TMI Blog1997 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... sting carried forward unabsorbed allowances under section 80J and after making a claim for deduction of Rs. 10,06,800 under section 80J for the year. The company had computed the claim for deduction under section 80J without deducting the liabilities from the capital employed in respect of the units, The assessment was completed by the Income-tax Officer by his order dated August 29, 1983, and the total income was assessed at Rs. 64,23,287 and tax demanded was Rs. 41,43,022 including interest under section 139(8) of Rs. 66,147 and interest under section 217 of Rs. 81,960. The balance tax payable was Rs. 36,03,585. The petitioner-company had requested for stay of collection demanded in the assessment until the decision of the Supreme Court regarding the validity of retrospective amendment to rule 19A for purposes of section 80J was known and stay of tax was granted by the Commissioner. The assessment was revised on the basis of the order of the Commissioner of Income-tax (Appeals) to take into account the correct relief under section 80J on the basis of the revision made for earlier years. The balance tax had been provisionally determined on February 25, 1985, at Rs. 21,80,651 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted. He also produced the balance-sheet of the petitioner-company for the year 1979 to show that the petitioner-company was in difficulties. He also cited a number of decisions in support of his stand. I will be referring to the decisions in the course of the order. Learned senior counsel for the Department submitted that the petitioner-company had the benefit of the money from March 17, 1981, to February 27, 1986. It had taken all steps not to pay the amount by indulging in litigation. The balance-sheet of the year 1979 cannot be looked into. The demand is made in the year 1988 and the latest balance-sheet has not been produced. The first two conditions set out in section 220(2A) of the Act have not been satisfied. He prays for dismissal of the writ petition. The question is whether the writ petitioner-company is entitled to any relief in the present writ petition or in any event it is at least entitled to a remission to the first respondent for a fresh appraisal of the case. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961 : "Interest is levied under section 139(8) or section 215 of the Income-tax Act, 1961, because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the petitioner that the Commissioner's recommendations were different ; the petitioner was not entitled to the right of being personally heard by the Board before its petition under section 220(2A) was disposed of by the Board." In that case, on the basis of the tax demand as finally raised for the assessment years 1979-80 and 1982-83, the Income-tax Officer raised a demand under section 220(2) of the Act from the petitioner. A written representation to the Central Board was given under section 220(2A) for waiver of the demand for interest. After considering the report of the Commissioner, the Board declined to waive the demand for interest. Petitions for special leave to appeal were filed before the Supreme Court. The petitioner also did not claim that the Commissioner's report had not been considered. In those circumstances, the Supreme Court held that the petitioner was not entitled to the right of being personally heard by the Board. That case arose at a time when the Board was exercising the powers of waiver or reduction of tax on a recommendation of the Commissioner. The present provision gives the power to the Commissioner. The Supreme Court observed that the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicially and reasonably based on relevant facts. The authority concerned should not act as a mere tax gatherer, but as a quasi-judicial authority vested with the power of mitigating hardship to the petitioner. In G. T. N. Textiles Ltd. v. Deputy CIT [1993] 199 ITR 347 (Ker), it was held rejecting the contention of the assessee that the Commissioner had looked into the fact as to whether genuine hardship would be caused to the assessee and found that that was not a case where the payment of interest caused undue hardship to the assessee and the discretion vested in the Commissioner had, therefore, been properly exercised. No error was committed warranting interference by the High Court under article 226 of the Constitution. In Central Provinces Manganese Ore Co. v. CIT [1986] 160 ITR 961 already referred to, the Supreme Court has observed as follows : "Since the statute provides for the waiver or reduction of interest, it is open to the Income-tax Officer before imposing a levy under section 139(8) and to the Inspecting Assistant Commissioner before doing so under section 215 to issue notice to the assessee and hear him in the matter. In case where the jurisdictional fact a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the petitioner-company, The other decisions relied on by learned counsel are: (1) P. M. Manuel v. ITO [1997] 226 ITR 616 (Ker) ; (2) R. P. David v. Agrl. ITO [1972] 86 ITR 699 (Mad) ; (3) A. V. Thomas and Co. Ltd. v. ITO [1982] 138 ITR 275 (Ker) ; (4) Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308 (SC) ; and (5) Birla Cotton Spinning and Weaving Mills Ltd. v. ITO [1995] 211 ITR 610 (Cal). In the first of the decisions, the Kerala High Court held that where an application is made for waiver of interest levied under section 215 of the Income-tax Act, 1961, the income-tax authorities have to objectively consider the circumstances and find out whether the assessee is entitled to it. There should not be a mechanical consideration of the claim put forward by the assessee and it should not be that if some benefit is given to the assessee, he will be satisfied. If the conditions laid down for the exercise of discretion are satisfied, the authority has no discretion to refuse to exercise the discretion. If there is omission to exercise the discretion on account of the failure on the part of the authority to genuinely address itself to the matter before it, mandamus can be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case the tax computed by the Income-tax Officer was paid in full and within time by the assessee and a portion of the tax was refunded to the assessee consequent to the order of the Appellate Assistant Commissioner, but, on further appeal, the Tribunal reversed the order of the Appellate Assistant Commissioner and restored that of the Income-tax Officer and thereafter a fresh notice of demand was served on the assessee calling upon him to pay back to the Department, the tax refunded to him. It was held that the liability to pay interest to the Department under section 220(2) of the Income-tax Act, 1961, arose only from the date when the fresh notice of demand was issued to the assessee and not from the date when the tax was refunded to the assessee. That case also does not in any way advance the case of the petitioner-company. The fourth decision relied on by learned counsel for the petitioner-company relates to exemption of portion of profits and gains derived from new industrial undertaking. I am afraid that the decision has no application to the facts of the present case. It related to the exclusion of borrowed monies and debts and particularly long-term borrowings in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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