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SMT. NIMMI JOHN CHACKOLA Versus THE CHIEF COMMISSIONER OF INCOME TAX, COCHIN AND OTHERS

Waiver of interest u/s 220 - discretionary power - Held that:- There is no doubt about the proposition that the interest being charged is compensatory in nature. The power given under sub Section (2A) of Section 220 is to reduce or to waive the interest paid or payable. The reasons to reduce or waive interest, should be either the payment of such amount has caused or would cause genuine hardship, whether the default in payment of the amount on which interest has been paid or was payable was due .....

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ready made in instalments and what remained to be paid was a portion of interest. The Commissioner, having arrived at a finding, granted waiver for the balance interest payable i.e. ₹ 11,31,040/- and did not waive the entire interest, though it was found that the petitioner had satisfied all the conditions. As already indicated, statute permits reduction of interest or waiver of interest in full. This is a case in which the Commissioner has found that the interest payable can be waived the .....

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to the 3rd respondent to allow waiver of interest amounting to ₹ 15,06,296/- and for other consequential benefits. 2. The short facts involved in the writ petition would disclose that the assessment was completed with respect to the return filed by late John J.Chackola in respect of assessment year 1994-95. Ext.P1 is the assessment order dated 28/03/2001. Petitioner, being the legal heir, was prosecuting the matter. Ext.P1 order was modified by a further order dated 17/05/2004. Petitioner .....

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ged under Section 234A of the Act amounting to ₹ 3,75,256/-. The claim for waiver of interest under Section 234B of the Act was rejected. By Ext.P3 order dated 01/12/2011, the total amount payable was computed at ₹ 22,24,894/- inclusive of interest of ₹ 12,86,754/- under Section 220(2) of the Act. Petitioner submitted Ext.P4 representation for waiver of interest under Section 220(2) of the Act. In the meantime, petitioner was served with Ext.P5 showing the computation of amount .....

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ted payment of interest was beyond the control of the petitioner and therefore the balance interest payable under Section 220(2) of the Act is waived in full. Pursuant to Ext.P6, petitioner submitted a letter dated 29/06/2012 to the 3rd respondent requesting for waiver of the interest charged, that is, ₹ 15,06,296/-. This was replied by Ext.P8 dated 31/05/2013 indicating that waiver was permitted only in respect of the balance amount payable and therefore petitioner is not entitled for any .....

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e Tax in limiting the waiver to an amount of ₹ 24,408/- which was the balance amount due from the deceased assessee. Perusal of the judgment indicates that the contention urged in the case is that no specific reason had been stated to limit the waiver to the amount which remained due and payable. It was held at paragraph 9 as under: 9. In the instant case, what was stated by the Chief CIT was that certain amounts were already paid by way of adjustment or otherwise and that certain amounts .....

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.Malani v. Commissioner of Income Tax and Another [(2008) 306 ITR 196 (SC)]. In the above case, the Apex Court considered the question as to what would cause genuine hardship. It was held that the ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto. 5. On the other hand, learned counsel for the Revenue placed reliance on the judgment of the Kerala State Cashew Development Corporation Ltd. v Income Tax Office .....

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ircumstances. The levy of interest being compensatory, it has to be verified whether the delay in filing the returns was on account of sufficient reasons being shown. 6. There is no doubt regarding the proposition laid down in the cases cited above. Even the learned Single Judge of this Court in E.M.Joseph (supra) observed that the Section does not make any distinction by which there is any restriction imposed on the Commissioner of Income Tax to consider waiver of the interest that has been pai .....

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t when the interest under Section 139(8) is levied by way of compensation and not by way of penalty, the Officer could waive the interest in its entirety or reduce the quantum of interest. It was further held that when the interest is compensated, it must necessarily follow that the loss sustained by the State is a relevant factor. 8. The Apex Court in B.M.Malani (supra) had considered the scope of Section 220(2A) and held at paragraphs 21 and 22 as under: 21. For interpretation of the aforement .....

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son having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied. 22. The ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto. For the said purpose, another well-known principle, namely, a person cannot take advantage of his own wrong, may also have to be borne in mind. The said principle, it is conceded, has not been applied by the courts below in this c .....

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, Kusheshwar Prasad Singh v. State of Bihar [2007] 11 SCC 447, paragraphs 13 , 14 and 16. 9. Section 220(2A) reads as under: 220. When tax payable and when assessee demand in default. xxxx (2A) Notwithstanding anything contained in sub-section (2), the Chief Commissioner or Commissioner may reduce or waive the amount of interest paid or payable by an assessee under the said sub-section if he is satisfied that- (i) payment of such amount has caused or would cause genuine hardship to the assessee; .....

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