TMI Blog2019 (8) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... e) as in clause 2(d). When a person embarks on the journey of litigation, one should always be prepared for an adverse verdict. Therefore, there is nothing unforeseeable about the outcome of judicial or quasi judicial proceeding. As the preambular paragraph of the notification dated 23.05.1996 states, reduction or waiver of penal interest charged under Sections 234 A, 234 B and 234 C can be made only in the classes of cases or classes of income tax specified in paragraph 2 of the order. Unless the case of the assessee can be brought within one of the five clauses, there can be no scope for claiming reduction or waiver. It is not the case of the petitioner that his case will fall under clause 2 (a) or (b) or (c) or (d) of the notification. His case will have to fall only within clause 2(e). That is why, even though the petitioner talks about clause (v) in the earlier part of ground (d) of his affidavit filed in support of the writ petition, he would contend in the very same ground a little later, that he had satisfied the conditions laid under clause (e) of the Board's circular. Rejection of one's stand in a legal proceeding cannot be construed as an unavoidable ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property came only on 20.01.1994 with assignment of leasehold interest in the land and not on 06.03.1992. After so reasoning out, the assessment was completed under Section 143(3) of the Income Tax Act, 1961, on 29.10.1998 by treating the capital gains of ₹ 6,05,000/- as short term capital gains. The claim of the assessee that it was a long term capital gains was rejected. The assessing officer determined the total income at ₹ 17,30,930/- for the said assessment year and demanded a sum of ₹ 5,46,742/- as the total net tax payable. The assessing officer charged interest under Section 234 A of the Act at ₹ 45,108/- and under Section 234 B at ₹ 1,73,766/- and under Section 234 C at ₹ 5,640/-. 3.It is not in dispute that the entire tax as demanded by the assessing officer was paid. The writ petitioner's father thereafter filed a waiver petition under Section 119(2) (a) of the Income Tax Act on 18.08.2000 for waiver of the interest charged under the aforesaid provisions. The stand taken in the said waiver petition was that on 06.03.1992 he purchased an immovable property at Royapettah High Road for ₹ 5,20,000/- vide buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner pointed out that the petitioner's father duly filed his return of income on time without detection by the assessing officer. According to the petitioner's counsel, the respondent erroneously invoked Clause(e) and that the applicable clause will be clause (v) of the Board's cricular dated 23.05.1996. According to the petitioner, the said clause reads as under : ( v )Where return of income is filed voluntarily without detection by the Income-tax Department and due to circumstances beyond control of the taxpayer such return of income was not filed within the stipulated time-limit or advance tax was not paid at the relevant time. The writ petitioner's father was under a bonafide belief that the transaction is liable only for long term capital gain. However, the assessing officer chose to treat the transaction as a short term capital gain. This according to the petitioner's counsel was beyond the control of the assessee. After the assessing officer made the stand clear, the petitioner's father duly paid the tax. Therefore, the petitioner's counsel contend that the impugned order will have to be set aside and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification bearing F.No.400/234/95-IT(B), dated 23.05.1996. Nowhere is there any clause (v) as claimed by the petitioner in his affidavit as well as in his written arguments. Notification bearing F.No.400/234/95-IT(B), dated 23.05.1996 reads as follows : In exercise of the powers conferred under clause ( a ) of subsection (2) of section 119 of the Income-tax Act, 1961, the Central Board of Direct Taxes hereby direct that the Chief Commissioner of Income-tax and Director-General of Income-tax may reduce or waive interest charged under section 234A or section 234B or section 234C of the Act in the classes of cases or classes of income specified in paragraph 2 of this order for the period and to the extent the Chief Commissioner of Income-tax/Director-General of Income-tax deem fit. However, no reduction or waiver of such interest shall be ordered unless the assessee has filed the return of income for the relevant assessment year and paid the entire tax due on the income as assessed except the amount of interest for which reduction or waiver has been requested for. The Chief Commissioner of Income-tax or the Director-General of Income-tax may also imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve amendment of law or, as the case may be, the decision of the Supreme Court in his own case, which event has taken place after the end of any such previous year, in any assessment or reassessment proceedings the advance tax paid by the assessee during the financial year immediately preceding the relevant assessment year is found to be less than the amount of advance tax payable on his current income, the assessee is chargeable to interest under section 234B or section 234C and the Chief Commissioner or Director-General is satisfied that this is a fit case for reduction or waiver of such interest. ( e )Where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the Assessing Officer. 3. The Chief Commissioner of Income-tax/Director-General of Income-tax may order the waiver or reduction of interest under sections 234A, 234B and 234C under this order with reference to the assessment year 1989-90 or any subsequent assessment year but shall not so reduce or waive penal interest in those cases where waiver or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on which advance tax was paid by the taxpayer after the receipt of such income; ( iv )where, as a result of any retrospective amendment of law or the decision of the Supreme Court after the end of the relevant previous year, certain receipts which were hitherto treated as exempt, become taxable. Since no advance tax would normally be paid in respect of such receipts during the relevant financial year, penal interest is levied for the default in payment of advance tax; ( v )where return of income is filed voluntarily without detection by the Income-tax Department and due to circumstances beyond control of the taxpayer such return of income was not filed within the stipulated time-limit or advance tax was not paid at the relevant time. 3. The Chief Commissioners and Directors-General are being authorised to reduce or waive penal interest under sections 234A, 234B and 234C with reference to assessment year 1989-90 and any subsequent assessment year subject to certain specified conditions. This is a major step taken by the Central Board of Direct Taxes to mitigate the hardships in deserving cases. Press Note : Dated 21- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass outcomes of judicial and quasi judicial proceedings. This is all the more so because, clause 2(d) deals with arising of liability on account of a subsequent decision of the Hon'ble Supreme Court. If adverse judicial or quasi judicial decisions are to furnish a cause for seeking waiver of interest, it would have been expressly stated in clause 2(e) as in clause 2(d). When a person embarks on the journey of litigation, one should always be prepared for an adverse verdict. Therefore, there is nothing unforeseeable about the outcome of judicial or quasi judicial proceeding. 14.As the preambular paragraph of the notification dated 23.05.1996 states, reduction or waiver of penal interest charged under Sections 234 A, 234 B and 234 C of the Act can be made only in the classes of cases or classes of income tax specified in paragraph 2 of the order. In other words, unless the case of the assessee can be brought within one of the five clauses, there can be no scope for claiming reduction or waiver. It is not the case of the petitioner that his case will fall under clause 2 (a) or (b) or (c) or (d) of the notification. His case will have to fall only within clause 2(e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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