TMI Blog1996 (6) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... and 1985-86. The assessment orders for the three years were passed on March 25, 1987, March 7, 1988 and March 28, 1988. The firms were also assessed for the above years and it was found that the income returned filed by the firms was not correct. Consequently, the income returned by the petitioners as income from the firms had to be changed. It was further found that the advance tax paid was less than 75 per cent. of the assessed tax and so the Assessing Officer levied interest under section 215 of the Act for all the three assessment years. The petitioners filed separate petitions for waiver of interest under section 215(4) of the Act for the above assessment years. The petitioners highlighted the fact that they could not anticipate the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he balance interest is waived under rule 40(5) of the Income-tax Rules. " Thus, the officer reduced the interest by 50 per cent. Against the above orders, the petitioners filed revisions under section 264 of the Act before the third respondent. The Commissioner disposed of the petitions by exhibit P-11 order dated December 21, 1990. The Commissioner refused to interfere since the second respondent had reduced the interest under rule 40, sub-rule (5), of the Income-tax Rules (hereinafter called " the Rules "). The original petitions are filed challenging exhibits P-7 and P-11 orders. On behalf of the petitioners, Sri George K. George contended that both respondents Nos. 2 and 3 have not exercised the discretion vested in them under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med. Rule 40 deals with waiver of interest. We are concerned with rule 40(5) which reads as follows: Any case in which the Deputy Commissioner considers that the circumstances are such that a reduction or waiver of the interest payable under section 21.5 or section 217 is justified. The question that arises is whether the authorities have exercised their power in accordance with the above rules. If the discretion given to the authorities is not exercised properly on the facts of the case, this court is entitled to interfere under article 226 of the Constitution. A similar question arose before the Supreme Court with respect to non-waiver of interest and penalty in exercising the power under section 273A of the Act. In Apex Finance and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 came up for consideration before a Division Bench of the Gujarat High Court in the above case and the court decided to quash the order passed by the authorities and issued a direction to the authorities to grant waiver of interest. The court interpreted the word " justified " in rule 40(5) as follows : " The word ' justified ' is a word of wide import. Something could be said to be justified if it is proved or shown to be fair or right or according to justice or backed by sufficient reason. " Exhibit P-7 order passed by the Deputy Commissioner says that the contentions of the assessee are partially acceptable, nothing more is stated in that regard. The petitioners' contention was that they paid the advance tax as per the information g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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