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Humayun Suleman Merchant Versus The Chief Commissioner of Income Tax (X) , Mumbai & Anr.

2016 (11) TMI 606 - BOMBAY HIGH COURT

Waiver or reduction of interest in terms of the order [F.No.400/234/95IT( B)] dated 23.5.1996 issued under Section 119(2)(a) - Application of provisions of Section 54(F) (4) - return being filed after the due date and the Petitioner not having paid Advance tax the assessing officer levied interest under Sections 234A, 234B and 234C vide order dated 13.3.2001 - Held that:- Mr. Chatterjee’s, Senior Counsel appearing on behalf of the petitioner contention is that the Petitioner received posses .....

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Mr. Chatterjee’s contention that the expression “as the case may be” used in paragraph 2(d) of the order issued by the CBDT can come to the petitioner’s rescue. - We must point out that no decision of this Court on the interpretation of Section 54F(4) of the Act (as in force at the relevant time) was brought to our notice which took a view that no tax is payable on the amounts of gain made on sale of land, if not invested and also not deposited in the specified bank account as mandated by S .....

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ot entitled to such benefit, in case it does not fall within it. - In the present facts, the petitioners have not been able to establish that non payment of the tax and/or non investment in the specified bank account in terms of Section 54F of the Act was on account of unavoidable circumstances or circumstances beyond control of the petitioner. The petitioner has not established that he is entitled to benefit of the order dated 23rd May, 1996 for waiver of interest. - Decided against assess .....

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application for waiver of interest levied under Sections 234A, 234B, and 234C of the Act in respect of assessment year 199697 is rejected. 2. In a related development Income Tax Appeal No.545 of 2002 was filed in this Court pertaining to the same assessee and the same assessment year. Two substantial questions of law formed the subject matter of the Income Tax Appeal. These are as follows : (a) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justi .....

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n Nos.1 and 2 have been answered in the affirmative i.e. in favour of the respondent revenue and against the appellant assessee. 4. In this Petition it is the petitioner's case that for the assessment year 199697 the petitioner has filed return of income declaring total income of ₹ 44,84,820/. The Assessing Officer levied interest as under : Under Section 234A ₹ 53,580/ Under Section 234B ₹ 9,73,370/ Under Section 234C ₹ 700/ In the return filed, the petitioner had cl .....

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Advance tax the assessing officer levied interest under Sections 234A, 234B and 234C vide order dated 13.3.2001. 5. Under Section 234A, if the return of income for any assessment year under section 139(1) is furnished after the due date then at the relevant time the assessee is liable to pay simple interest at the rate of 2% for every month or part of a month comprising the period commencing on the date immediately following due date and ending on the date when it is furnished and in case no re .....

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essed tax, the assessee at the relevant time is liable to pay simple interest at the rate of 2% for every month or part of the month from 1st April of the following financial year upto the date of Assessment. Under Section 234C if advance tax payable under Section 208 has not been so paid before the scheduled dates of 15th June, or 15th December or 15th March as provided in the section, the assessee is liable to pay simple interest at the rate of 1 ½% is less than 30% (15th June) or 60% ( .....

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ain such exemption at all levels viz before the Assessing Officer, the Commissioner of Income Tax (Appeals) and the Tribunal. Being aggrieved the appellant filed Income Tax Appeal which we have decided on 18th August, 2016. In view of dismissal of the appeal, the denial of exemption under Section 54F stands confirmed. 8. Mr. Chatterjee, learned Senior Counsel appearing on behalf of the petitioner submitted that the petitioner was entitled to waiver or reduction of interest in terms of the order .....

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order passed in the case of an assessee by the High Court within whose jurisdiction he is assessable to income and as a result he did not pay income tax in relation to such income in any previous year and subsequently, in consequence of any retrospective amendment of law or as the case may be, the decision of Supreme Court in his own case, which event has taken place after the end of year of any such previous year, in any assessment or reassessment proceedings the advance tax paid by the assess .....

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under : 2. In partial modification of this para of the order, the Central Board of Direct Taxes has decided that there shall be no condition that the decision of the High Court or the Supreme Court, as referred to therein, must be given in the assessee's own case. Also the condition that any retrospective amendment of law or the decision of the Supreme Court or the jurisdictional High Court must have been made after the end of the relevant year stands withdrawn. 11. In the light of above ci .....

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the Supreme Court in the assessee's own case, which event has taken place after the end of any such previous year, in any assessment or reassessment proceeding, if the advance tax paid by the assessee is found to be less than what was payable, the assessee could be entitled for reduction or waiver of interest on the shortfall or omission to pay advance tax. He submitted that the facts of the petitioner s case clearly fell within the discretionary provisions of said clause 2(d) inasmuch as th .....

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aid towards purchase of the flat and the balance of ₹ 34,60,000/was to be paid and the return of income was filed on 4th November, 1996 under Section 139 of the Act. Section 54F provides that the amount not utilized wholly or partly for the purchase towards residential accommodation shall be deposited by him under Section 139(1) in a specified bank account. In the facts of the present case ₹ 34,60,000/was not so deposited nor was it paid towards purchase price. 13. In support of his .....

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here was no interest liability in cases where the assessee could not anticipate events of the next financial year and hence no default in paying advance tax. 14. Mr. Chatterjee also relied upon a judgment of the Kerala High Court in CIT v/s Jimichan M.Varicatt [2011] 330 ITR 338 (Ker) and the decision of the Gujarat High Court in Smt. Bhanuben Panchal Vs. Chandrikaben Panchal Vs. CCIT and others 269 ITR 27 in which the High Court had reduced the interest levied. He therefore submitted that the P .....

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lied upon CIT v/s Anjum Ghaswala & Ors [2001] 252 ITR 1 and submitted that in Prime Securities (supra) this court had followed Anjum Ghaswala (supra) while holding in the facts of that case that advance tax was not due owing to an unanticipated event and therefore the assessee was entitled to relief. In Ghaswala (supra) Mr. Malhotra pointed out the Supreme Court had reiterated that as in the normal rule of construction where a statute vests certain powers in an authority to be exercised in a .....

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ted that no case for interference was made out. 16. We find that the entire case of the petitioner as urged before us for waiver of interest is based on the interpretation of clause 2(d) of the order [F.No.400/234/95IT( B)] dated 23rd May, 1996 read after its modification dated 30th January, 1997. Therefore the scope of examination before us is the only correct and true interpretation of the above order in the facts of this case. 17. Having considered the facts, hearing counsel at length and hav .....

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the present case the petitioner is not entitled to benefit of order [F.No.400/234/95IT( B)] dated 23.5.1996 and we are unable to appreciate Mr. Chatterjee s contention that the expression as the case may be used in paragraph 2(d) of the order issued by the CBDT can come to the petitioner s rescue. This on the basis of his submission that it would cover any other case. The phrase or as the case may be has been used in the order dated 23rd May 1996 to cover the alternative to an assessee not payin .....

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se as the case may be would mean either of the alternatives as listed out along with the phrase as the case may be . The Court held it would mean whichever the case may be or as the situation may be . It would mean one of the various alternatives. The order dated 23.5.1996 of the CBDT grants relief of waiver and / or reduction of interest on the ground that the nonpayment of tax was on the basis of the decision of the jurisdictional High Court which was subsequently nullified by either retrospec .....

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d) of the order dated 23rd May 1996 as modified. The only submission made before us for nonpayment of taxes was hardship to the petitioner and for that purpose reliance was placed on the phrase as the case may be , to submit it would cover all other cases. We must point out that no decision of this Court on the interpretation of Section 54F(4) of the Act (as in force at the relevant time) was brought to our notice which took a view that no tax is payable on the amounts of gain made on sale of la .....

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in the order. The parameters are binding upon the authorities and the petitioner was not entitled to such benefit, in case it does not fall within it. 20. Reliance by Mr. Chatterjee upon the decision of this Court in Prime Services Ltd. (supra) is of no assistance in the present case as it does not deal with relief as claimed before us on the basis of CBDT the order dated 23rd May, 1996. Similarly, the decision of Kerala High Court in CIT vs. Jimichan M.Varicatt (supra) was a decision wherein t .....

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matter of Smt. Bhanuben Panchal (supra) . In the above case, the Gujarat High Court observed in the context of the facts before it that under clauses (a) to (d) of paragraph 2 of the order dated 23rd May, 1996, the nonpayment of tax was for circumstances beyond the control of the assessee and the same could be considered as a specie of unavoidable circumstances. Clauses (a) to (e) merely illustrate the different facets of the underlying principle that waiver of interest is to be considered when .....

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