2018 (2) TMI 515 - HC - Income Tax

Petition Dismissed: No Merit Found, Interest Waiver Denied, Record Error Absent

The petition was dismissed as the court found no merit in the arguments presented. The petitioner's case did not meet the conditions for interest waiver ... Reduction or waiver of interest u/s 234A, 234B and 234C - rectification of mistake - Held that:- In the present case, the notice u/s 142(1) of the Act was issued by the ITO on 19.8.2002 calling for return of income by 26.8.2002. Thereafter, again the notices were issued on 9.9.2002 and 17.10.2002. Thus, it cannot be said that the return could not be filed due to unavoidable circumstances. In totality, the petitioner’s case is not covered in any of the Paragraphs of the Circular dated 26.6.2006 issued by the CBDT. Moreover, the judgment relied upon by learned Counsel for the petitioner, which was rendered by the Hon. Apex Court in the matter of ‘B.M. Malani v. C.I.T.’ [2008 (10) TMI 2 - SUPREME COURT ], is not applicable in view of the present facts and circumstances of the case. In that case, the appellant had requested the appellate authority to sell shares and securities seized from him and appropriate the sale proceeds towards payments of arrears of taxes. In the present case, there is no mistake apparent from the record, as discussed hereinabove. Issues Involved:1. Imposition of interest under Sections 234A, 234B, and 234C of the Income Tax Act, 1961.2. Validity of the demand and garnishee notices.3. Petitioner's application for rectification under Section 154 of the Act.4. Petitioner's application for waiver of interest based on the CBDT Circular dated 26.6.2006.5. Applicability of judicial precedents cited by the petitioner.Detailed Analysis:1. Imposition of Interest under Sections 234A, 234B, and 234C:The petitioner was subjected to a survey under Section 133(A) of the Income Tax Act on 21.12.2001, leading to the surrender of an income of Rs. 50.00 lakh. The petitioner filed the income tax return on 13.1.2005, declaring a total income of Rs. 51,10,850/-. The assessment order was passed on 7.3.2005 under Section 143(3), and interest amounting to Rs. 11,02,480/- was imposed under Sections 234A, 234B, and 234C. The petitioner had deposited Rs. 15,45,000/- excluding interest, and was issued demand and garnishee notices.2. Validity of the Demand and Garnishee Notices:The petitioner received a demand notice on 05.12.2008 and a garnishee notice on 19.12.2008. The notices were issued following the non-honoring of cheques presented by the petitioner and subsequent non-compliance with notices under Sections 142(1) and 271(1)(b) of the Act. The penalty of Rs. 10,000/- was imposed due to non-compliance.3. Petitioner's Application for Rectification under Section 154:The petitioner filed an application for rectification of the mistake under Section 154 on 18.02.2009, followed by another application for waiver of interest on 2.2.2009, and an adjournment request on 21.2.2013. The competent authority rejected the application on 12.4.2013, finding no apparent mistake from the record.4. Petitioner's Application for Waiver of Interest Based on CBDT Circular:The petitioner referred to the CBDT Circular dated 26.6.2006, which outlines conditions for the reduction or waiver of interest under Sections 234A, 234B, and 234C. The conditions include scenarios involving search and seizure, unexpected income, judicial pronouncements, and unavoidable circumstances.- Condition (a): The petitioner did not claim that books of accounts or incriminating documents were seized, thus this condition was not applicable.- Condition (b): This condition pertains to unexpected income received after the due date of advance tax payment, which was also not applicable to the petitioner.- Condition (c): This applies to income not chargeable to tax due to judicial pronouncements or retrospective amendments. The petitioner’s case did not fall under this scenario.- Condition (d): This condition relates to filing returns due to unavoidable circumstances without detection by the Assessing Officer. The petitioner had received multiple notices, negating this condition.5. Applicability of Judicial Precedents:The petitioner cited the Supreme Court judgment in ‘B.M. Malani v. C.I.T.’, which involved the sale of seized shares and securities to pay tax arrears. The court found this precedent inapplicable to the present case, as there was no similar context of asset seizure and sale.The court also referenced the Supreme Court judgment in ‘L. Hirday Narain v. ITO, Bareilly’, emphasizing the duty of public officers to exercise their authority appropriately when conditions for rectification are met. However, the court found no apparent error in the record warranting rectification.In ‘CIT Bhopal v. Ralson Industries Ltd.’, the Supreme Court distinguished between rectification under Section 154 and revision under Section 263, noting that rectification is limited to errors apparent on the face of the record and does not confer a power of review. The court upheld this distinction, finding no grounds for rectification in the petitioner’s case.Conclusion:The petition was dismissed, with the court finding no merit in the arguments presented. The petitioner’s case did not satisfy the conditions for waiver of interest under the CBDT Circular, and there was no apparent error in the record to justify rectification under Section 154. All pending applications were disposed of accordingly.