SRI NAGENDRA KUMAR N H V. THE CHIEF COMMISSIONER OF INCOME TAX

WP/909/2019

AI Insights

The case involves Sri Nagendra Kumar N.H, the petitioner, who filed a writ petition under Article 227 of the Constitution of India against the Chief Commissioner of Income Tax, Bangalore-I. The petitioner sought to set aside an order that rejected his request for a waiver of interest levied under Sections 234A, 234B, and 234C of the Income Tax Act for the assessment year 2014-15. The rejection was based on the grounds that the petitioner's circumstances did not meet the conditions set by the Central Board of Direct Taxes for waiving such interest. The petitioner argued that the interest should be waived due to the seizure of cash which prevented him from utilizing it for tax payments, and that he had cooperated with the tax department during the assessment proceedings. The court found that the respondent did not adequately consider the petitioner's specific circumstances and directed a re-evaluation of the waiver request.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 764407 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 09-02-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SANMATHI
• Assessee Lawyers: ANNAMALLAI
• Keywords: Assessment Year 2014-15; Cash seizure; Income Tax; Waiver of interest
• Section: 234B; 234A; 234C; 132A; 227; 119(2)(a)

Judgement Text

" - 1 - WP No. 909 of 2019 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF FEBRUARY, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 909 OF 2019 (T-IT) BETWEEN: SRI NAGENDRA KUMAR N.H S/O LATE SRI. H. HANUMAIAH AGED ABOUT 52 YELARS NO.53/A, LAKSHMI HANUMAIAH NILAYA, 5TH MAIN, 3RD CROSS, PRAMOD LAYOUT, BANGALORE 560 039. …PETITIONER (BY SRI. ANNAMALLAI.S., ADVOCATE FOR SRI. M LAVA., ADVOCATE) AND: THE CHIEF COMMISSIONER OF INCOME TAX BANGALORE-I C.R. BUILDINGS, QUEENS ROAD, BANGALORE 560001. …RESPONDENT (BY SRI. SANMATHI E I.,ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER PASSED BY THE RESPONDENT DATED 22.03.2018 AS REFERRED AS ANNEXURE-A AND DIRECT THE RESPONDENT TO WAIVE THE INTEREST LEVIED U/S 234A, 234B AND 234C OF THE ACT. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - WP No. 909 of 2019 ORDER The petitioner is aggrieved by the order dated 22.03.2018 [as per Annexure-A] which is under Section 119(2)(a) of the Income Tax Act, 1961 [for short, ‘the IT Act’]. By this impugned order, the petitioner’s request for waiver of interest under Section 234A, 234B and 234C of the IT Act for the assessment year 2014-15 is rejected for the following reasons: “Assessee has sought waiver on the ground that the cash was seized and not allowed to be utilized for payment of tax dues and the assessee did not have any other source for payment of taxes. Further, he has requested for waiver on the ground that he has cooperated with the department in completion of assessment proceedings. However, the waiver of interest by the CCIT is governed by the communication of Central Board of Direct Taxes dated 26/06/2006. The instant case and reason adduced by the assessee do not fall under purview of the four conditions mentioned therein. The - 3 - WP No. 909 of 2019 assessee was appraised of this fact during the course of hearing. As such, the request of the assessee for waiver of Interest u/S.234A, B & C for the assessment year 2014-15 cannot be acceded to.” 2. Sri Annamallai S., the learned counsel for the petitioner, submits that the petitioner cannot contest that under typical circumstance the petitioner would not be liable to pay interest under the provisions of Section 234A, 234B and 234C of the IT Act. However, the petitioner’s case for waiver must be considered in the light of the indisputable fact that cash of Rs.47,00,000/- was seized after search under Section 132A of the IT Act on 22.03.2014 and handed over to the authorities much before closure of the financial year. After assessment order is framed, refund is ordered after appropriating a sum of Rs.22,78,918/- as tax payable and interest under the provisions of Section 234A, 234B and 234C. Sri.Annamallai S. submits that the interest under the - 4 - WP No. 909 of 2019 aforesaid provisions is levied when the circumstances justify as compensatory component, and the CBDT’s communication dated 26.06.2006 is only illustrative in nature, and interest waiver cannot be restricted to the circumstances mentioned therein. 3. In response, Sri E.I.Sanmathi, the learned counsel for the respondent, submits that it may be true that cash was handed over before closure of the financial year but such amount will not be appropriated by the Revenue unless the assessment order is framed and therefore there is no justification for waiver of interest on the ground that the department had access to cash and compensatory component would not arise. 4. However, as seen from the order, these circumstances are not considered. The petitioner’s case is that the application for waiver is filed adverting to the specific circumstances that would demonstrate that there cannot be compensatory - 5 - WP No. 909 of 2019 component to justify levy of interest, and the reasons assigned do not indicate that these aspects are considered. Therefore, this Court is of the considered view that the respondent must reconsider the petitioner’s request for waiver of interest in the light of the petitioner’s specific case and assigning reasons as to why the same should not be accepted to enable a complete adjudication on the question of waiver of interest in the peculiarities of the case. As such, the petition is allowed, and the impugned order dated 22.03.2018 [Annexure-A] is quashed calling upon the respondent to reconsider the question of waiver of interest as aforesaid within a period of five [5] months from the date of receipt of a certified copy of this order. SD/- JUDGE SA ct:sr "