High Court grants waiver of interest under Income Tax Act for assessment year 1989-90

The Madras High Court allowed the Writ Petition, set aside the order denying waiver of interest under sections 234B and 234C of the Income Tax Act, 1961, and directed the respondent to grant the waiver for the assessment year 1989-90. The court held that the circumstances leading to the delay in filing the return of income, considered unavoidable for waiver under section 234A, should also be applicable for waiver under sections 234B and 234C. The decision aligned with a previous ruling by the Gujarat High Court, emphasizing consistency in granting waivers under the specified sections without imposing any costs on the parties.

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Issues:
Challenge to order denying waiver of interest under sections 234B and 234C of the Income Tax Act, 1961.

Analysis:
1. The petitioner challenged the order denying waiver of interest under sections 234B and 234C of the Income Tax Act, 1961. The respondent had granted waiver under Section 234A after considering the petitioner's explanation for the delay in filing the return of income. However, the authority did not consider the same reasons for waiver under sections 234B and 234C, stating that the circumstances mentioned in a specific notification were not satisfied for granting waiver under these sections.

2. The Hon'ble Division Bench of Gujarat High Court in a similar case highlighted that circumstances leading to late payment of taxes could be considered unavoidable circumstances for the delay in filing the return of income. The court referred to a notification empowering the waiver of interest under sections 234A, 234B, or 234C, emphasizing that such waiver could be granted only after the assessee filed the return of income and paid the entire tax due except the interest amount in question.

3. The court noted that if circumstances were deemed unavoidable for waiver under section 234A, they should also be considered so for waiver under sections 234B and 234C. Therefore, the waiver granted under section 234A should be extended to interest under sections 234B and 234C as well. The court held that the reasoning applied by the Gujarat High Court should be adopted in this case for consistency.

4. Considering the petitioner's reasonable cause for delay in filing the return of income and following the Gujarat High Court's reasoning, the Madras High Court allowed the Writ Petition, set aside the impugned order, and directed the respondent to grant waiver of interest under sections 234B and 234C for the assessment year in question, 1989-90. The court made this decision without imposing any costs on the parties involved.

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