P. Sudhakaran vs Deputy Commissioner of Income Tax

C.K. Abdul Rehim, J.—The challenge in this writ petition is against Ext.P6 order issued by the 2nd respondent, rejecting a petition filed u/s 220(2A) of the Income Tax Act, seeking waiver of interest due on delayed payment of tax, with respect to the assessment year 1988-89. The petitioner filed return for the said year declaring a total income of Rs. 59,410. The assessment was completed u/s 143(3) on a total income of Rs. 5,51,190, and the petitioner conceded additional income of Rs. 4,91,769, to make up discrepancies in the credit balance in the books of account. The assessment resulted in a demand of Rs. 3,50,106, which was subsequently increased to Rs. 3,61,891. The interest charged under Sections 139(8) and 217 were waived to the extent of 50 per cent by the first respondent, thereby reducing the demand to Rs. 3,11,502. The petitioner paid the amount in various instalments. Thereafter, the Assessing Officer, vide proceedings dated 25-10-2000 levied interest u/s 220(2) amounting to Rs. 1,67,453 which was later reduced to Rs. 1,08,982. Ext. P4 petition was filed seeking to waive imposition of the said amount as interest leviable u/s 220(2).

u/s 220(2A) the assessee has to satisfy the following conditions:

(1) Payment of such amount has caused or would cause genuine hardship to the assessee.

(2) Default in payment of the interest which has been paid or was payable under the said sub-section was due to circumstances beyond the control of the assessee and

(3) The assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.

The Commissioner of Income Tax, on consideration of the petition, observed that the assessee has co-operated with the assessment proceedings and, hence, the condition No. (3) mentioned above has been satisfied by him. While considering the condition No. (1) as to whether the payment of the amount will cause genuine hardship to the assessee, the Commissioner observed that the assessee had returned a total income of Rs. 3,38,650 and Rs. 3,80,980 for the assessment years 1998-99 and 1999-2000, respectively. It is found that the assessee has got agricultural income also. Considering the fact that the interest to be waived is Rs. 1,08,982 only, the first respondent held that the payment of such an amount will not cause genuine hardship to the assessee.

The contention of learned Counsel for the petitioner is that there is clear failure on the part of first respondent in not considering the fact that the petitioner firm has got huge liabilities during assessment years 1998-99 and 1999-2000, as evidenced from their balance sheet, and hence, the findings that the assessee has got sufficient income during the subsequent years, is not factually correct. For evaluating the question whether condition No. (1) above has been satisfied or not, what is to be taken note of is the income of the assessee for the periods concerned. The fact that the assessee is having liabilities, as per the balance sheet, is not a criteria to assess his capacity for payment. Hence I do not find any illegality or error in the findings of the Commissioner in this respect.

The learned Counsel urges a further contention that the Commissioner has totally failed to consider the question regarding condition No. (2) enumerated above. In fact, the Commissioner has narrated the history of the assessment and background of the default. It is mentioned that against a total income of Rs. 5,51,170 assessed, the assessee had initially declared an amount of Rs. 59,410 only. It is also evident that a waiver of 50 per cent on the interest due under Sections 139(8) and 217 was allowed. Further, payment of the tax amount in instalments was allowed. From these facts alone it could not be said that the default occurred due to any circumstances which were beyond the control of the assessee. However, relying on the decision of this Court in G.T.N. Textiles Ltd. Vs. Deputy Commissioner of Income Tax and Another, , the first respondent found that all the three conditions are cumulative and unless all of them are satisfied, waiver of interest could not be allowed u/s 220(2A). Since there is a clear finding that the condition No. (1) has not been satisfied in this case, the failure to consider condition No. (2) is not of consequence. Hence, I am inclined to concur with the finding that the assessee is not entitled to get a waiver u/s 220(2A).

The learned Counsel for the petitioner, Adv. K.M.V. Pandalai, vehemently contended that there is lack of proper consideration of the issue by the 1st respondent, and there is no proper evaluation of the facts and circumstances of the case, based on the requirements stipulated in the provision in order to decide whether waiver can be allowed or not. On a perusal of Ext.P61 do not think that there is any non-application of mind or non-advertance to the contentions. The first respondent had properly considered the different aspects of the issue, based on the statutory conditions. Hence, I do not find any impropriety or irregularity in Ext.P6 proceedings.

In the result the writ petition is devoid of merit and accordingly dismissed.