Court quashes order denying waiver of interest under Income Tax Act. Petitioner's hardship recognized.

The court quashed the order rejecting the petitioner's application for waiver of interest under Section 220(2A) of the Income Tax Act, 1961. The court found that the petitioner demonstrated genuine hardship as all properties were under attachment and the interest liability was cleared using compensation. The court directed the respondent to reconsider the application within three months, emphasizing proper notice and compliance with the law.

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Issues:
Challenge to order for waiver of interest under Section 220(2A) of the Income Tax Act, 1961.

Analysis:
The petitioner challenged Ext.P3, an order passed by the 1st respondent rejecting the petitioner's application for waiver of interest under Section 220(2A) of the Income Tax Act, 1961. The petitioner had requested the waiver of interest liability of Rs.8,54,476, which was rejected by Ext.P3 order. Subsequently, the entire interest liability was satisfied by appropriating amounts from the Corporation of Cochin due to the petitioner in a land acquisition proceeding. The reasons stated in Ext.P3 for rejection were the petitioner's alleged failure to prove the absence of any other business or source of income and lack of cooperation during recovery proceedings.

In response to the first reason for rejection, the court noted that the respondents did not claim that the petitioner had any other business or income sources. It was also acknowledged that all of the petitioner's properties were under attachment, and the interest liability was cleared using compensation from the Corporation of Cochin. These facts supported the petitioner's claim of genuine hardship due to the lack of income sources. Regarding the lack of cooperation, the petitioner's defense was that non-compliance was due to a lack of funds, not willful default. The court found this defense plausible, given the circumstances of property attachment and subsequent clearance of liabilities through appropriation of compensation.

The revenue contended that since the interest liability was discharged using compensation, there was no genuine hardship. However, the court disagreed, stating that the mere discharge of liability did not negate the existence of hardship, especially if all available funds were appropriated by the revenue. Consequently, the court quashed Ext.P3 and directed the 1st respondent to reconsider the petitioner's application within three months, with proper notice and in accordance with the law. The writ petition was disposed of.

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