Kanhaiyalal Dudheria V. The Chief Commissioner of Income Taxes and The Additional Commissioner of Income Tax and The Deputy Commissioner of Income Tax

WP/104240/2025

AI Insights

The case involves M/s. Kanhaiyalal Dudheria, a partnership firm engaged in iron ore mining, which filed a writ petition against the Chief Commissioner of Income Taxes and other officials, challenging the rejection of their request for a waiver of interest under Section 234C of the Income Tax Act for the assessment year 2008-09. The petitioner argued that their business was dormant until the renewal of their mining license, and thus, the income was not anticipated or contemplated during the due dates of the advance tax installments. The court found that the authority's decision lacked a detailed examination as mandated by the CBDT instructions and thus remanded the matter for a fresh decision.

• Counselvise Citation: [] 140 COUNSELVISE.COM (IT) 833012 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-01-2026
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: M THIRUMALESH
• Assessee Lawyers: M N GOWDA; H R KAMBIYAVAR
• Keywords: Waiver of interest; Writ of Certiorari; Advance Tax Installments; Mining License Renewal
• Section: 234C; 226; 227; 119(2)(a)

Judgement Text

" - 1 - HC-KAR NC: 2026:KHC-D:966 WP No. 104240 of 2025 IN THE HIGH COURT OF KARNATAKA, AT DHARWAD DATED THIS THE 27TH DAY OF JANUARY 2026 BEFORE THE HON'BLE MRS JUSTICE K.S.HEMALEKHA WRIT PETITION NO. 104240 OF 2025 (T-IT) BETWEEN: M/S. KANHAIYALAL DUDHERIA INCORPORATED UNDER THE PARTNERSHIP ACT, REPRESENTED BY ITS PARTNER, SHRI. NAVRATANMAL BACHHAWAT, AGED ABOUT 73 YEARS, MINE OWNERS AND EXPORTERS, BEHIND KSRTC NEW BUS STAND, BALLARI ROAD, SANDUR-583119, BALLARI DISTRICT. …PETITIONER (BY SRI. M.N.SHANKARE GOWDA AND SRI. H.R.KAMBIYAVAR, ADVOCATES) AND: 1. THE CHIEF COMMISSIONER OF INCOME TAXES, CENTRAL REVENUE BUILDING, QUEEN’S ROAD, BENGALURU-560001. 2. THE ADDITIONAL COMMISSIONER OF INCOME TAX INCOME TAX DEPARTMENT, BELLARY RANGE, FORT MAIN ROAD, FORT BELLARY-583102. 3. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1, AAYAKAR BHAVANA, STAFF ROAD, BELLARY-583102. …RESPONDENTS (BY SRI. M.THIRUMALESH, ADVOCATE) Printed from counselvise.com MANJANNA E Digitally signed by MANJANNA E Location: HIGH COURT OF KARNATAKA DHARWAD BENCH Date: 2026.01.30 10:48:08 +0530 - 2 - HC-KAR NC: 2026:KHC-D:966 WP No. 104240 of 2025 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF WRIT OF CERTIORARI QUASHING THE ORDER DATED 15.09.2022 PASSED BY THE 1ST RESPONDENT IN F.NO.WAIVER/119(2)(A)/CCIT-1/2021-22 U/S 119(2)(A) OF THE IT ACT, FOR THE ASSESSMENT YEAR 2008-09 (PREVIOUS YEAR 2007-08) INSOFAR AS REJECTION OF PETITION FOR WAIVER OF INTEREST OF RS.32,78,246.00 (ANNEXURE-U) IN THE PETITIONER’S CASE AND ETC. THIS WRIT PETITION COMING ON FOR ORDER THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: THE HON'BLE MRS JUSTICE K.S.HEMALEKHA ORAL ORDER The petitioner has called in question the order dated 15.09.2022, passed by respondent No.1 under Section 119 (2)(a) of the Income Tax Act, 1961 (‘Act’ for short), whereby, the request of the petitioner for waiver of interest levied under Section 234C of the Act for assessment year 2008-09 has been partly rejected. 2. The petitioner is a partnership firm engaged in Iron Ore Mining. The case of the petitioner is that the business had remained dormant for several years and commenced only after renewal of the mining licence in later part of the financial year. Interest under Section 234C of Printed from counselvise.com - 3 - HC-KAR NC: 2026:KHC-D:966 WP No. 104240 of 2025 the Act came to be levied on the ground of non-payment of advance tax installments. The petitioner sought waiver of such interest by invoking Section 119 (2)(a) of the Act read with Central Board Direct Taxes (CBDT) order dated 26.06.2006. 3. Insofar as the second and third installments of advance tax was concerned, the authority has recorded in the impugned order that the petitioner does not qualify for waiver, on the ground that the assessee has not been able to establish that the income was neither anticipated or contemplated, as required under the conditions stipulated in CBDT instructions contained in the board's order dated 26.06.2006 and on that reasoning waiver of interest relatable to the said installments has been denied. 4. Learned counsel for the petitioner submits that the impugned order dated 15.09.2022 is arbitrary, cryptic and vitiated by non-application of mind, insofar as it rejects the claim of waiver of interest under Section 234C of the Printed from counselvise.com - 4 - HC-KAR NC: 2026:KHC-D:966 WP No. 104240 of 2025 Act in respect of the second and third advance tax installments. It is contended that the authority has merely recorded that the assessee failed to establish that the income was neither anticipated nor contemplated, without undertaking an installment vide examination as mandated under the CBDT order dated 26.06.2006. 5. It is submitted that the income in question accrued only after commencement of mining operation and after due dates of the relevant installments, and therefore, the case squarely falls within the parameter prescribed for waiver. It is argued that CBDT instructions being binding on the department, the failure to objectively apply the conditions stipulated therein renders the impugned order unsustainable in law. However, learned counsel does not disputes the finding recorded in the impugned order insofar as they relate to other advance tax installments and seeks interference only to the limited extent as indicated above. Printed from counselvise.com - 5 - HC-KAR NC: 2026:KHC-D:966 WP No. 104240 of 2025 6. Per contra, learned counsel appearing for the respondents supports the impugned order and submits that the interest under Section 234C is statutory in nature and becomes leviable on failure to pay advance tax installment on the due dates. It is contended that waiver of interest under Section 119 (2)(a) is discretionary and the assessee must strictly satisfy the conditions prescribed under the CBDT order dated 26.06.2006. According to the respondents, the petitioner has failed to establish that the income relatable to the second and third installments were neither anticipated nor contemplated and therefore, the authority was justified in denying waiver. 7. It is submitted that the authority has exercised discretion in accordance with law and the impugned order does not warrant interference under Article 226 of the Constitution of India. CBDT order dated 26.06.2006, requires the authority to objectively examine whether the income is in question accrued after the due date of the Printed from counselvise.com - 6 - HC-KAR NC: 2026:KHC-D:966 WP No. 104240 of 2025 relevant installments and whether such income could have been anticipated or contemplated. 8. A mere recording that assessee has failed to establish the same, without supporting reasons of factual analysis, does not amount to be a reasoned exercise of jurisdiction and discretion under Section 119(2((a) of the Act. 9. In the above circumstances, this Court is of the considered view that the impugned order insofar as it relates to the second and third installments of advance tax cannot be sustained and calls for consideration. Accordingly, this Court pass the following: ORDER i. The writ petition is allowed in part. ii. The order dated 15.09.2022, passed by respondent No.1 under Section 119(2)(a) of the Income Tax Act, 1961 is hereby set aside. Printed from counselvise.com - 7 - HC-KAR NC: 2026:KHC-D:966 WP No. 104240 of 2025 iii. Only insofar as it relates to denial of waiver of interest under Section 234C of the Act in respect of second and third installments of advance tax, the matter is remanded to respondent No.1 for fresh consideration of the petitioner's claim for waiver confined to the second and third installments in view of the CBDT order dated 26.06.2006, and by passing a reasoned and a speaking order in accordance with law. iv. All other findings in the impugned order shall remain undisturbed. v. Contentions of both the parties are kept open, to the extent indicated above. Sd/- JUSTICE K.S.HEMALEKHA AT Ct:VH List No.: 1 Sl No.: 24 Printed from counselvise.com "