P. Sudhakaran, Proprietor V. Deputy Commissioner of Income Tax, Cir II, Division I, Thiruvananthapuram and Commissioner of Income Tax, Aayakar Bhavan, Kawdiar, Thiruvananthapuram

OP/27470/2001

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The case revolves around a petition filed by P. Sudhakaran, the proprietor of M/s Sudhakara Hardwares, challenging the order of the Commissioner of Income Tax, Thiruvananthapuram, which rejected his request for a waiver of interest on delayed tax payment for the assessment year 1988-89. The petitioner had initially declared a significantly lower income than assessed, leading to a substantial tax demand. Although some reliefs were granted, including a reduction in the interest charged, the petitioner sought further relief under Section 220(2A), claiming that the payment of the remaining interest would cause genuine hardship. The Commissioner found that the petitioner did not demonstrate genuine hardship, given his income in subsequent years, and thus denied the waiver. The High Court upheld this decision, agreeing that all conditions for a waiver under Section 220(2A) must be cumulatively satisfied, and the petitioner failed to meet the first condition regarding genuine hardship.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 812335 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 02-06-2009
• Assessment Year: misc
• Other Referred Cases: M/s. G.T.N Textiles, 217 ITR 653
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K MENON; GEORGE K GEORGE; JOSE JOSEPH
• Assessee Lawyers: K M V PANDALAI
• Keywords: Genuine hardship; Waiver of interest; Delayed payment of tax; Assessment year 1988-89
• Section: 143(3); 220(2); 220(2A); 139(8); 217

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 2ND JUNE 2009 / 12TH JYAISHTA 1931 OP.No. 27470 of 2001(T) ------------------------------------- PETITIONER(S): ------------------------ P. SUDHAKARAN PROPRIETOR, M/S SUDHAKARA HARDWARES VARKALA BY ADV. SRI. K.M.V.PANDALAI RESPONDENT(S): --------------------------- 1. DEPUTY COMMISSIONER OF INCOME TAX CIR II, DIVISION I, THIRUVANANTHAPURAM. 2. THE COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN, KAWDIAR, THIRUVANANTHAPURAM. BY ADV. SRI.P.K.RAVINDRANATHA MENON, SENIOR ADVOCATE-R2 SRI.GEORGE K. GEORGE, STANDING COUNSEL FOR IT FOR R1 SRI. JOSE JOSEPH, STANDING COUNSEL. THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 02/06/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.P NO.27470 OF 2001 APPENDIX PETITIONER'S EXHIBITS: Ext.P1: Order dated 19.6.1990 passed by the Income Tax officer, Ward I, Thiruvananthapuram for 88-89. Ext.P2: letter dated 06.03.1995 filed by the petitioner. Ext.P2(a): statement showing the details of tax paid. Ext.P2(b): Challan receipt for Rs.31,502 date 04.11.1999. Ext.P3: proceedings of the Deputy Commissioner of Income Tax, Circle II, Divison I, Thiruvananthapuram dated 25.10.2000. Ext.P4: petition u/s 220(2A) dated 27.11.2000 filed by the petitioner before the commissioner of Income Tax, Thiruvananthapuram. Ext.P5: letter dated 27.11.2000 filed by the petitioner before the Deputy Commissioner of Income Tax, Thiruvananthapuram. Ext.P6: order u/s 220(2A) of the Act passed by the Commissioner of Income Tax, Thiruvananthapuram on 29.01.2001. Ext.P7: copy of Balance Sheet as on 31st March 2000 dated 23.10.2000. Ext.P7(a): copy of the Balance Sheet as on 31st March 1999 dated 02.10.1999. PETITIONER'S EXHIBITS: NIL /True Copy/ P.A TO JUDGE. SPC C.K.ABDUL REHIM, J. --------------------------- O.P No.27470 OF 2001 ------------------------------- DATED THIS THE 2ND DAY OF JUNE, 2009 J U D G M E N T ~~~~~~~~~~~ 1. The challenge in this writ petition is against Ext.P6 order issued by the 2nd respondent, rejecting a petition filed under 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 under 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 discripancies in the credit balance in the books of accounts. The assessment resulted in a demand of Rs.3,50,106/-, which was subsequently increased to Rs.3,61,891/-. The interest charged under S.139(8) and 217 were waived to the extent of 50% by the first respondent, thereby reducing the demand to Rs.3,11,502/-. The petitioner O.P No.27470 of 2001 2 paid the amount in various instalments. Thereafter the assessing officer, vide proceedings dated 25.10.2000 levied interest under S.220(2) amounting to Rs.1,67,453/- which was later reduced to 1,08,982/-. Ext. P4 petition was filed seeking to waive imposition of the said amount as interest leviable under S.220(2). 2. Under Section 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 cooperated 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 O.P No.27470 of 2001 3 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 . 3. 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. O.P No.27470 of 2001 4 4. 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 50% on the interest due under S.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 M/s. G.T.N Textiles, 217 ITR 653, 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 under Section 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 the assessee is not entitled to get a waiver under S.220(2A). O.P No.27470 of 2001 5 5. The learned counsel for the petitioner, Adv. K.M.V Pandalai, vehemently contented 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.P6 I 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. 6. In the result the writ petition is devoid of merit and accordingly dismissed. C.K.ABDUL REHIM, JUDGE. spc "