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TMI Blog2018 (11) TMI 1754X X X X Extracts X X X X X X X X Extracts X X X X ..... The said common application made by the petitioner seeking such waiver had been considered and rejected by the respondent/Revenue, through the impugned order dated 12.08.2003. Challenging the said rejection order of the waiver application of the petitioner/assessee, these two writ petitions were filed for the aforesaid relief for the Assessment Years 1996-97 and 1997-98 respectively. 3. Heard Mr. M.P. Senthil Kumar, the learned counsel appearing for the assessee, who would submit that, the assessee had been regularly paying the taxes by way of advance tax and TDS and the demand made by the Revenue for the two Assessment Years is due under sections 234-A, 234-B, 234-C and under section 143(1)(a) adjustment only. The adjustment made under section 143(1)(a) has already been subject to 20% additional tax. Therefore, the tax due portion was very low, hence, levying further interest under section 220 was only an interest on interest and also as an additional due. Therefore, on these reasons and for further reasons of genuine hardship that the assessee faced in making the payment of the interest due as demanded by the Revenue, such waiver application was made by the assessee by invoking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned is vitiated. 10. By making these submissions and in support of his contentions, the learned counsel for the petitioner/assessee has relied upon the following decisions: (i) B.M. Malani v. CIT 306 ITR 196, Supreme Court of India, equivalent. (ii) Mani v. CIT [320 ITR 472 Court of Madras Madurai Bench equivalent to. (iii) Poompuhar Shipping Corpn. Ltd. v. Asstt. CIT [2017] 88 taxmann.com 218 (Mad.). 11. By relying upon these decisions, Mr.M.P.Senthil Kumar, learned counsel appearing for the assessee would contend that, the situation exactly faced by the assessee during the relevant point of time, while he was making the request for waiver under section 220(2-A) of the Act was a genuine hardship faced by the assessee and therefore, if the principles enunciated in the aforementioned cases were applied on the facts of the petitioner/assessee's case, certainly, the decision taken now by the Revenue as reflected in the impugned order, could not have been taken. Therefore, the learned counsel would submit that, the impugned order is liable to be interfered with for the above said reasons. 12. Per contra, Mr. A.P. Srinivas, the learned standing counsel appearing for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts and the cash availability, etc. 16. The respondent in the impugned order of rejection, has also taken into account the balance sheet of the assessee, which was already available with the Revenue, based on which, the respondent has come to a right conclusion that the assessee was having immovable property of building and machineries, which are several times worth than the actual due payable by the assessee. 17. He would further submit that, therefore only in that circumstances, the financial hardship projected by the assessee through its application, since was not substantiated by any other evidences to come to a conclusion that, really the assessee had been facing genuine hardship and the non payment of the due was because of the reason, which was beyond the control of the assessee, the Revenue has come to a right conclusion that the assessee was not entitled to seek the waiver within the meaning of section 220(2A) of the Act. 18. In support of his contentions, the learned standing counsel has relied upon the following decisions: 1. Benara Valves Ltd. v. Commissioner of Central Excise 2006 (204) ELT 513 (SC). 2. K.C. Mohanan v. Chief CIT 350 ITR 461 (Ker.). 3. Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid or was payable under the said sub-section was due to circumstances beyond the control of the assessee; and (iii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him: Provided that the order accepting or rejecting the application of the assessee, either in full or in part, shall be passed within a period of twelve months from the end of the month in which the application is received: Provided further that no order rejecting the application, either in full or in part, shall be passed unless the assessee has been given an opportunity of being heard: Provided also that where any application is pending as on the 1st day of June, 2016, the order shall be passed on or before the 31st day of May, 2017". 22. On going through the aforesaid provision i.e., sub-section 2A of section 220, it suggests that, the principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner is vested with the power to reduce or waive the amount of interest paid or payable by the assessee under sub-section (2), provided, for seeking such waiver, the assessee must satisfy thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the condition Nos.1 and 2 had not been satisfied by the assessee and therefore he was not entitled to seek for waiver under section 220(2A). 26. In this context, as projected by the learned counsel appearing for both sides, the decisions cited by them, regarding the aspect of genuine hardship and also regarding the aspect of the manner under which the Revenue has to consider the waiver application and the order to be passed in the waiver application to contain all the reasons, have to be ascertained. The learned counsel for the assessee as well as the Revenue relied upon B.M. Malani case cited supra, where, the Hon'ble Supreme Court has given a detailed findings about the three conditions imposed under 220(2A) and also the term "genuine hardship". The following findings given by their Lordships can be usefully referred to herein: "5. Section 220(2A) of the Act contains a non-obstante clause. It confers a jurisdiction upon the Chief Commissioner or Commissioner to reduce or waive the amount of interest paid or payable by an assessee thereunder, if he is satisfied that: (i) Payment of such amount has caused or would cause genuine hardship to the assessee; (ii) Default i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take advantage of his own wrong, may also have to be borne in mind. The said principle, it is conceded, has not been applied by the courts below in this case, but we may take note of a few precedents operating in the field to highlight the aforementioned proposition of law. [See Priyanka Overseas Pvt. Ltd. & Anr. v. Union of India & oRs. 1991 Suppl. (1) SCC 102, para 39, Union of India & ors. v. Major General Madan Lal Yadav (Retd.) (1996) 4 SCC 127 at 142, paras 28 and 29, Ashok Kapil v. Sana Ullah (dead) & ors. (1996) 6 SCC 342 at 345, para 7, Sushil Kumar v. Rakesh Kumar (2003) 8 SCC 673 at 692, para 65, first sentence, Kusheshwar Prasad Singh v. State of Bihar & ors. (2007) 11 scc 447, paras 13, 14 and 16). Thus, the said principle, in our opinion, should be applied even in a case of this nature. A statutory authority despite receipt of such a request could have kept mum. It should have taken some action. It should have responded to the prayer of the appellant. However, another principle should also be borne in mind, namely, that a statutory authority must act within the four corners of the statute. Indisputably, the Commissioner has the discretion not to accede to the req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement of affording an opportunity of being heard can be assumed, particularly when the proceedings are quasi-judicial. 26. A Division Bench of this Court in Auro Food Limited, Pondicherry v. The Commissioner of Income Tax, Tamil Nadu reported in 2005 1 MLJ 79 was considering the aspect as regards the manner in which the power to be exercised under section 220(2A) of the Act. By placing reliance of the decision of the Kerala High Court (referred supra), the Honourable Division Bench held that when ever an application is filed seeking waiver of interest, it is incumbent on the part of the quasi-judicial authority to record reasons in his order. While reiterating such principles, the Honourable Division Bench of this Court in the cases of Kanchipuram Silk Handloom Weavers' Co-Operative Marketing Society Limited and M. Ganesan's case (referred supra), had directed the matter tobe considered afresh since reasons have not been recorded. 27. The legal position as regards the scope and power under section 220(2A) having been analayased as above, if the impugned order is perused, it reveals that the respondent after narrating the facts of the matter, has stated that a perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing counsel appearing for the respondent/Revenue, apart from citing the decision in B.M. Malani's case (supra), had also cited three other decisions referred to above. The judgment in Benara Valves Ltd., cited supra has been referred to by the learned standing counsel, where the following passages are relied upon: 'Two significant expressions used in the provisions are "undue hardship to such person" and "safeguard the interests of Revenue". Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view. As noted above there are two important expressions in section 35(F). One is undue hardship. This is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about undue hardship would not be sufficient. It was noted by this Court in S. Vasudeva v. State of Karnataka and Ors. (AIR 1994 SC 923) that under Indian conditions expression "Undue hardship" is normally related to economic hardship. "Undue" which means something which is not merited by the conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zation of money from the property, it cannot be said to be a genuine hardship as sought to be canvassed. On the contrary, the quantum of amount of Rs. 45,11,093/- is a tip in the iceburg in comparison to huge value of 12 properties belonging to the assessee. If the person has the capacity to pay, may be by out of his movable or immovable properties and inspite of that the ground is contended as of hardship, same cannot be termed as genuine hardship. If such hardship is treated as genuine hardship, it would defeat the purpose of consideration of the genuine hardship." 30. Yet another judgment of the Kerala High Court relied upon by the learned standing counsel is K.C. Mohanan's case (supra), where the following passages were relied upon: "5. In so far as this case is concerned, reading of the impugned order shows that the first respondent has specifically found that this is not a case where the assessee had established that payment of interest would cause genuine hardship to him. This conclusion is on the basis that the assessee is a partner in two firms doing business in liquor and also in a firm running a theatre. It is also found that asseessee has substantial agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the context, after having analysed the said plea made by the assessee, the respondent has found, based on the balance sheet of the assessee, that the assessee was having a building worth Rs. 18 lakhs and machineries worth Rs. 45 lakhs. From the said finding, it become clear that, apart from these immovable properties of building and machineries, which are the basic immovable/movable properties to run the industry or business of the assessee, no other source had been found out by the Revenue. 35. However, the said findings given by the Revenue was fully supported by Mr. A.P. Srinivas, learned standing counsel appearing for the Revenue by citing the decision of Mookambika Associates. In Mookambika's Associates (supra) case, it was factually found that, the assessee was having huge immovable properties totally 12 in numbers in the peripheral area of Bangalore City and the total demand was only rupees Rs. 45,11,093/- which, according to the learned Judges, was only a tip in a iceberg, in comparison to the huge value of assets belonging to the assessee. 36. Only in that context, the learned Judges had come to the conclusion that, the hardship projected by the assessee in that ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial in nature. 42. Relying upon these decisions, the learned counsel appearing for the assessee, would vehemently contend that, even though the statute does not expressly provide for any opportunity of being heard to the assessee before passing the order in a waiver petition under section 220(2A), impliedly, such a principle has to be adopted and such an opportunity of being heard should have been given to the assessee. Here, in the case in hand, since no such opportunity was given to the assessee, invoking the said principle underlined in Corborundum Universal Ltd., the impugned order can be interfered with. 43. However, Mr. A.P. Srinivas, the standing counsel appearing for the respondent, by relying upon the entire judgment of the Corborundum Universal Ltd. (supra), case, would submit that, no doubt, even though the statute does not expressive in providing for an opportunity of being heard, if the proceeding is quasi judicial in nature, such an opportunity of being heard can be assumed as a settled proposition. However, in respect of the said settled general proposition, section 220(2A) proceeding is an exception and this has also been considered by the Hon'ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee, had to be abandoned and that will go to a very financial viability of the assessee and therefore the said deposit cannot be construed as a resource or source to be exploited for the purpose of making the demand. Therefore, on that reason, the rejection made by the Revenue was not justified and accordingly an interference was shown by the learned judge. 47. By citing the said decision, the learned counsel for the assessee, would vehemently contend that, here in the case in hand, it has been specifically found by the respondent that, except the land and machineries, no property is available with the assessee. No liquid cash or deposit or share capital or debenture are found in the name of the assessee, even according to the respondent, after having gone through the balance sheet. When that being so, by citing the reason, that the assessee is having land and machineries, his plea of genuine hardship can be rejected should not have been taken by the Revenue. 48. Applying the aforesaid principle mentioned in the said case, namely, Poompuhar Shipping Corpn. Ltd. (supra), case, and also the principle in general that, the genuine hardship in Indian condition is nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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