TaxTMI 
TaxTMI 
2004 (3) TMI 49
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....Act on the basis of the gross foreign earnings. The said assessment for all the four assessment years was accepted by the concerned Assessing Officer under section 143(1) and the intimations were issued to the petitioners. On November 16, 1999, the Assessing Officer served upon the petitioner notices under section 148 of the Income-tax Act for reopening of his assessment for the assessment years 1993-94 to 1996-97. The petitioner filed his return for the aforesaid four assessment years on April 27, 2000, declaring income. The Assessing Officer did not accept the case of the petitioner and for the assessment years 1993-94 to 1996-97 held and determined the income after allowing the deductions under section 80-O of the Income-tax Act on the net foreign earnings received by the petitioner in India. As per the assessment under section 143(3) read with section 148, certain amount was held payable by the petitioner during all the four assessment years and the Assessing Officer also charged interest under section 234B of the Income-tax Act. The petitioner preferred rectification applications under section 154 of the Act for the assessment years 1993-94 to 1996-97 for correct working of th....
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....isions in question. It was also held that section 119(2) confers the Central Board of Direct Taxes (for short, "the Board") powers of relaxation of any of the provisions mentioned in the sub-section including sections 234A, 234B and 234C of the Act. The learned judge, accordingly, did not find any constitutional infirmity in the provisions of sections 234A, 234B and 234C. The Karnataka High Court in Union Home Products [1995] 215 ITR 758 held thus: "The question whether the provision making interest payable on the happening of any event is a provision which is compensatory in character will have to be answered in the context of the language and the purpose behind the provision and not by reference to other provisions of similar or analogous nature. Viewed thus, it is not possible to hold that the provisions of sections 234A, 234B and 234C are provisions of a penal nature simply because, in actual application of these provisions there may be situations where an assessee may render himself liable to payment of interest under each one of these provisions simultaneously for the same period nor can the compensatory nature of the provisions be deemed to have been lost simply because in....
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....ed with the view of the Karnataka High Court and held the said provisions intra vires. The Division Bench considered the submission that even in cases of extreme hardship no discretion has been conferred upon the assessing authority to waive or reduce the interest and, therefore, the provisions were unreasonable. Dealing with this aspect, the Division Bench of the Punjab and Haryana High Court held thus: "We shall now deal with the argument of learned counsel for the petitioners that even in cases of extreme hardship no discretion has been conferred upon the assessing authority to waive or reduce interest and, therefore, the provisions impugned are unreasonable. It is well-settled that the Legislature is presumed to be aware of the needs of the time and the measures to be adopted for collection of revenue and the courts cannot interfere with the legislative instrument merely because there does not exist a provision in the statute giving some discretion to the authorities constituted under the Act. It is also well-settled that mere hardship to a particular party cannot be a ground for holding that the statute is unreasonable. Under the taxing statutes, greater degree of latitude ve....
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....prophecy based on meagre and uninterpreted experience". Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and, therefore, it cannot provide for all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that account alone, it cannot be struck down as invalid. The courts cannot, as pointed out by the United States Supreme Court in Secretary of Agriculture v. Central Reig Refining Co. [1950] 94 L. Ed. 381, be converted into Tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, but that too cannot of itself be a ground for invalidating the legislation, because it is not possible for any Legislature to anticipate as if by some divine prescience, distortions and abuses of its legislation, which may be made by those subject to its provisions, and to provide against such distortions and abuses. Indeed, howsoever great may be the care bestowed on its framing, it is difficult to conceive of a legislation which is not capable of being abused by pervert....
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....f the Income-tax Act to issue appropriate directions to relieve the hardship in c suitable cases. As a matter of fact, the Board in exercise of its power under section 119(2)(a) issued notification on May 23, 1996, which reads thus: "In exercise of the powers conferred under clause (a) of sub-section(2) of section 119 of the Income-tax Act, 1961, the Central Board of Direct Taxes, hereby direct that the Chief Commissioner of Income-tax and Director-General of Income-tax may reduce or waive interest charged under section 234A, or section 234B or section 234C of the Act in the classes of cases or classes of income specified in paragraph 2 of this order for the period and to the extent the Chief Commissioner of Income-tax/Director-General of Income-tax deem fit. However, no reduction or waiver of such interest shall be ordered unless the assessee has filed the return of income for the relevant assessment year and paid the entire tax due on the income as assessed except the amount of interest for which reduction or waiver has been requested for. The Chief Commissioner of Income-tax or the Director-General of Income-tax may also impose any other conditions deemed fit for the said red....
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....revious year, in any assessment or reassessment proceedings the advance tax paid by the assessee during the financial year immediately preceding the relevant assessment year is found to be less than the amount of advance tax payable on his current income, the assessee is chargeable to interest under section 234B or section 234C and the Chief Commissioner or Director-General is satisfied that this is a fit case for reduction or waiver of such interest. (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 legal heirs without detection by the Assessing Officer. 3. The Chief Commissioner of Income-tax/Director General of Income-lax may order the waiver or reduction of interest under sections 234A, 234B and 234C under this order with reference to the assessment year 1989-90 or any subsequent assessment year but shall not so reduce or waive penal interest in those cases where waiver or reduction of such interest has been rejected in the past on the merits of the case. If any petition in the past has been rejected because the Board had not issued this direction earlier, thes....
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....the Chief Commissioner of Income-tax. The whole case of the petitioner is that in the return of income for the assessment years 1993-94 to 1996-97, the petitioner claimed deductions on gross receipts based on the judgment of the Madras High Court in Addl. CIT v. Isthmian India Maritime (P.) Ltd. [1978] 113 ITR 570 and a few decisions of the Income-tax Appellate Tribunal; the petitioner could not have anticipated that he would ultimately be entitled to get deduction under section 80-O on the net income and not on the gross receipts of foreign earnings. According to the petitioner, the difference occurred due to the change in the judicial opinion about the deduction under section 80-O of the Act and, therefore, interest charged under sections 234B and 234C ought to have been waived by the Chief Commissioner of Income-tax. The Chief Commissioner of Income-tax has dealt with this aspect and held in para. 5 of the impugned order thus: "5. From the perusal of the assessee's submissions it is seen that the assessee's plea is that the section 80-O deduction for the above assessment years was claimed on the gross foreign earnings in view of the decisions of various Income-tax Appellate Tr....