2013 (1) TMI 312 - HC - Income Tax

Court emphasizes conditions for waiver of interest under Income Tax Act. Genuine hardship and compliance crucial.

KC. MOHANAN Versus THE CHIEF COMMISSIONER OF INCOME TAX, KOCHI & Others

The court upheld the rejection of waiver applications under the Income Tax Act as the petitioners failed to satisfy the specified conditions for waiver of ... Waiver of interest levied u/s 220 (2) - application rejected - Held that:- levy of interest under Section 220 (2) is for delay in payment of tax for the periods subsequent to completion of assessment. One of the contention raised by the assessee that non-payment was due to circumstances beyond his control is that the assessment was necessitated on account of addition of taxable income of the firm of which he is a partner. This reason may justify delay in filing the returns but not delay in the payment of tax for the post assessment period. If that be so, the second requirement of Section 220 (2A) of existence of circumstances beyond the control of the assessee is also established. Waiver of interest levied u/s 234A and 234B - allowed when conditions specified in the notification F.No. 400/29/2002-IT (B) dated 26th of June 2006 are satisfied - Held that:- None of the conditions specified in notification are applicable and in spite of it, the order shows 1/3rd of the interest has been waived up to the assessment year 1992-93 the petitioner cannot seek waiver of interest levied under Section 234 A and Section 234 B. Issues:1. Challenge to order rejecting application for waiver of interest under Income Tax Act2. Interpretation of conditions for waiver of interest under Section 220 (2A)3. Assessment of genuine hardship for claiming waiver of interest4. Consideration of circumstances beyond control for waiver of interest5. Challenge to order partially allowing waiver of interest under Sections 234 A and 234 B6. Conditions for waiver of interest under Sections 234 A and 234 BAnalysis:1. The petitioner challenged the order rejecting the application for waiver of interest under the Income Tax Act. The court noted that to claim waiver under Section 220 (2A), the three specified conditions must be cumulatively satisfied by the assessee. The conditions include genuine hardship, circumstances beyond control, and cooperation in related assessments or proceedings.2. The court emphasized that if any of the conditions are not met, the claim for waiver would fail. In the case at hand, the first respondent found that the petitioner did not establish genuine hardship, considering the petitioner's involvement in various businesses and ownership of agricultural land. As such, the court upheld the order rejecting the waiver application.3. The court further reasoned that the levy of interest under Section 220 (2) is for delays in tax payment post-assessment. While the petitioner cited reasons for delayed filing of returns, it did not justify the delay in tax payment. Therefore, the condition of circumstances beyond control was not met, reinforcing the rejection of the waiver request.4. In another case, the petitioner challenged an order partially allowing waiver of interest under Sections 234 A and 234 B. The court highlighted the specific conditions for waiver under these sections, such as seizure of documents, retrospective amendments, and voluntary return filing. Since none of these conditions were met, the petitioner could not seek waiver, leading to the rejection of the petition.5. Ultimately, the court found no merit in the writ petitions and rejected them, affirming the orders refusing waiver of interest under the Income Tax Act. The judgment underscored the importance of meeting all specified conditions for claiming waivers and emphasized the legal requirements for seeking relief from interest levies under the relevant sections of the Act.