2004 (5) TMI 37

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....2, dated November 17, 1988, that the assessee could not be held liable under section 271(1)(c) of the Act. The penalty imposed was deleted. The Department filed an appeal before the Income-tax Appellate Tribunal, Patna, challenging the decision of the Commissioner of Income-tax (Appeals) deleting the penalty. The Tribunal by order dated October 25, 1995, marked annexure 3, reversed the order of the Commissioner of Income-tax (Appeals) and restored the order of the Assessing Officer imposing a penalty on the assessee. The assessee got the question as to "whether, on the facts and in the circumstances of the case, the imposition of penalty under section 271(1)(c) of the Act amounting to Rs. 2,20,000 was legal and valid" referred to the High Court under section 256(1) of the Income-tax Act. Meanwhile, the assessee filed an application under section 220(2A) of the Act praying for waiver of interest on the penalty imposed. Complaining that the said petition remained undisposed of, the assessee filed CWJC No. 447 of 1999(R) before this court. This court, by judgment dated February 22, 1999, directed the Commissioner of Income-tax to dispose of the petition for waiver of interest filed....

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....nt would have caused genuine hardship to the assessee; that the default in payment of the amount on which interest was payable was due to circumstances beyond the control of the assessee and that the assessee has co-operated with the inquiry relating to the assessment, or in the proceedings for recovery of any amount due from the assessee. In annexure 16, after referring to the facts of the case, the Commissioner of Income-tax has found that none of the conditions referred to above has been satisfied by the assessee and in that view, there was no justification in waiving the interest on penalty as sought for by the assessee. On the facts, the finding that the assessee has not satisfied any of the conditions of section 220(2A) of the Act is seen to be sustainable. The assessee has not been able to show that any genuine hardship would have been caused to it, if payment of interest on the penalty imposed had been made by it. Nor has the assessee been able to show that non-payment of the penalty was due to circumstances beyond the control of the assessee. It is clear from the facts noticed in the order of the Commissioner of Income-tax, that the assessee had certainly not co-operate....

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.... of Income-tax (Appeals). Learned counsel submitted that as distinct from an assessment, it was the imposition of a penalty and while considering the question, the court has to strictly consider whether the conditions for imposition exist in a given case. He argued that when on November 17, 1988, the Commissioner of Income-tax (Appeals) set aside the order imposing penalty, it could not be said that the assessee had to pay the penalty or that he had the liability to pay the penalty inviting an obligation to pay interest on that amount. No doubt, the Assessing Officer had imposed a penalty by his order dated March 14, 1988, and had also made a demand under section 156 of the Act and it could be taken that there was an obligation on the assessee to pay the penalty as demanded. But that demand stood effaced when the Commissioner of Income-tax (Appeals) allowed the appeal by an order dated November 17, 1988, and it stood effaced until the order of the Commissioner of Income-tax (Appeals) was set aside by the Tribunal on October 25, 1995, and the order imposing penalty by the Assessing Officer was restored. A proceeding initiated pursuant thereto could only make the assessee liable for ....

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....ourt by a liberal interpretation of the said section and relying upon section 3 of the Validation Act has held that the Revenue is entitled to invoke section 220(2) of the Act for the purpose of demanding interest on such retention of money. We are not in agreement with the High Court on the interpretation placed by it on section 220(2) of the Act in regard to the right of the Revenue to demand interest in a situation where the assessee has promptly satisfied the demand made by the Revenue in regard to the tax originally assessed. It is settled principle in law that the courts while construing revenue Acts have to give a fair and reasonable construction to the language of a statute without leaning to one side or the other, meaning thereby that no tax or levy can be imposed on a subject by an Act of Parliament without the words of the statute clearly showing an intention to lay the burden on the subject. In this process, the courts must adhere to the words of the statute and the so-called equitable construction of those words of the statute is not permissible. The task of the court is to construe the provisions of the taxing enactments according to the ordinary and natural mea....