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2011 (12) TMI 283

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.... said firms. The facts relevant to the subject of challenge made in the writ petition have been detailed by the learned Single Judge. For the purpose of the disposal of these appeals, suffice it to say that the premises of the assessees were searched under Section 132 of the Act and pursuant to a notice under Section 148 of the Act, the assessments against the assessees were completed for the years 1988-89 to 1995-96 and interest was also levied under Section 234A, 234B and 234C. The assessee filed an application under Section 119(2)(a) for waiver of interest imposed under Sections 234A, 234B and 234C for the assessment years 1989-90 to 1995-96. The application was filed invoking the powers of the Chief Commissioner of Income Tax, conferred....

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.... seizure and after issuance of notice pursuant to such search and seizure. The notification, according to the Commissioner, entitled an assessee to claim waiver only where it was satisfactorily proved that a return of income could not be filed by the assessee due to unavoidable circumstances and that such return of income is filed voluntarily by the assessee or his legal heirs without detection by the Assessing Officer. Since the assessee filed return only after search and detection of concealed income, the waiver of interest initially granted was found to be against law and hence the Chief Commissioner cancelled the first order granting waiver and restored the interest levied. The writ petition filed challenging the rectified order issued ....

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.... satisfaction of which, only, entitles the assessee for a waiver. Obviously assessee's case was not covered by the terms of the notification entitling him to be considered for waiver of interest under the notification issued under Section 119(2)(a) of the Act. The notification so issued ([1997] 225 ITR (Statutes) 101) inter alia confers power on the Chief Commissioner and Director-General of income Tax to reduce or waive interest under Section 234A, Section 234B or Section 234C of the Act in the classes of cases or classes of income specified in paragraph 2 of the said notification. As noticed earlier, this power is conferred under a Circular issued invoking the powers of a beneficial provision and the eligibility to be considered under the....

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....of income or classes of cases specified in the notification, there can be no question of consideration of waiver or reduction of interest. As a corollary, in the classes of cases or classes of income which does not fall under those specified in paragraph 2 of the notification, the Chief Commissioner of Income Tax has no authority to consider reduction or waiver of interest. Admittedly, the assessee would claim entitlement to be considered under the notification on the premise that the assessee falls under paragraph 2(e) of the notification, which is extracted herein below: "(e). Where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his ....

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....e such claim. It is this entitlement which is the bone of contention in the instant case. The assessee if falling under any of the classes of income or classes of cases enumerated under paragraph 2 of the notification, necessarily gets an entitlement to be considered for waiver or reduction of interest. Once entitlement is proved, then waiver or reduction does not automatically follow; it is a matter of discretion of the competent authority. However, if the assessee does not fall under the classes in paragraph 2, there can be no consideration of the claim. The entitlement of the assessee does not fall for any adjudication, nor is it in the realm of discretion and cannot change with opinions and persons. The fact that the order passed under ....