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Judgment
M. Jeyapaul, J.—Heard the submissions made by the learned Counsel appearing for the Petitioner and the learned standing counsel appearing for the Respondents.
The Petitioner prays a direction to the third Respondent to waive the interest levied u/s 220(2) of the Income Tax Act, 1961, for the block assessment years 1987-88 to 1997-98, as per the settlement dated 29-7-1997 between the Petitioner and the Respondents.
The Petitioner sought for waiver of a sum of Rs. 80,58,639, being the interest levied u/s 220(2) of the Income Tax Act, 1961.
A search was carried out in the premises of the Petitioner/Assessee on 4-7-1996. The Petitioner furnished block return on 28-7-1997 responding to the notice issued by the first Respondent calling for a block assessment return in the aftermath of the search carried out in the premises of the Petitioner/Assessee. Having accepted block returns submitted by the Petitioner/Assessee, a demand for Rs. 3,60,00,000 was raised. Interest u/s 220(2) of the Income Tax Act, 1961 was charged to the tune of Rs. 80,58,639 by the first Respondent vide order dated 15-2-2000.
The third Respondent, having evaluated the background of the case which culminated in charging interest u/s 220(2) of the Income Tax Act, 1961 passed the impugned order saying that none of the conditions as adumbrated u/s 220(2A) of the Income Tax Act did exist in the case on hand. Consequently, the petition seeking waiver of interest was rejected. The representation made by the Assessee praying for waiver of interest u/s 220(2) of the Income Tax Act, 1961 stood dismissed.
Heard the submissions made on either side.
The learned Counsel appearing for the Petitioner would submit that all the conditions found u/s 220(2A) have been satisfactorily projected by the Petitioner. In spite of that, the third Respondent chose to dismiss the plea for waiver of interest.
Per contra, the learned standing counsel appearing for the Respondents would submit that the third Respondent after having been dissatisfied with the grounds on which the waiver was sought by the Assessee, chose to pass the considered order and therefore he would submit that the order does not warrant (interference).
The fact remains that the premises of the Petitioner/Assessee was subjected to search on 4-7-1996. The Petitioner came out with some offer and the department also having accepted the offer communicated the acceptance of the offer vide letter No. F. No. 1150/2A-11/1997-98, dated 29-7-1997, thereby the Petitioner/Assessee and the department have entered into an agreement.
In terms of the aforesaid settlement arrived at between the department and the Petitioner/Assessee, block assessment was completed. The Petitioner on its part furnished the department all the documents and securities relating to the book debts giving authority to the department to collect the book debts. The department also recovered the debts and adjusted towards the demand of tax. The department also adjusted the amount available with the Petitioner under the prohibitory order.
The Petitioner/Assessee was also left with no amount as the entire amount to the credit of the Assessee was already attached and adjusted against the tax demand made by the department for the block assessment period.
The third Respondent has authority to reduce or waive the amount of interest paid or payable by an Assessee if he is satisfied that the payment of such amount has caused or would cause genuine hardship to the Assessee, that the default in the payment of amount was due to certain circumstances beyond the control of the Assessee and that the Assessee has co-operated in the enquiry relating to the assessment or any proceeding relating to the recovery of amount due from him as per Section 220(2A) of the Income Tax Act, 1961.
In the considered opinion of this Court, it is found that the default in payment of amount was due to the circumstances beyond the control of the Assessee. It is also found that the Petitioner/Assessee had extended full co-operation in the enquiry relating to assessment and also in the process of recovering the amount from the book debt. The Petitioner also would have faced genuine hardship if he had been directed to pay the entire amount demanded under the block assessment period, as there was no amount lying with the Petitioner and the amounts were due from book debtors.
In view of the above, the court finds that the third Respondent should have exercised his discretion in waiving the amount of interest payable on the tax demanded for the block assessment period of 1987-88 to 1997-98.
In the above circumstances the impugned order passed u/s 220(2A) of the Income Tax Act, 1961 by the third Respondent is quashed and consequently the third Respondent is directed to waive the interest levied u/s 220(2) of the Income Tax Act, 1961 for the block assessment years 1987-88 to 1997-98. The writ petition is allowed. There is no order as to costs.