AI Insights
The case involves a writ petition filed by Sri Ajay Kumar against the Union of India and other respondents, challenging an order by the Settlement Commission (IT & WT), which imposed interest on the petitioner for several assessment years. The petitioner, engaged in businesses including cold storage and dealing in potatoes, approached the Settlement Commission for the assessment of his returns. While the assessment itself was not contested, the petitioner objected to the interest imposed, arguing that it was done mechanically without considering relevant circulars that allowed for non-payment or reduction of interest. The respondents defended the imposition of interest, citing the legal requirements under the Income Tax Act. The court referenced a Supreme Court judgment and previous similar cases to conclude that the Settlement Commission was bound to impose interest as per the statutory provisions, and could only consider waiving or reducing it if a relevant circular was in effect, which was not the case here.
Appeal Details
Counselvise Citation
[2010] 140 COUNSELVISE.COM (IT) 701252 (HC-PATNA)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Others
Pronouncement Date
13-09-2010
Assessment Year
misc
Judgement Text
" CIVIL WRIT JURISDICTION CASE No.4161 OF 1995 ------------ In the matter of an application under Articles 226 and 227 of the Constitution of India. ------------- Sri Ajay Kumar, C/O Sri Lakhan Lal Sao, Mohalla- Mathuria Biharsharif, District- Nalanda. Bihar ----- 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. & Ms. 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 2 the petitioner. 2. It relates to assessment years 1985-86, 1986-87, and 1988-89,1989-90, 1990-91 and 1991-92. The petitioner is running several businesses including cold storage and also dealing in potatoes. 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: “6. INTEREST CHARGEABLE- Interest under section 139(8) of the I.T. Act 1961 chargeable for assessment years 1985-86 and 1986-87 shall be charged in full as per law. For assessment year 1988-89, however, interest under section 139(8) of the I.T. Act, 1961 chargeable in the applicant‟s case will be limited to an amount chargeable for a period of 6 months and the amount in excess thereof is waived. Interest under sections 215/217 of the Act chargeable for these 3 assessment years, namely, 1985-86, 1986-87 and 1988-89 as a result of this settlement is waived. For assessment years 1989- 90, 1990-91 and 1991-92, interest under sections 234A, 234B of the Act and 234C shall be charged in full in accordance with law.” 3 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- 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 4 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 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. 5 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.) "
Other Referred Cases
Commissioner of Income-Tax Vs. Anjum M.H. Ghaswala and others (2001) 252 ITR I, C.W.J.C. No.4152 of 1995 (Janki Sao Vs. Union of India & Ors.)
Laws Referred To
Constitution of India, Income Tax Act, 1961
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