Government company denied waiver of interest under Income-tax Act for late return filing

The court upheld the denial of waiver of interest under section 220(2) of the Income-tax Act for assessment year 1993-94 to a Government company. The petitioner's delay in filing the return for the subsequent year was deemed unjustified, as they could have avoided the interest by filing within the stipulated time. The court found that the petitioner had the capacity to pay the balance amount owed and rejected their argument of facing difficulties in raising funds within a short period. The petition was dismissed for lacking merit, with the petitioner advised to pursue the waiver application under other sections of the Income-tax Act separately.

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Issues:
Challenge to denial of waiver of interest under section 220(2) of the Income-tax Act for assessment year 1993-94.

Analysis:
The petitioner, a Government company engaged in various activities, claimed deduction for wage arrears paid to employees in the assessment year 1993-94. The claim was disallowed, leading to a substantial demand against the petitioner. However, this disallowance entitled the petitioner to claim the same amount as a deduction in the subsequent year, resulting in a refund in the form of advance tax paid. Despite being aware of this, the petitioner delayed filing the return for the subsequent year, leading to interest liabilities under section 220(2) of the Income-tax Act. The petitioner sought waiver of this interest, arguing genuine hardship due to liquidity problems and the inability to raise funds within a short time. The Chief Commissioner of Income-tax denied the waiver, stating that the petitioner failed to establish sufficient grounds for waiver, including proving genuine hardship and lack of control over non-payment of tax demanded in time.

The court noted that the petitioner's delay in filing the return for the subsequent year was unjustified, as it could have avoided the interest by filing within the time provided for payment under the demand notice. The court highlighted that the petitioner had the capacity to pay the balance amount owed, as evidenced by the business volume. The petitioner's argument of facing difficulties in raising a substantial sum within a short period was not accepted, especially considering the delay in clearing the arrears until September 1996. The court found no grounds to interfere with the denial of waiver of interest under section 220(2) of the Income-tax Act.

The judgment concluded by dismissing the petition, stating it lacked merit. The petitioner was advised to pursue the application for waiver of interest under sections 234B and 234C of the Income-tax Act separately. No costs were awarded in the case.

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