2024 (11) TMI 702 - HC - Income Tax

Income Tax waiver denied without considering COVID-19 impact on advance tax estimation quashed under Section 234C

Grasim Industries Limited, Versus Chief Commissioner of Income Tax (Central) 1, Mumbai, Assistant Commissioner of Income Tax (Central) Mumbai, Union of India, through the Secretary, Department of Revenue, Ministry of Finance, New Delhi.

The Bombay HC quashed the Chief Commissioner of Income Tax's order denying waiver of interest under Section 234C of the Income Tax Act for Assessment Year ... Denial of Waiver of interest charged u/s 234C - thrust being the sudden outbreak of the COVID-19 pandemic which prevented the petitioner from correctly/properly estimating the income/book profits for paying the Advance Tax for the A.Y. 2021-22 - HELD THAT:- It appears to us that the impugned order in its findings has nowhere considered the primary submission of the petitioner on waiver of interest, attributable to the COVID-19 pandemic. There is no reference let alone findings on such submission of the petitioner, which is stated to be fundamental to the case of the petitioner as set out in its application dated 9th November 2022. There is another contention that the impugned order also fails to consider and/or deal with the position in law as reflected in the decisions cited and relied upon by the petitioner in its application dated 9th November 2022, let alone dealing with the same. In our view, the impugned order ought to have addressed these issues as flagged by the petitioner in supporting its case for grant of waiver of interest u/s 234C of the Income Tax Act as set out in the application of the petitioner dated 9th November 2022. Such approach of Chief Commissioner of Income Tax would show non-application of mind to the material contentions raised by the petitioner. The other statutory provisions and/or the scheme of the Act, on which the petitioner intends to support the case of the petitioner, in the given facts and circumstances, also lacks consideration in the impugned order. It was apposite for the Petitioner to raise contentions relying on the decisions cited before us, which also needs to be taken into consideration by the CCIT. Thus we deem it to be fit and proper to quash and set aside the impugned order dated 30th March 2024 passed by respondent No. 1; and remand the proceedings to the respondent No. 1 for a denovo consideration of the petitioner's waiver application to be decided on its own merits. Issues:Petition challenging order rejecting waiver of interest under Section 234C of the Income Tax Act for Assessment Year 2021-22.Analysis:Factual Matrix:The petitioner filed its return of income for A.Y. 2021-22, declaring income and book profits. Interest of Rs. 3,88,59,353/- was charged under Section 234C for deferment of Advance Tax. Details of Advance Tax paid and interest payable were provided.Rival Submissions:Petitioner's counsel argued that due to COVID-19 impact, estimating book profits accurately was challenging. Relied on statutory provisions and instructions for waiver of interest. Cited Supreme Court and Karnataka High Court judgments supporting waiver. Revenue's counsel opposed, emphasizing impugned order's correctness and discretionary nature of waiver refusal.Findings/Consideration:The petitioner's application for waiver highlighted COVID-19's impact on income estimation, not addressed in the impugned order. Lack of consideration for petitioner's submissions and legal provisions indicated non-application of mind. Impugned order failed to address cited decisions supporting waiver. Court quashed the order, remanding for fresh consideration within eight weeks, emphasizing a reasoned decision in accordance with the law. All contentions of parties were kept open.This judgment emphasizes the importance of considering all aspects raised by the petitioner, including the impact of external factors like the COVID-19 pandemic, in deciding on waiver of interest under the Income Tax Act. The court's decision to remand the matter for a fresh review underscores the need for a comprehensive and reasoned approach in such cases.