K. C. Mohanan vs The Chief Commissioner of Income Tax, The Income Tax Officer and The Tax Recovery Officer

Antony Dominic, J.—The parties to these writ petitions and the issues raised are common and therefore these writ petitions were heard and are disposed of by the common judgment. In so far W.P. (C) No. 1463/2008 is concerned, petitioner challenges Ext. P9 order passed by the first respondent rejecting his application made u/s 220(2A) for waiver of interest levied u/s 220(2) of the Income Tax Act. A reading of Ext. P9 order shows that on appreciation of the contentions raised and the materials available, the first respondent concluded that the petitioner did not satisfy the three conditions specified in Section 220(2A) of the Income Tax Act for granting waiver of interest. The question raised in this writ petition is whether the said finding of the first respondent is legally tenable.

It is the settled position of law that the three conditions specified in Section 220(2A) of the Income Tax Act should be cumulatively satisfied by an assessee to claim waiver of interest levied u/s 220(2) of the Act. These conditions are:-

(i) That the payment of such amount of interest has caused or would cause genuine hardship to the assessee.

ii) That default in the payment of the amount on which interest is payable was due to circumstances beyond the control of the assessee and

iii) That the assessee has co-operate in an enquiry relating the assessment or proceedings for recovery of any amount due from him.

As a result of the requirement that all the three conditions should be satisfied by the assessee to claim the benefit of waiver, if it is found that anyone of the conditions have not satisfied the claim of the assessee has to fail.

In so far as this case is concerned, reading of the impugned order shows that the first respondent has specifically found that this is not a case where the assessee had established that payment of interest would cause genuine hardship to him. This conclusion is on the basis that the assessee is a partner in two firms doing business in liquor and also in a firm running a theatre. It is also found that assessee has substantial agricultural income and that he owns 5.22 acres of coconut garden and 1.10 acres of cashew plantation. These facts found by the first respondent in Ext. P9 order are not even contended to be incorrect. If that be so, on the materials available before this court, I am unable to infer that the payment of interest by the assessee would cause any genuine hardship justifying invocation of power u/s 220(2A) of the Act. Consequently, Ext. P9 order challenged in W.P. (C) No. 14634/08 has to be upheld.

This view taken by me is fortified by the fact that levy of interest u/s 220(2) is for delay in payment of tax for the periods subsequent to completion of assessment. One of the contention raised by the assessee that non-payment was due to circumstances beyond his control is that the assessment was necessitated on account of addition of taxable income of the firm of which he is a partner. This reason may justify delay in filing the returns but not delay in the payment of tax for the post assessment period. If that be so, the second requirement of Section 220(2A) of existence of circumstances beyond the control of the assessee is also established.

In so far as W.P. (C) No. 15054/08 is concerned, the challenge in the writ petition is against Ext. P4, an order by which in the claim of the assessee, waiver of interest levied under Sections 234A and 234B of the Act is only partially allowed. In so far as W.P. (C) No. 10504/08 is concerned, the petitioner challenges Ext. P4 order where he sought waiver of interest levied under Sections 234A and 234B of the Income Tax Act. Interest under Sections 234A & B could be waived by the first respondent, only if the conditions specified in the notification F. No. 400/29/2002-IT (B) dated 26th of June 2006 are satisfied. The first condition requires seizure of documents in search and seizure operations and the second condition is applicable only where interest is charged u/s 234(c). Third condition is applicable only in case where statute has been amended retrospectively and the fourth condition is applicable only where return is filed voluntarily. In so far as this case is concerned none of these grounds are applicable and in spite of it, the order shows 1/3rd of the interest has been waived up to the assessment year 1992-93. Since conditions specified in the notification are not available, the petitioner cannot seek waiver of interest levied u/s 234A and Section 234B. Therefore, Ext. P9 order has to be sustained.

In the result, the writ petition has no merit and also rejected.