Janki Sao V. Union of India through the Secretary, Ministry of Finance, Deptt. of Revenue, Central Secretariat, North Block, New Delhi-110001 and The Settlement Commission (IT & WT), Additional Bench, 16-B, Rowland Road, 5th Floor, Calcutta-700020 and The Commissioner of Income Tax, Central Revenue Building, Birchand Patel Marg, Patna-1

CWJC/4167/1995

AI Insights

The case involves Janki Sao, the petitioner, who contested the imposition of interest by the Settlement Commission on his income assessments for the years 1987-88 to 1991-92. The interest was imposed following the Commission's final order on June 24, 1994, which assessed Sao's income from trading in potatoes, director's fees from Janki Cold Storage Private Limited, and dividends. The petitioner argued that the Commission's decision was mechanical and failed to consider relevant circulars that allowed for non-payment or reduction of interest. The respondents defended the Commission's decision, asserting that it was bound by the law to impose interest and that no relevant circular was in effect at the time of the assessments. The court referenced a Supreme Court judgment which supported the Commission's authority to impose interest but allowed for consideration of waivers or reductions if supported by a circular under Section 119(2)(a) of the Act.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 818572 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 13-09-2010
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax Vs. Anjum M.H. Ghaswala and others (2001) 252 ITR I
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: HARSHWARDHAN PRASAD; RISHI SINHA; ARCHANA SINHA
• Assessee Lawyers: AJAY RASTOGI
• Keywords: Assessment years; Dividends; Income from trading; Interest Imposition; Settlement commission; Directors Fee
• Section: 234B; 234A; 234C; 245D(4); 226; 245C; 227; 119(2)(a); 245B; 139(8)

Judgement Text

" CIVIL WRIT JURISDICTION CASE No.4167 OF 1995 ----------------- In the matter of an application under Articles 226 and 227 of the Constitution of India. ------------- Janki Sao, (Individual), Mathuria- Mohalla, Biharsharif, District- Nalanda. ----- Petitioner. Versus 1. Union of India through the Secretary, Ministry of Finance, Deptt. of Revenue, Central Secretariat, North Block, New Delhi-110001. 2. The Settlement Commission (IT & WT), Additional Bench, 16-B, Rowland Road, 5th Floor, Calcutta-700020 (Constituted by the Central Government u/s 245B of the Income Tax Act, 1961). 3. The Commissioner of Income Tax, Central Revenue Building, Birchand Patel Marg, Patna-1 ---- Respondents. ------------- For the Petitioner: Mr. Ajay Kumar Rastogi,Advocate. For the Respondents: Mr. Harshwardhan Prasad, Sr.Standing Counsel, Mr. Rishi Raj Sinha, Jr.S.C. & Mrs. Archana Sinha. P R E S E N T THE HON‟BLE MR. JUSTICE SUDHIR KUMAR KATRIAR THE HON‟BLE MR. JUSTICE BIRENDRA PRASAD VERMA S.K.Katriar,J. This writ petition is directed against the order dated 24.6.1994, passed by the Settlement Commission (IT & WT), Additional Bench, Calcutta, in purported exercise of powers under Section 245 D(4) of the Income-Tax Act, 1961, (hereinafter referred to as „the Act‟), whereby the order of assessment as per the prescribed procedure has been passed and also orders have been passed for payment of interest. The present writ petition is confined to that part of the impugned order whereby interest has been imposed on the petitioner. 2 2. It relates to assessment years 1987-88, 1988-89,1989- 90, 1990-91 and 1991-92. The petitioner derives income from trading in potatoes and directors fee from M/S Janki Cold Storage Private Limited and dividends. He approached the Settlement Commission in terms of Section 245C of the Act for assessment of his returns with respect to the said periods. The Settlement Commission passed the final order on 24.6.1994, and portion of which is impugned herein. As stated, learned counsel for the petitioner does not raise grievance with respect to the order of assessment which indeed is final under the provisions of the Act. The petitioner, however, raises a grievance with respect to the order passed by the Settlement Commission, whereby interest has been imposed. The relevant portion of the impugned order is reproduced hereinbelow: “7.INTEREST CHARGEABLE- Interest will be charged under section 139(8) as per law for assessment year 1987-88. For assessment year 1988-89 interest under section 139(8) will be charged for a delay of 18 months. Interest chargeable under section 215/217 as a result of this settlement is waived for these two years. Interest will be charged in full as per law for assessment years 1989-90 to 1991-92 under sections 234A, 234B and 234C of the Act.” 3. While assailing the validity of the impugned order, learned counsel for the petitioner submits that the Tribunal has passed order for interest in a mechanical manner. He has not considered the relevant circulars which permit non- 3 payment, or reduction in payment, of interest. Such an order, in his submission, has to be passed in accordance with law, taking into account the facts and circumstances of each case, and by recording reasons in support of the order. He relies on the judgment of the Supreme Court in Commissioner of Income-Tax Vs. Anjum M.H. Ghaswala and others (2001) 252 ITR I. He also relies on the relevant circular dated 2.5.1994, which has been issued in terms of Section 119 (2)(a) of the Act. In other words, in his submission, the impugned order has been passed in complete oblivion of the circular. 4. Learned Junior Standing Counsel has supported the impugned action and submits that the Commission has no option but to impose interest in terms of Section 139(8)(a) of the Act. He next submits that no circular is on record as a result of which it is not possible for the respondents to verify applicability of one or the other circular in the present case. In any case, in his submission, the alleged circular orally relied on by learned counsel for the petitioner is dated 2.5.1994, whereas the present proceedings are with respect to the earlier assessment years. 5. We have perused the materials on record and considered the submissions of learned counsel for the parties. The issues are concluded by the authoritative pronouncement of the Supreme Court in Commissioner of 4 Income Tax vs. Anjum M.H. Ghaswala and others(supra), wherein it has been held that the Settlement Commission is bound to impose tax in terms of Section 139(8)(a) of the Act. It can consider the petitioner‟s plea for waiver or reduction in interest if the Board has issued a circular in terms of Section 119(2)(a) of the Act. The present Bench had the occasion of applying the said judgment of the Supreme Court in C.W.J.C. No.4152 of 1995 (Janki Sao Vs. Union of India & Ors.), and was dismissed by order dated 31.8.2010. It has been held by this Court that no such notice in terms of Section 119(2)(a) of the Act has been issued by the Board of Directors Taxes at the relevant point of time. Just the same situation occurred in the present proceedings where no circular has been placed on record to satisfy us that any such circular in terms of section 119(2)(a) of the Act was in force at the relevant point of time. In that view of the matter, the order passed by the Settlement Commission regarding realization of interest is consistent with the law governing the issue. 6. The writ petition is dismissed. In the facts and circumstances of the case, there shall be no order as to costs. B.P. Verma, J. I agree. High Court Patna, Dated 13th September,2010 Vinay/N.A.F.R. ( S. K. Katriar,J. ) (Birendra Prasad Verma, J.) "