Madras High Court
The Chandrasekarapuram Co-Op. Whole ... vs The Chief Commissioner Of Income Tax on 15 April, 2024
Author: C.Saravanan
Bench: C.Saravanan
W.P.(MD) No.3512 of 2020
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 15.04.2024
CORAM
THE HON'BLE MR.JUSTICE C.SARAVANAN
W.P.(MD) No.3512 of 2020
and
W.M.P.(MD)No.2980 of 2020
The Chandrasekarapuram Co-op. Whole Sale
Stores Limited,
No.66, Nageshwaran North Street,
Kumbakonam – 612 001,
Rep. by its Managing Director,
PAN: AAALT 0356N ... Petitioner
Vs.
1.The Chief Commissioner of Income Tax,
Income Tax Department,
No.44, Williams Road,
Cantonment,
Tiruchirappalli.
2.The Principal Commissioner of Income Tax – 1,
Income Tax Department,
No.44, Williams Road,
Cantonment,
Tiruchirappalli.
3.The Joint Commissioner of Income Tax – 1,
Income Tax Department,
No.44, Williams Road,
Cantonment,
Tiruchirappalli.
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Page No. 1 of 14
W.P.(MD) No.3512 of 2020
4.The Deputy Commissioner of Income Tax,
Circle – 2,
Income Tax Department,
No.44, Williams Road,
Cantonment,
Tiruchirappalli. ... Respondents
Prayer: Writ Petition filed under Article 226 of Constitution of India for
issuance of a Writ of Certiorarified Mandamus, to call for the records of
the first respondent to quash the impugned order dated 13.11.2019 C.No.
932(1)/CCIT/TRY/2018-19 for the Assessment Years 2005-06, 2007-08,
2008-09 and 2009-10 and direct the first respondent for waiver of interest
charged under Sections 234A, 234B and 234C to the Income Tax Act,
1961 on the grounds stated in the present Writ Petition.
For Petitioner : Mr.A.S.Sriraman
For Respondents : Mr.N.Dilipkumar
Senior Standing Counsel
ORDER
The petitioner is aggrieved by the impugned order dated
13.11.2019, passed by the first respondent – Chief Commissioner of
Income Tax, partly rejecting the prayer of the petitioner for waiver of
interest under Sections 234A, 234B and 234C of the Income Tax Act,
1961.
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2. The dispute in the present case pertains to the following
Assessment Years:-
Assessment Due date for Due date for Date of Audit Return filed
Year filing return getting Report on
of income accounts
audited
2005-06 31.10.2005 31.10.2005 14.07.2009 03.08.2009
2007-08 31.10.2007 31.10.2007 18.12.2009 31.12.2009
2008-09 31.10.2008 31.10.2008 10.03.2011 31.05.2011
2009-10 31.10.2009 31.10.2009 30.04.2011 02.04.2012
3. By the impugned order, the first respondent has granted partial
waiver of interest insofar as interest under Section 234A of the Income
Tax Act, 1961, for the Assessment Years 2005-2006 and 2007-2008.
However, for the Assessment Years 2008-2009 and 2009-2010, the first
respondent has concluded that the petitioner has filed the return belatedly
long after the receipt of statutory audit by the Audit Department of the
State Government.
4. The learned counsel for the petitioner has filed copies of the
Audit Reports for the Assessment Years 2008-2009 and 2009-2010. The
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learned counsel for the petitioner would submit that there is only a partial
delay in filing the returns, inasmuch as the Audit Reports were received
by the Office of the petitioner for the Assessment Years 2008-2009 and
2009-2010 on 22.03.2011 and on 31.01.2012 and the returns were filed
immediately thereafter on 31.05.2011 and on 02.04.2012, respectively.
5. It is submitted that the reasons for dropping the interest under
Section 234A of the Income Tax Act, 1961 for the Assessment Years
2005-2006 and 2007-2008 should apply for the Assessment Years
2008-2009 and 2009-2010. Therefore, the rejection of the prayer for
waiver of interest under Section 234A of the Income Tax Act, 1961 for
the Assessment Years 2008-2009 and 2009-2010 is liable to be interfered
with favourably in the light of the CBCT Circular, dated 26.06.2006,
bearing reference No.400/129/2002-IT(B).
6. As far as interest under Sections 234B and 234C are concerned,
the learned counsel for the petitioner would submit that on 17.03.1995,
due to the financial stress faced by the Stores, more than 60 employees
were deputed / transferred to other Co-operative Institutions. That apart,
it is submitted that the employees' dues of about 1.40 Crores payable to
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the retired / deputed / transferred employees were still pending as on
31.03.2019. It is further submitted that a loan of Rs.16 Lakhs due to the
Tamil Nadu Government was still pending from the year 2001. It is
further submitted that statutory funds of Rs.70 Lakhs as prescribed by the
Tamil Nadu Co-operative Societies Act, 1983, such as Co-operative
Education Fund, Co-operative Development Fund payable to the Co-
operative Union was still pending and therefore, it is submitted that the
first respondent should have exercised the discretion vested with him in
terms of CBCT Circular No.400/129/2002-IT(B), dated 26.06.2006.
7. In this connection, the learned counsel for the petitioner has also
drawn the attention of this Court to the decision rendered by this Court in
Tvl.Sanmac Motor Finance Ltd. vs. Chief Commissioner of Income
Tax, Chennai, [2020] 271 Taxman 51 (Madras) : AIRONLINE 2020
MAD 866, wherein this Court has exercised the discretion in favour of the
petitioner therein.
8. The learned counsel for the petitioner would submit that the case
of the petitioner deserves a similar treatment, as the petitioner is a Co-
operative Society, which is solely owned by the State Government. It is
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further submitted that although it is intended to make profit, it serves the
needs of the Society by implementing Part-IV of the Constitution of India.
9. Opposing the prayer, the learned Senior Standing Counsel for the
respondents would submit that there is no merit in the present Writ
Petition. It is submitted that the first respondent has exercised the
discretion correctly in the impugned order by applying Circular No.
400/129/2002-IT(B), dated 26.06.2006 of the Central Board of Direct
Taxes, issued under Section 119(2)(a) of the Income Tax Act, 1961.
10. It is further submitted that the Board has clarified that insofar as
interest under Sections 234B and 234C are concerned, they will not be
governed by the clarification in Paragraph 2(d) of the said Circular. The
learned Senior Standing Counsel for the respondents also would refer to
the decision relied by the learned counsel for the petitioner in
Tvl.Sanmac Motor Finance Ltd. case [cited supra].
11. The learned Senior Standing Counsel for the respondents has
also placed reliance on the decision of the Hon'ble Supreme Court in
Commissioner of Income Tax, Mumbai vs. Anjum M.H. Ghaswala
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and others, 2002 (1) SCC 633. Particularly, a reference was made to
Paragraph 33 of the said judgment. The learned Senior Standing Counsel
for the respondents has also placed reliance on the decision of the
Bombay High Court in De Souza Hotels (P.) Ltd. vs. Chief
Commissioner of Income Tax, [2012] 207 Taxman 84 (Bombay) :
[2012] 253 CTR 541 (Bombay), which was affirmed by the Hon'ble
Supreme Court in C.C.No.13729 of 2012, dated 21.08.2012 [(2012) 25
Taxmann.com 553 (SC)].
12. I have considered the arguments advanced by the learned
counsel for the petitioner and the learned Senior Standing Counsel for the
respondents. I have perused the decisions cited by the learned counsel for
the petitioner and the learned Senior Standing Counsel for the
respondents. I have also perused the content of CBCT Circular No.
400/129/2002-IT(B), dated 26.06.2006.
13. The Hon'ble Supreme Court in Commissioner of Income Tax,
Mumbai vs. Anjum M.H. Ghaswala and others [cited supra], has held
as under:-
''33. It is then contended that if it is to be
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construed that the Commission has no power of
waiver or reduction of interest then the entire
purpose of Chapter XIX-A would be defeated since a
person making an application to the Commission
would not be in any way better off than pursuing his
remedy otherwise provided in the Act. We are unable
to accept this argument advanced on behalf of the
respondents because the persons who approach the
Commission under Chapter XIX-B are admittedly the
persons who had not declared their true incomes to
the income tax authorities as required under the Act.
In spite of this default, Section 245-C comes to the
aid of such assessees by providing a way out of the
statutory implications of their default. The object of
the legislature in introducing this section is to see
that the protracted proceedings before the authorities
or in courts are avoided by resorting to settlement of
cases. In this process, an assessee cannot expect any
reduction in amounts statutorily payable under the
Act. While the Settlement Commission arrives at the
taxable income of the assessee on the basis of
records available before it, it has to levy the
mandatorily chargeable tax on such income arrived
at by it and wherever interest is due under the
mandatory provisions like Sections 234-A, 234-B and
234-C, it has to include the said interest also in the
settlement. But, at the same time, the assessee who
because of his non-disclosure would otherwise have
been liable for various penal actions, gets an
opportunity of getting immunity from penal
proceedings. It is to be seen that under Section 245-H
the Commission has the power to grant immunity to
the assessee from prosecution and penalty. This
immunity is not confined only to the penal provisions
of the Act but it is also available, if granted by the
Commission, to offences under the Penal Code, 1860
or under any other Central Act for the time being in
force and also get the benefit of waiver or reduction
in the imposition of penalty under the Act with
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respect to the cases covered by the settlement.
Therefore, it is futile to contend that merely because
the Settlement Commission has not been vested with
the power of waiving or reducing the interest,
Chapter XIX-A would either become otiose or would
not serve any purpose. Hence, this argument has to
be rejected.''
14. The above said view has been followed by the Bombay High
Court in De Souza Hotels (P.) Ltd. vs. Chief Commissioner of Income
Tax [cited supra] and the S.L.P. against the said order has been dismissed
by the Hon'ble Supreme Court. This Court had also an opportunity to
consider the applicability of the Circular in the context of a Company,
which was ordered to be wound up in Tvl.Sanmac Motor Finance Ltd.
case [cited supra]. In the said case, it was observed as under:-
''19. From a reading of the above circular, it is
evident that the case of the petitioner is not
specifically covered by any of the situation
contemplated in the above notification. Therefore, no
fault can be found with the impugned order of the 1st
respondent as the 1st respondent is bound by the
above notification though the petitioner company
was ordered to be wound up by an order dated
18.06.2001 in C.P.No.323 of 1998.
21. Though the notification has not considered
the above situation, I am of the view that the
petitioner is entitled for a partial relief for the above
reason dehors the above notification. The date of
winding up dates back to the date of petition and
during the aforesaid period, there was a legal
disability to pay the tax by the company as the
official liquidator obtained leave of the company
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court under the Companies Act, 1956.
22. Since the 1st respondent has no power to
grant waiver of interest in the light of the specific
instruction of the Central Board of Direct Taxes, the
Court in the exercise of its power under Article 226
of the Constitution of India can order waiver
applying the legal principles applicable in the case of
winding up of a company.
34. As the petitioner was under a legal
disability during the period between 18.06.2001 and
27.10.2006, during the subsistence of winding up
order and since the petitioner company was under
the control of this court and the official liquidator, I
am of the view, this is a fit case for granting partial
relief to the petitioner.''
15. In my view, the stand of the petitioner that the petitioner was
entitled for waiver of interest under Section 234A of the Income Tax Act,
1961, for the Assessment Years 2008-2009 and 2009-2010 on similar for
the Assessment Years 2005-2006 and 2007-2008 deserves to be accepted,
as there is only marginal delay in filing the returns after the Audit Report
was received by the petitioner from the Office of Joint Director of Co-
operative Audit on 22.03.2011 for the Assessment Year 2008-2009 and on
31.01.2012 for the Assessment Year 2009-2010. The returns for these
years were filed by the petitioner on 31.05.2011 and 02.04.2012,
respectively. Therefore, to the extent of rejection of waiver of interest
under Section 234A of the Income Tax Act, 1961 is concerned, I am of
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the view that the impugned order warrants interference, by granting
waiver to the petitioner. Therefore, the interest under Section 234A of the
Income Tax Act, 1961, deserves to be waived and therefore, this Writ
Petition deserves to be allowed to that extent.
16. As far as the interest under Sections 234B and 234C of the
Income Tax Act, 1961 are concerned, they pertain to belated payment of
advance tax under Section 210 within the stipulated period under Section
211 of the Income Tax Act, 1961. In my view, no case is made out by the
petitioner for waiver of interest notwithstanding the reason stated by the
petitioner in the affidavit. CBCT Circular No.400/129/2002-IT(B), dated
26.06.2006, does not specifically deal with waiver of interest under
Sections 234B and 234C of the Income Tax Act, 1961.
17. There were no impediments operating against the petitioner
from paying the advance tax within the time line under Section 211 of
Income Tax Act, 1961. The decision of this Court in Tvl.Sanmac Motor
Finance Ltd. case [cited supra], which was relied by the learned counsel
for the petitioner as also by the learned Senior Standing Counsel for the
respondents, has not given a complete waiver of interest under any of the
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provisions although partial waiver was allowed as it evident from reading
of Paragraph 35 of the order, which reads as under:-
''35. Under these circumstances, I am of the view
that there should be a waiver of interest under
Section 234A, Section 234B and Section 234C of the
Income Tax Act, 1961 for the period between
18.06.2001 and 27.10.2006 alone.''
18. That apart, the payment of interest on the tax that was payable
on the date specified in Section 211 of the Income Tax Act, 1961 is
axiomatic in the sense it has to be paid by the due date prescribed under
the Statute and therefore, there cannot be any waiver either on the ground
of equity or on a reading of the above Circular dated 26.06.2006, bearing
reference No.400/129/2002-IT(B) or on a reading of the decision of this
Court in Tvl.Sanmac Motor Finance Ltd. case [cited supra] or on a
reading of the decision of the Hon'ble Supreme Court in Commissioner
of Income Tax, Mumbai vs. Anjum M.H. Ghaswala and others [cited
supra].
19. In fine, this Writ Petition is partly allowed to the extent
indicated above. Accordingly, there shall be a waiver of interest under
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Section 234A of the Income Tax Act, 1961 for the Assessment Years
2008-2009 and 2009-2010. No costs. Consequently, connected
Miscellaneous Petition is closed.
Index : Yes/ No 15.04.2024
Neutral Citation: Yes / No
Speaking order / Non-speaking order
smn2
To
1.The Chief Commissioner of Income Tax,
Income Tax Department,
No.44, Williams Road,
Cantonment,
Tiruchirappalli.
2.The Principal Commissioner of Income Tax – 1,
Income Tax Department,
No.44, Williams Road,
Cantonment,
Tiruchirappalli.
3.The Joint Commissioner of Income Tax – 1,
Income Tax Department,
No.44, Williams Road,
Cantonment,
Tiruchirappalli.
4.The Deputy Commissioner of Income Tax,
Circle – 2,
Income Tax Department,
No.44, Williams Road,
Cantonment,
Tiruchirappalli.
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C.SARAVANAN, J.
smn2
15.04.2024
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