the
department, whether it is the principal amount of tax or whether it is interest
or whether it is penalty, will have to be decided only by the Official Assignee
subject to the control of the Insolvency Court depending upon the amount
available in his coffers. Since the amount payable to the department is a crown
debt, which ranks pari pasu with other debts, that will also get a rateable
distribution.
Therefore, if the
ultimate payment to the department actually depends upon the extent of funds
available in the coffers of the Official Liquidator or the Official Assignee,
it is unthinkable that the Official Assignee should be driven to the necessity
of approaching the Authority for the waiver of the interest and to allow him to
come up before the Insolvency Court in case he suffers an order. Hence, it is
held that the question of waiver could also be considered by the Insolvency
Court itself. In case where surplus funds are available, the Company Court
distributes such surplus funds to the promoters. Similarly, the Insolvency
Court distributes surplus funds to the insolvent or his or her legal heirs. But
at that time, the Company Court can as well say that these surplus funds should
be paid only towards discharge of the liability on account of interest and/or
penalty.
With that leverage in
mind, it is opined that this question of waiver can be decided by the
Insolvency Court itself without driving the Official Assignee to go before the
Central Board of Direct Taxes depending upon the amounts of funds available with
the Official Assignee. As a matter of fact, in the case on hand, the insolvent
herself took out an application before the Insolvency Court for a direction to
the Official Assignee to set apart capital gains tax. By an order, the Official
Assignee was directed to set apart 20 per cent of the sale proceeds. Hence,
section 178(4) has been complied with by the Official Assignee and that is the
end of section 178 and nothing more.
In view of the above, the appeal is
allowed, the order of the Judge is modified to the effect that the Official
Assignee need not go before the Central Board of Direct Taxes praying for
waiver of interestundersections234A, 234B and 234C as Insolvency Court itself
can consider the question of waiver of interest in terms of the power conferred
undersection 7 of Presidency Towns Insolvency Act, 1909 and in the light of the
provisions of the Act, together with the quantum of funds available and the
distribution already made. [In favour of assessee] (Related Assessment
years : 2008-09 to 2014-15) – [Official Assignee v. T.R. Bhuvaneswari (2016)
385 ITR 105 : 240 Taxman 266 : 70 taxmann.com 182 (Mad.)]
Upholds rejection of Section
234A/B/C interest waiver application; Pending quantum appeal irrelevant
Bombay High Court dismisses asssessee's
writ challenging Chief Commissioner’s order under section 119(2) rejecting
assessee’s application for waiver of interest under
section 234A/B/C for non-payment of advance tax on capital gains arising
during Assessment year 1996-97; High Court notes that assessee omitted to pay
advance tax in anticipation of obtaining exemption under section 54F, however
coordinate bench while adjudicating on quantum proceedings restricted
assessee's exemption claim under section 54F proportionately to the amount
invested in the new property; Assessee contended that waiver of interest was
justified as its case clearly fell within the discretionary powers of clause
2(d) of CBDT order (dated May 23rd 1996) using the term ‘as the case may be’
and as assessee’s appeal was pending before High Court and was awaiting
adjudication , assessee should have been spared from interest liability; High Court
clarifies that The order dated 23.05.1996 of the CBDT
grants relief of waiver and / or reduction of interest on the ground
that the non payment of tax was on the basis of the decision of the jurisdictional
High Court which was subsequently nullified by either retrospective amendment of the law or by a
Supreme Court decision.”, holds assessee’s case not covered by the same; As
assessee was unable to establish that non-payment of tax was due to unavoidable
situations, High Court approves rejection of interest waiver application,
distinguishes assessee’s reliance on Gujarat High Court ruling in Smt.
Bhanuben Panchal v. Chandrikaben Panchal v. Chief Commissioner of Income Tax (2004)
269 ITR 27 (Guj.), Kerala High Court ruling in CIT v. Jimichan M. Varicatt
(2011) 330 ITR 338 (Ker.). (Related Assessment year : 1996-97) – [Humayun
Suleman Merchant v. Chief Commissioner of Income Tax, Mumbai [TS-624-HC-2016(BOM)]
– Date of Judgement : 25.10.2016 (Bom.)]
Income-tax authorities are
authorised to waive off interest under sections 234A, 234B and 234C only for
such classes of income and cases for which general or special orders have been
issued by CBDT
Assessee filed petition seeking
waiver of interest under section 234C on basis of Notification dated 26.06.2006
issued by CBDT undersection 119(2)(a). Income-tax authorities are authorised to
waive off interest under sections 234A, 234B and 234C only for such classes of
income and cases for which general or special orders have been issued by CBDT.
Since assessee’s case was not falling under such notified classes, he would not
be entitled to waiver of interest under section 234C. [In favour of revenue] (Related Assessment
year : 1990-91) - [Fertilizers & Chemicals Travancore Ltd. v. DCIT, (Assessment)
Special Range, Ernakulam (2015) 377 ITR 591 : 233 Taxman 29 : 57 taxmann.com
264 (Ker.)]
Conditions specified in Notification
F. No. 400/29/2002-IT, dated 26.06.2006 are not fulfilled by assessee, waiver
of interest levied under sections 234A and 234B cannot be granted
Assessee sought waiver of interest levied
under sections 234A and 234B. Interest under section 234A and section 234B
could be waived by Commissioner, only if the conditions specified in the
Notification F. No. 400/29/2002-IT(B) dated 26.06.2006 are satisfied. Since conditions
specified in notification were not available, assessee could not seek waiver of
interest. [In favour of revenue] - [K.C. Mohanan v. Chief Commissioner of
Income-tax (2013) 350 ITR 461 : 258 CTR 103 : 214 Taxman 127 : 30 taxmann.com
376 (Ker.)]
Power of Board exercisable under section
119(2)(a) is an enabling provision empowering Board to pass orders in favour of
assessee for waiver of interest levied, 234B and 234C, and where in assessee’s
case said power was delegated to Chief Commissioner, question of remanding
matter yet again directing Board to reconsider it, did not arise
In earlier writ proceedings, Court
directed that in case assessee had any grievance in respect of order that had
been passed earlier by Chief Commissioner on an application filed by assessee
seeking for waiver of interest under provisions of sections 234A and 234B, it
was open for him to approach Board. Thereupon, assessee had approached Board
which issued endorsement directing him to approach Chief Commissioner. Assessee
questioned said order before Court in writ petition contending that when Court
had directed Board to consider matter, it ought to have been considered by
Board itself. Single Judge opined that power of Board exercisable under section
119(2)(a) is an enabling provision empowering Board to pass orders in favour of
assessee for waiver of interest levied under sections 234A, 234B and 234C, and
that power having already been delegated to CCIT/DGIT, question of remanding
matter yet again directing Board to reconsider matter, did not arise. Accordingly,
Single Judge dismissed assessee’s writ petition. On facts, Chief Commissioner
was to be directed to consider assessee’s claim for waiver of interest levied
undersection 234B on merits and dispose it off by giving reasons. [Matter
remanded] – [B. Gajendra Kumar v. ITO (2013) 219 Taxman 16 : 36 taxmann.com
51 (Karn.)]
Returns for assessment
years 1996-97 to 2000-01 were filed only after notices were issued undersection
148, said returns had rightly been held by respondent-authority as not being
voluntary in nature and in such a case no fault could be found with order of
respondent authority rejecting assessee’s prayer for waiver of interest
In 1990-91, the Gujarat
Narmada Nigam Authority initiated proceedings for compulsory acquisition of the
agricultural land of the petitioner and co-owners for the purpose of construction
of the Narmada canal. The petitioner was chosen to represent the interest of
himself and other co-owners of the land. After litigation, the petitioner and
other co-owners became entitled to compensation along with interest in the land
acquisition proceedings. The total amount of interest was computed at a figure
of Rs. 20,01,716. It was the case of the petitioner that the said interest was
relatable to a period of 102 months. As per the tax deduction certificate which
was in the name of the petitioner, the petitioner filed a return of income for
the assessment year 2001-02 showing proportionate income for 12 months worked
out at a sum of Rs. 2,35,000. After working out the tax payable at Rs. 44,650,
net refundable amount was claimed at Rs. 1,75,539 based on the TDS certificate,
wherein tax deducted at source was shown to be Rs. 2,20,189. The petitioner was
duly assessed by accepting the said return of income but the Assessing Officer
thereafter issued notice undersection 148 calling upon the petitioner to file
returns of income for earlier assessment years, which had admittedly not been
filed. The petitioner thereafter filed returns for the said assessment years
and the assessments were completed. Ultimately, the petitioner filed a petition
for the assessment years 1996-97 to 2000-01 for waiver of interest charged
under sections 234A and 234B. In the said petition, the petitioner had
categorically taken a stand that interest should be waived/charged only in
relation to the share of the petitioner as he was only one of the co-owners of
the land, which was acquired. The respondent rejected the application, holding
that as the returns were not voluntarily filed but in response to the notice
undersection 148, the conditions for the waiver of interest were not satisfied.
Held that as the returns
for the assessment years 1996-97 to 2000-01 were filed only after notices were
issued undersection 148, the said returns had rightly been held by the
respondent-authority as not being voluntary in nature. Therefore rejection of
the prayer for waiver of interest was justified. However, the matter was to be
remanded to the Assessing Officer who shall determine as to whether the
interest received along with the compensation for the lands acquired was liable
to be apportioned amongst various co-owners or whether the same was liable to
be taxed in the hands of the petitioner alone. In the event the Assessing
Officer came to the conclusion that the petitioner was entitled to such
apportionment, then only for the purpose of computing the liability to pay
interest under sections 234A and 234B shall such an exercise be taken by the
Assessing Officer. [Remanded]
(Related Assessment years : 1996-97 to 2001-02) – [Sendhaji Amraji Thakore v.
Chief Commissioner of Income-tax (2009) 315 ITR 233 (Guj.)]
Assessee had
filed revised return for relevant assessment years, disclosing compensation
along with interest income received by him - Assessing authority levied
interest on said income under sections 234A, 234B and 234C - Assessee filed an
application for waiver of penalty and interest - Chief Commissioner rejected
same on ground that application did not satisfy conditions laid down in CBDT’s
notification for waiver inasmuch as assessee was not suffering from any
financial hardship in paying amount of interest and was of view that assessee
should have disclosed entire interest income on receipt basis and paid tax - Order
passed by Chief Commissioner could not be sustained and was to be set aside
The
assessee had received compensation along with interest on account of
acquisition of his land by the State Government under the Land Acquisition Act,
1894. Accordingly, the assessee filed his revised return for the relevant
assessment years disclosing the interest income. The assessing authority levied
interest on the said income under sections 234A, 234B and 234C. The assessee
filed an application under section 119 read with section 273 for waiver of
penalty and interest. The Chief Commissioner rejected the application on the
ground that application did not satisfy any condition laid down in CBDT’s
Notification No. F. No. 400/234/95-IT(B), dated 23-05-1996 for waiver inasmuch
as assessee was not suffering from any financial hardship in paying amount of interest
and was also of view that assessee should have disclosed entire interest income
on receipt basis and paid tax. On writ :
The
Chief Commissioner has been empowered by the Central Board of Direct Taxes
under clause (a) of section 119(2) to reduce or waive interest charged under
sections 234(A), 234(B) or 234(C) vide Notification No. F. No. 400/234/95-IT
(B) dated 23.05.1996. In the aforesaid Notification, under clause (b), the
condition is that where a return of income could not be filed by the assessee
due to unavoidable circumstances and such return of income is filed voluntarily
by the assessee or his legal heirs without detection by the Assessing Officer,
the interest under sections 234A, 234B and 234C can be waived or reduced. In
the instant case, the Chief Commissioner had proceeded on the assumption that
the interest income ought to have been declared on receipt basis and as the
petitioner had not disclosed the full amount of interest income and had only
disclosed a part of the said income by filing the return for the assessment
years 1995-96 to 2001-02 when it could have filed the return for the earlier
assessment years also, was wholly misconceived. It is well-settled that the
amount of interest paid on the enhanced amount of compensation accrues every
year and is taxable in the year in which it has accrued.
The
petitioner had filed the petition for waiver of interest and penalty for the
assessment years 1995-96 to 2001-02 and, therefore, the Chief Commissioner
ought to have confined the consideration as to whether the conditions mentioned
in the Notification dated 23-05-1996 had been fulfilled or not. No adverse
inference should have been drawn from the fact that the return of the income
for the earlier assessment years had not been filed.
The
petitioner had filed the revised return of income for the assessment years
1995-96 to 2001-02 voluntarily and had also paid the taxes due thereon. He was
claiming waiver of interest and penalty for those assessment years only. The
Chief Commissioner had taken into consideration irrelevant materials regarding
non-disclosure of the entire interest income even though according to settled
principles by the Apex Court, it could not be subjected to tax in the
assessment years in question. Moreover, the question of financial hardship and
difficulty in paying the amount of interest under sections 234A, 234B and 234C
and the amount of penalty, which had been taken as one of the grounds for
rejecting the waiver application was misconceived as it did not find mention in
CBDT’s notification empowering the Chief Commissioner to exercise such a power.
He had to confine himself within the four corners of the conditions specified
therein and could not travel beyond it.
Therefore,
the order passed by the Chief Commissioner could not be
sustained and was to be set aside. The Chief Commissioner was directed to
decided the matter afresh in accordance with law after giving an opportunity of
being heard to the petitioner. In the result, the petition succeeded and was
allowed. (Matter remanded back) (Related Assessment
years : 1995-96 to 2001-02) – [Ashwani Dhingra v. Chief Commissioner of Income-tax
(2005) 275 ITR 72 : 194
CTR 233 : 142 Taxman 241 (All.)]
Sections 234A, 234B and 234C of the
Income-tax Act, 1961 are not violative of article 14 of the Constitution of
India
Provisions contained in sections 234A,
234B and 234C are not penal provisions but the said provisions are compensatory
in nature for breach of civil obligation. To obviate the arbitrariness and
eliminate the objective decisions of the tax authority, sections 234A, 234B and
234C have been introduced. As a matter of fact, by the said provisions uniform
treatment to similarly situated persons is sought to be achieved and,
therefore, there is no question of the said provisions being violative of
article 14, nor the said provisions are unreasonable. The said provisions did
not infringe the petitioner's fundamental right under article 19(1)(g). The
petitioner could not show how the said provisions restricted his right to carry
on business. Besides, in cases of extreme hardship, the Board can exercise
power. – [Related Assessment years : 1993-94
to 1996-97) - Umesh S. Bangara v. Union of India (2004) 268 ITR 405 : 189
CTR 319 : 137 Taxman 231 (Bom.)]
Assessee deposited tax
as per law existing on 06.11.1989 and claimed cash assistance received against
export as capital receipt - Law was amended with retrospective effect by the
Finance Act, 1990 and as such receipts became taxable - Accordingly, income was
enhanced and interest under sections 234B and 234C was charged - There was a
bona fide intention on part of assessee and, accordingly, it could not pay
advance tax on cash compensatory support amount
The assessee deposited
tax on income arrived at as per law existing on 06.11.1989 and claimed cash
assistance received against the export as capital receipt. Subsequently, the
law was amended with retrospective effect by the Finance Act, 1990 and as such
receipts became taxable. Accordingly, the income was enhanced by the Assessing
Officer and interest under sections 234B and 234C was charged rejecting
explanation of the assessee that there was a bona fide intention that it was
not liable to pay tax on account of cash compensatory support. On appeal, the
Commissioner (Appeals) upheld the order passed by the Assessing Officer. On
second appeal :
HELD : The amendment
came in the year 1990 and the estimate was filed much earlier, i.e., on 06.11.1989.
Therefore, it could not be said that there was any mala fide intention on the
part of the assessee.
In view of the
instructions issued by the CBDT in Order No. F. 400/234/95-IT(B), dated 21.05.1996
it is amply clear that intention of the tax authorities is such that the
interest should not be levied where any amendment came with retrospective
effect.
In
the instant case also, the amendment came in the year 1990 with retrospective
effect. Therefore, there was a bona fide intention on the part of the assessee
and accordingly it could not pay advance tax on cash compensatory amount.
Further, the Assessing Officer also did not charge any interest under sections
234B and 234C while processing return under section 143(1)(a). It clearly
showed that the Assessing Officer was of the view that no advance tax was
payable on account of cash compensatory amount as by that date amendment had
not come as the amendment came by Finance Act, 1990. Hence, on facts and
circumstances of the case no interest under section 234B or 234C should be
charged on account of failure to pay advance tax on the amount of cash
compensatory support. (Related
Assessment year : 1989-90) – [Priyanka
Overseas Ltd. v. DCIT (2001) 79 ITD 353 : (2002) 75 TTJ 783 (ITAT Delhi)
