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TMI Blog1974 (1) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... had not been assessed to income-tax at any time prior to the assessment year 1965-66. The orders of assessment in respect of the years 1965-66, 1966-67, 1967-68 and 1968-69 were passed by the Income-tax Officer in the year 1969. While passing the said orders of assessment, the Income-tax Officer levied interest at the prevailing rate under section 217(1) of the Act in respect of the advance tax which they had to pay according to the provisions of the Act. Aggrieved by that part of the order of assessment, the petitioners filed petitions before the Commissioner of Income-tax requesting him to exempt payment of the interest levied under section 217(1) in exercise of his power under rule 40 of the Income-tax Rules (hereinafter referred as " th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 212(2) of the Act ; 4. Persons who have not been previously assessed either under the Act or under the Indian Income-tax Act of 1922 but who have filed an estimate of their income under section 212(3) ; and 5. Persons who have not been previously assessed either under the Act or under the Indian Income-tax Act of 1922 and who have not filed any estimate as required by section 212(3) of the Act. The petitioners come under the last category. The argument of Sri Srinivasan is that whereas persons falling under categories Nos. 2, 3 and 4 referred to above are made liable to pay interest on account of delayed payment of advance tax under sections 215 and 216 and whereas persons falling under category No. 5 in which the petitioners f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position in all material respects with persons falling under category No. 1. Although the interest payable under section 217(1) is not in the nature of penalty, it has a purpose to fulfil and that is that persons who have withheld money payable to Government beyond the prescribed period and who have had the benefit of it should suitably compensate the Government. In so far as persons falling under category No. 1 are concerned, it is clear from the provisions of sections 218, 221 and 222 that as soon as those persons become defaulters in payment of advance tax, it is open to the authorities to set in motion the recovery process against them to recover the advance tax which has fallen due and also to levy penalty. But in the case of persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person is under section 163 treated as an agent of another person and is assessed upon the latter's income. 3. Where the assessee has income from an unregistered firm assessed under the provisions of clause (b) of section 183. 4. Where the previous year is the financial year or any year ending about the close of the financial year and large profits are made after the 1st March (or the 15th March in cases where the proviso to section 211 applies) in circumstances which could not be foreseen. 5. Any case in which the Inspecting Assistant Commissioner considers that the circumstances are such that a reduction or waiver of the interest payable under section 215 or section 217 is justified. " The argument constructed by Sri Srinivasan on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with regard to the interest payable by him under law. Sub-rule (5) confers the discretion on the Inspecting Assistant Commissioner to give relief under other circumstances in which reduction or waiver of interest is justified. The said power is conferred on an officer of the income-tax department who, by the time he is called upon to exercise the said power, would have acquired sufficient experience regarding the administration of the provisions of the Act. The fact that sub-rule (5) authorises him to allow reduction or waiver only in justifiable cases requires that he has got to record reasons in support of the order. Those reasons are liable to be scrutinised by the higher authorities under the Act. Under these circumstances it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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