1998 (8) TMI 66 - HC - Income Tax

Court upholds denial of waiver under IT Act for failure to pay admitted tax

The Court upheld the CIT's decision to reject the petitioner's application for waiver under sections 139(8) and 217 of the IT Act, 1961. It ruled that ... Interest Issues:Validity of order declining waiver of interest under sections 139(8) and 217 of the IT Act, 1961.Analysis:1. The petitioner filed returns for the assessment year 1987-88, disclosing varying incomes and paying a part of the tax due. The assessing authority levied interest under sections 139(8) and 217, prompting the petitioner to seek waiver through an application under section 273A, which was rejected by the CIT. The petitioner challenged this rejection.2. The petitioner's counsel argued that the requirement to pay tax due on disclosed income at the time of filing returns was not explicitly stipulated in section 273A. They contended that as long as tax was paid pursuant to the assessment order, the condition of payment was fulfilled. The counsel emphasized liberal interpretation of the provision, citing relevant case laws to support their argument.3. On the Respondents' behalf, it was argued that depositing the admitted tax amount was a crucial requirement for invoking section 273A, as established in a previous Single Bench decision. The Respondents maintained that this requirement was not contradicted by any other provision in section 273A and should be strictly adhered to.4. Section 273A mandated the assessee to make a full and true disclosure of income and pay the tax due on such income to qualify for interest waiver. The Court held that the payment of the admitted tax amount was a condition precedent for invoking the provision. Any additional tax or interest payable beyond the disclosed amount was not exempt from this requirement, ensuring proper tax payment and timely claim for waiver.5. The Court rejected the argument that payment of admitted tax could be delayed until invoking the waiver provision, emphasizing the importance of prompt tax payment for claiming interest waiver. The legislative intent behind the provision was to encourage timely tax payment, and any interpretation deviating from this purpose would defeat the provision's objective.6. The Court upheld the CIT's decision to reject the petitioner's application for waiver, stating that non-compliance with the requirement to pay the admitted tax amount along with the return removed the petitioner from the provision's scope. The petition was dismissed without costs.This detailed analysis highlights the interpretation of section 273A regarding the payment of admitted tax as a condition for interest waiver, emphasizing the importance of timely tax payment and compliance with statutory requirements for invoking beneficial provisions under the IT Act, 1961.