Interest relief power: retrospective amendment allows reduction or waiver for assessments modified after commencement, benefiting assessee.

The fifth proviso to section 18A(6), as enacted by the 1953 amendment and implemented by rule 48 with retrospective effect from 1 April 1952, grants a discretionary power to reduce or waive interest where prescribed circumstances obtain; rule 48 contains no limiting provision that relief must be granted before completion of a regular assessment. Where an assessment completed before 1 April 1952 is later modified on final adjustment or appeal after that date, the quantum of interest is capable of alteration and the officer may exercise the discretion to reduce or waive interest; the direction to consider relief favoured the assessee.

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Issues: Whether the power conferred by the fifth proviso to section 18A(6) to reduce or waive interest (as introduced by section 13 of the Indian Income-tax (Amendment) Act, 15 of 1953 and implemented by rule 48) could be exercised in respect of assessments completed before 1 April 1952 but pending final adjustment or appeal after that date.

Analysis: Section 18A(6) originally imposed an absolute liability to pay interest where tax paid on estimate was less than 80% of tax determined on regular assessment. Section 13 of the Indian Income-tax (Amendment) Act, 15 of 1953 added a fifth proviso permitting the Income-tax Officer to reduce or waive such interest in cases and circumstances as prescribed; rule 48, made under section 59, specifies events and circumstances in which reduction or waiver may be granted, including where assessment is completed more than one year after submission of the return and the delay is not attributable to the assessee, and where the Inspecting Assistant Commissioner considers circumstances justify reduction or waiver. The proviso and rule 48 are retrospective to 1 April 1952. The rule text contains no limitation that the power to relieve must be exercised only before the regular assessment is completed. Where an assessment completed before 1 April 1952 is subject to modification by an appellate authority and the final adjustment occurs after 1 April 1952, the quantum of interest remains capable of alteration and therefore is within the scope of the discretionary power introduced by the amendment. The statutory scheme and rule 48 thus permit exercise of the power to reduce or waive interest in cases pending on 1 April 1952 before authorities able to modify assessment, and the Income-tax Officer is required to consider whether relief is justified in such circumstances.

Conclusion: The discretionary power under the fifth proviso to section 18A(6), as reflected in rule 48, could be exercised in respect of assessments completed before 1 April 1952 where final adjustment or appeal resulted in modification after that date; the High Court's direction that the Income-tax Officer consider whether reduction or waiver of interest was justified was proper. The result is in favour of the assessee.

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