TMI Blog1996 (12) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... income on30-3-1988. The assessment was made on the same day estimating assessee's income at Rs. 75,117 besides agricultural income as declared. The ITO also initiated penalty proceedings under sections 271(1)(a) and 273(1)(b) of the I.T. Act besides charging interest under sections 139(8) and 217 of the I.T. Act. 3. On appeal, the learned A.A.C. cancelled penalty under section 271(1)(a) and reduced quantum of penalty under section 273 to Rs. 1,865. 4. The assessee then moved an application under section 154 stating, inter alia that due to search, he could not file the return in time and also could not pay advance tax as he was not aware of quantum of share income from the firm. It was prayed that interest charged be waived. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon decision of Karnataka High Court in the case of M.B. Nagendra Simha Sons (HUF) v. CIT [1996] 219 ITR 100. 7. The learned counsel for the assessee Shri Salil Agarwal vehemently supported the impugned order of CIT (Appeals). He mentioned that levy of interest without issuing show-cause notice to the assessee was had in law. The levy of interest was not automatic. Shri Agarwal in this connection drew our attention to the decision of Hon'ble Karnataka High Court relied upon by the learned CIT (Appeals). He further quoted decision of Patna High Court in the case of CIT v. Prabhat Zarda Factory [1996] 221 ITR 791 wherein their Lordships after considering all decisions held that Appellate Tribunal was justified in deleting penal interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for waiver after rejecting his application under section 154. As per the settled law, multiplicity of proceedings is to be avoided. Validity and propriety of the impugned order has to be judged from that angle. The assessee has a statutory right to apply and claim waiver of interest by satisfying conditions mentioned in rule 117A and rule 40 of I.T. Rules, particularly in case when no opportunity of being heard was provided before the levy. The situation before us is fully covered by the decision of the Hon'ble Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd v. CIT [1986] 160 ITR 961 wherein their Lordships observed as under : "Since the statute provides for the waiver or reduction of interest, it is open to the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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