K.M. Rajan, Rajan and Co. vs Commissioner of Income Tax

K. Sukumaran, J.—A petition by an assessee u/s 273A(1) of the income tax Act, 1961 (''the Act'') had been disposed of by the Commissioner by the impugned order, exhibit P-3, passed on 30-1-1989. The prayer of the petitioner was for waiver of the interest levied under sections 139(8) and 217(1)(a) of the Act in its entirety.

The petitioner, a cashew exporter, filed his return for the assessment year 1982-83 on 17-1-1983. It was one declaring a net loss of Rs. 4,976.

The business premises of the assessee were subjected to a ''survey'' on 6-2-1985 (The word ''survey'' as such, is not seen in the context of the section. The heading, however, has it. The Commissioner can, therefore, be justified in employing the same terminology though, to a court of law which is to deal with other problems like survey in civil litigation, that could be a confusing concept). There have been some developments thereafter. On 19-2-1985, the petitioner submitted a revised return admitting a total income of Rs. 2,50,000 as against the earlier one, of the net loss of Rs. 4,976. In other words, the difference was a substantial figure of about Rs. 2,55,000.

The return for the assessment year 1983-84 was filed on 19-2-1985. Whereas the income estimated for advance tax was nil. The return filed was for an income of Rs. 1 Lakh. Both the ITO and the AAC had granted reduction in the payment of interest. Such reduction went to the extent of about 50 per cent of the amount.

Understandably, the petitioner pursued his claim for further waiver of interest before the Commissioner.

The question whether the conditions for waiver are satisfied depends upon the various facts disclosed in a case. It is essential for the statutory authority to evaluate such factors. At the level of the Commissioner, the Court could expect an unbiassed, fair and, at the same time, a firm evaluation of such factors. If the principles of law have been misapprehended or if the exercise of discretion has been arbitrary or capricious or if other vitiating factors which could be properly reckoned with, by a writ court do exist, interference may be justified. By and large, such exercises would be very limited in character. The question is whether, having regard to the manner in which the revision petition has been disposed of a case has been made out for the Court''s intervention under article 226 of the Constitution.

The basic facts have been clearly indicated in the order of the Commissioner. An inference has been drawn by him. It cannot be said that the inference so drawn is perverse or unjustified. The substantial difference between the initial return or estimate and the subsequent return is one of the factors which could be looked into to decide whether the assessee deserves a beneficial treatment in relation to the waiver of interest. If a revised return is filed, when, to employ the language of the Allahabad High Court, the game is up or when an assessee is driven against the wall, then the Commissioner can be naturally disinclined to favour such an assessee. That situation cannot ordinarily be one where relief can be obtained from the writ court. The principles had been discussed in a somewhat similar situation by this Court in Alukkas Jewellery Vs. Commissioner of Income Tax, . Judging by the principles laid down in that case, and on an evaluation of the factors which have been referred to and discussed by the Commissioner, I am satisfied that the impugned order does not call for any interference from this Court.

The counsel for the petitioner referred to the decision in Union Engineering Co. Vs. Commissioner of Income Tax, . The facts of that case are obviously distinguish able. The principles have been crystallised in a better form in the light of the experience of other courts and of this Court, as is reflected from the decision in Alukkas Jewellery''s case (supra) and the case law alluded to in that decision. I am, therefore, not tempted to review the judgment in Alukkas Jewellery''s case (supra). In that view of the matter, the writ petition is dismissed.