HIGH COURT OF JUDICATURE AT ALLAHABAD
AFR
COURT NO.37
Civil Misc. Writ Petition (Tax) No. 979 of 2012
Manoj Kumar Gupta
Vs.
Commissioner of Income Tax and others
********
Hon'ble Tarun Agarwala,J.
Hon'ble Vinod Kumar Misra,J.
(Per: Tarun Agarwala,J.)
1. We have heard Sri Nikhil Agrawal, the learned counsel for the petitioner and Sri Manu Ghildiyal, the learned counsel for the Income Tax Department.
2. The present dispute relates to the order passed by the Commissioner of Income Tax, Varanasi under Section 220(2A) of the Income Tax Act (hereinafter to referred as the "Act") reducing the interest payable under Section 220(2) of the Act to 25%. The petitioner, being aggrieved, has filed the present writ petition praying that in the present facts and circumstances of the case, which has come on record, the petitioner was entitled for complete waiver of the interest.
3. The background leading to the filing of the writ petition need not be repeated again as complete facts has already been given in the judgment of this Court dated 25.11.2011 passed in Writ Petition No.1444 of 2009.
4. However, in a nut shell it needs to be stated that a huge tax demand was created by the Income Tax Officer for the Assessment Year 1994-95, which the petitioner contested upto the Tribunal. Interest was also charged in the assessment order. After culmination of the appeal, the tax demand was reduced to Rs.75,000/- which was paid by the petitioner on 27.9.2000. Interest was not paid. The assessing officer, after giving full effect to the appellate order reduced the demand to Rs.75,000/- on which interest was calculated at around Rs.4.77 lacs. The petitioner, being aggrieved by the imposition of this interest filed an application under Section 220(2A) of the Act for waiver/reduction of the interest. This application was processed by the Commissioner of Income Tax who in its earlier order dated 26.2.2009 found that the ingredients, which are necessary under Section 220 (2A) of the Act was existing. The Commissioner of Income Tax held:
"4.3.1 For A.Y.2008-09, the assessee has filed return of income on 31.7.2008, declaring total income of Rs.1,08,300/-, which interalia, include income from salary of Rs.1,40,400/- for working with M/s. Varuna Bearing (P)Ltd. Therefore, it is to some extent apparent that payment of a sum of Rs.4,77,412/- may cause some amount of hardship to the assessee when the assessee has essentially Salary Income.
4.3.2 Default in payment of such amount on which interest is payable was due to circumstances beyond the control of the assessee. The assessee's submission in this regard appears to be some, since this was a case of prolonged adjudication."
5. After recording the aforesaid reasons, the Commissioner reduced the interest by 25%. The petitioner, being aggrieved, filed Writ Petition No.1444 of 2009, which was allowed by judgment dated 25.1.2011 and the matter was remitted again to the Commissioner to pass a fresh order in the light of the observation made in the said judgment. The operative portion of the judgment is extracted hereunder:
"We are of the opinion that where all the three conditions are found to be satisfied, the CIT would be failing to exercise his jurisdiction, in reducing or waving amount of interest paid or payable by the assessee. In this case the CIT, in our opinion, failed in exercise of the jurisdiction in reducing or waiving the amount of interest, which was without doubt, much larger as against the demand of tax.
The writ petition is allowed. The order dated 26.2.2009 passed by the Commissioner of Income Tax, Varanasi in the matter of the petitioner for the assessment year 1994-95 under Section 220 (2) read with Section 220 (2A) of the Income Tax Act, 1961 is set aside. The Commissioner of Income Tax, Varanasi will consider the question of waiver of interest strictly in terms of conditions laid down in Section 220 (2A) on which he has recorded his finding in para 4.3.1 and 4.3.2 of the impugned order and in the light of the observations made by us in this judgment. The fresh order will be passed, within three months."
6. Pursuant to the said decision, the Commissioner reconsidered the matter and, by an order dated 23.3.2012, reduced the payment of interest by 75% and, accordingly, directed the petitioner to pay the interest to the extent of 25% under Section 220(2) of the Act. The petitioner, being aggrieved, by the said decision has filed the present writ petition contending that in the given circumstances, when all the ingredients contemplated under Section 220(2A) of the Act was existing, the Commissioner committed an error in not allowing 100% waiver of the interest and only reducing it to 75%.
7. In support of his submission, the learned counsel for the petitioner has relied upon the decision in Manish Maheshwari vs. Asstt. Commissioner of Income Tax, and another, 2007(3)SCC 794, Auro Food Ltd. vs. Commissioner of Income Tax and another, 239 ITR 548, Union of India and anohter. vs. Jesus Sales Corporation, 1996 (4) SCC 69, S.G.Jaisinghani vs. Union of India, AIR 1967 SC 1427 and Kishan Lal vs. Union of India and another, 230 ITR 85 on the issue that the order of the authority under Section 220 (2A) of the Act being a quasi judicial order could be subjected to judicial review and that it was imperative for the authority to give reasons while disposing of the application. It was also held that where the the statute gives a discretion to an authority to exercise its power, such authority could exercise the same in a fair manner.
8. Having heard the learned counsel for the parties, we find that the Writ Court by its order dated 25.11.2011 had remitted the matter to the Commissioner to reconsider the question of waiver of interest strictly in terms of the conditions laid down in Section 220(2A) of the Act. The Commissioner while reconsidering the matter after considering paragraphs 4.3.1 and 4.3.2 of its earlier order came to the conclusion that the ingredients provided under Section 220(2A) of the Act exists and since there was a genuine hardship for the petitioner, granted partial waiver by reducing the interest to 75%.
9. We are of the opinion that, in the facts and circumstances, the authority had applied its mind to the situation while granting 75% waiver of the interest. It is not correct to state that the Commissioner did not apply its mind though we do find that proper reasoning has not been given. However, by not giving such proper reasoning it does not mean that the order is incorrect or is liable to be set aside. We are of the opinion, that a finality should be reached and the matter should be laid at rest. The petitioner has been litigating for almost 20 years and the matter should come to an end once and for all.
10. The contention that complete waiver of interest should be granted cannot be accepted. Admittedly, the enhanced income was found to be valid to a certain extent and the contention of the assessee was not accepted. A demand of Rs.75,000/- was eventually accepted by the petitioner which was paid. Consequently, interest was liable to be paid under Section 220(2) of the Act.
11. In Ratan Lal Agrawal (HUF) vs. Commissioner of Income Tax and another, 2007 (290) ITR 478, this Court held that under Section 220 (2-A) of the Act, upon the conditions being fulfilled, the Commissioner has the power either to reduce or waive the amount of interest and that it was not correct to suggest that the moment the three conditions enumerated are fulfilled, the only power left with the Commission is to waive the amount of interest.
12. Considering the peculiar facts and circumstances of the present case, we find that the original demand was reduced to Rs.75,000/-. However, the interest component under Section 220(2) of the Act has swelled to Rs.4.77 lacs. According to the learned counsel for the petitioner, the interest as on date would be Rs.1,19,353/- as per the impugned order. We find that for the assessment year 2008-09 the petitioner's total salary was Rs.1,40,400/-. Considering the aforesaid, we are of the opinion that directing the petitioner to pay Rs.1,19,353/- would entail undue hardship to him.
13. Considering the peculiar facts and circumstances in the given case, we are of the opinion, that in the interest of justice, the demand of interest should not exceed the demand of Rs.75,000/-.
14. We, accordingly, allow the writ petition in part and direct the petitioner to pay a sum of Rs.75,000/- towards interest under Section 220(2) of the Act on or before 31.12.2015, failing which the assessing officer will compute the interest as per the order of the Commissioner of Income Tax, Varanasi dated 23.3.2012.
Dated :24.11.2015
AKJ
(Vinod Kumar Misra,J.) (Tarun Agarwala,J.)