K.C.MOHANAN V. THE CHIEF COMMISSIONER OF INCOME TAX

WP(C)/14634/2008

AI Insights

The case involves K.C. Mohanan, the petitioner, challenging the orders of the Income Tax authorities regarding the waiver of interest levied under various sections of the Income Tax Act. The primary contention was against the rejection of his application for waiver of interest under Section 220(2A), which was denied on the grounds that the petitioner did not meet the statutory conditions for a waiver. Additionally, the petitioner contested the partial waiver of interest under Sections 234A and 234B. The court's decision was based on the interpretation of the statutory conditions for waivers and the factual matrix presented, which included the petitioner's financial status and the nature of his business involvements.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 755873 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 01-01-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: GEORGE GEORGE
• Assessee Lawyers: T M SREEDHARAN; V P NARAYANAN
• Keywords: Circumstances Beyond Control; Genuine hardship; Waiver of interest; Cooperation in enquiry
• Section: 234B; 234A; 220(2); 220(2A)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC TUESDAY, THE 1ST DAY OF JANUARY 2013/11TH POUSHA 1934 WP(C).No. 14634 of 2008 (P) --------------------------- PETITIONER(S): ------------- K.C.MOHANAN,ANUGRAHA, P.O.PALAYAD NADA, IRINGAL (VIA), VADAKARA KOZHIKODE DISTRICT. BY ADVS.SRI.T.M.SREEDHARAN SRI.V.P.NARAYANAN RESPONDENT(S): -------------- 1. THE CHIEF COMMISSIONER OF INCOME TAX, C.R.BUILDING, I.S.PRESS ROAD, KOCHI. 2. THE INCOME TAX OFFICER, WARD 2 (2), KOZHIKODE. 3. THE TAX RECOVERY OFFICER RANGE II, KOZHIKODE. BY SRI.GEORGE K. GEORGE, SC FOR IT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01-01-2013 ALONG WITH WPC NO.15054/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 14634 of 2008 APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE TABULATED STATEMENT PREPARED BY THE PETITIONER. EXT.P2: COPY OF THE APPLICATION FOR WAIVER OF INTEREST DATED 28.5.2003 U/S.234 A AND 234 B SUBMITTED BY THE PETITIONER. EXT.P3: COPY OF THE APPLICATION FOR WAIVER OF INTEREST DATED 16.7.2004 U/S.220(2) SUBMITTED BY THE PETITIONER. EXT.P4: COPY OF THE NOTICE NO.TR1/TRO-2/CLT/04-05 DATED 4.6.2004 ISSUED BY THE 3RD RESPONDENT FOR 1989-90. EXT.P5: COPY OF THE NOTICE NO.TR2/TRO-2/CLT/04-05 DATED 4.6.2004 ISSUED BY THE 3RD RESPONDENT FOR 1990-91. EXT.P6: COPY OF THE NOTICE NO.TR3/TRO-2/CLT/04-05 DATED 4.6.2004 ISSUED BY THE 3RD RESPONDENT FOR 1991-92. EXT.P7: COPY OF THE NOTICE NO.TR4/TRO-2/CLT/04-05 DATED 4.6.2004 ISSUED BY THE 3RD RESPONDENT FOR 1992-93. EXT.P8: COPY OF THE REVISED ORDER DATED 23.1.2002 FOR THE ASST. YEAR 1989-90 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL. EXT.P9: COPY OF THE ORDER DATED 25.9.2007 PASSED BY THE CHIEF COMMISSIONER OF INCOME TAX, COCHIN. RESPONDENT'S EXHIBITS: NIL /TRUE COPY/ P.A. TO JUDGE VPV ANTONY DOMINIC, J. ==================== W.P.C. NoS. 14634 of 2008 & 15054 of 2008 ==================== Dated this the 1st day of January 2013 JUDGMENT 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. 2. 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 under Section 220 (2A) for waiver of interest levied under Section 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. 3. 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 under Section 220 (2) of the Act. W.P.C. NoS. 14634 of 2008 & 15054 of 2008 -2- 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. 4. 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. 5. 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 asseessee has substantial agricultural income and that he W.P.C. NoS. 14634 of 2008 & 15054 of 2008 -3- 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 under Section 220 (2A) of the Act. Consequently, Ext.P9 order challenged in W.P.(C) No. 14634/08 has to be upheld. 6. This view taken by me is fortified by the fact that levy of interest under Section 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. W.P.C. NoS. 14634 of 2008 & 15054 of 2008 -4- 7. 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 234 A and 234 B of the Act is only partially allowed. 8. 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 234 (A) and 234 B of the Income Tax Act. Interest under Sections 234 A & 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 under Section 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 W.P.C. NoS. 14634 of 2008 & 15054 of 2008 -5- the notification are not available, the petitioner cannot seek waiver of interest levied under Section 234 A and Section 234 B. Therefore, Ext.P9 order has to be sustained. In the result, the writ petition has no merit and also rejected. Sd/- ANTONY DOMINIC JUDGE kvr/ /True copy/ P.A. to Judge "