TMI Blog2018 (11) TMI 1754X X X X Extracts X X X X X X X X Extracts X X X X ..... or from the assessee. No doubt, the issue with regard to the chance of personal hearing is not decided in this case for the reason set out above, at least, the additional particulars could have been called for by the Revenue. No such exercise seems to have been taken by the Revenue and without making such exercise, this Court is at loss to understand, as to how the Revenue has come to the conclusion that the assessee was not able to establish the case of genuine hardship cogently and clearly with reference to their books of accounts and cash availability. This Court is of the considered view that, the respondent, being a quasi judicial authority, while exercising its power of discretion vest in them u/s 220(2A) of the Act, has not acted judiciously with cogent and plausible reasons with supporting materials. Therefore, this Court has no hesitation to hold that, the impugned order is not sustainable, accordingly, it is liable to be interfered with. While making such re-consideration, it is open to the respondent to seek for further materials/documents from the assessee and once such demand is made to the assessee for producing additional documents in support of his case to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faced in making the payment of the interest due as demanded by the Revenue, such waiver application was made by the assessee by invoking section 226 (2A) of the Act. 4. In this context, the learned counsel appearing for the assessee would submit that, when the genuine hardship had been projected before the respondent/Revenue, through the said application made in this regard, the said hardship was not considered by the respondent/Revenue in proper perspective. 5. He would further submit that, the three conditions referred to under section 220(2A) were satisfied by the assessee and inspite of the fact that, all the three conditions had been satisfied, the respondent had rejected the waiver request without giving any acceptable reason for making such rejection. 6. The learned counsel appearing for the assessee would further submit that, since the order to be passed under 220 (2A) is a quasi judicial order, the respondent, while making the order rejecting the request of the assessee, should have applied his mind judicially and acceptable reasons should have been given as to how and why the assessee is not entitled to seek for the waiver. 7. The learned counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 respondent/Revenue, would submit that, the assessee had not even paid section 140-A tax for both the assessment years, for which the waiver was sought for. Moreover, the demand made was the interest payable by the assessee under section 234A, B and C and therefore, it cannot be construed as interest on interest, as the interest component under section 234-A,B and C shall only be construed as tax component. Therefore, the said reasons cited in the application submitted by the assessee cannot be accepted. 13. Learned Standing counsel would further submit that, in the application dated 31.01.2003, the assessee has mentioned that the assessee company had been incurring loss for the past 4 years, therefore, they were undergoing financial crisis and the assessee could not get any funds due to lack of business even to meet the day to day expenses, hence the assessee was to be considered as if it was facing genuine hardship in making the payment of interest as demanded. Except this reasoning, nothing has been stated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Mookambika Associates v. Asstt. CIT 2017] 391 ITR 26 (Kar.). 4. Division Bench Judgment of this Court Chief CIT v. Rajanikant Sons 396 ITR 171 (Mad.). By relying upon the decisions referred to above, the learned standing counsel would contend that, the genuine hardship theory has already been considered in number of cases and also the demand of personal hearing before making a decision under section 220(2A) of the Act had already been decided. If the principles enunciated in the aforesaid decisions are applied to the facts of the present case, certainly, the order, which is impugned herein, can be construed as an order of a quasi judicial authority passed after judicious consideration made in this regard based on the available materials. Therefore, such a discretionary order, without any plausible reason, cannot be interfered with, as no acceptable reasons have been projected by the assessee's side to assail the impugned order. Hence, the learned standing counsel would submit that, the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 three conditions. In short, the first condition is that, the assessee must have genuine hardship, the second condition would be that the non payment was due to the circumstances beyond the control of the assessee and the third and final condition is that the Revenue must have the satisfaction that the assessee has cooperated in an enquiry relating to the assessment or any proceeding for the recovery of any amount due from him. 23. Therefore, when the officer concerned, who has been vested with the power under sub-section 2A as referred to above, has to consider the waiver application by satisfying that the three conditions imposed in the sub section are satisfied by the assessee. Here, on a perusal of the impugned order, it is found that, only for non satisfaction of condition No. 1 and 2, the waiver application has been rejected. The Revenue/respondent did not say anything about the alleged non satisfaction of the third condition, namely, the cooperation of the assessee with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner 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 in the payment of amount on which interest has been paid or was payable under the said sub-section was due to circumstances beyond the control of the assessee; and (iii) Assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him. 6. The submission of Mr. Verma is that non encashment of demand draft worth ₹ 10 lakhs as also non- selling of the shares and securities as prayed for by the appellant caused genuine hardship to the assessee, in support whereof reliance has been placed on the New Collins Concise English Dictionary, Words and Phrases Permanent Edition Vol. 18 and Black's Law Dictionary. It was furthermore submitted that had the shares and securities been sold when the request therefor was made, which was worth ₹ 30 lakhs at the relevant time, the tax burden of the appellant would have been reduced; particularly when after adjusting the amount of ₹ 117.04 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 request of the assessee, but that discretion must be judiciously exercised. He has to arrive at a satisfaction that the three conditions laid down therein have been fulfilled before passing an order waiving interest. Compulsion to pay any unjust dues per se would cause hardship. But a question, however, would further arise as to whether the default in payment of the amount was due to circumstances beyond the control of the assessee. 27. The learned counsel appearing for the assessee heavily relied upon the judgment in Mani cited supra, where he relied upon the following paragraphs, which are extracted.- 22. This Court in P. Ramasamy v. Commissioner of Income Tax reported in 1999 (237) ITR held that pursuit of remedies available to the assessees under the Act cannot be construed as non co-operation with the department, unless the pursuit has been of a cantankerous nature, obstructive or evasive. 23. The Honurable Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 of the records and in particular the tax recovery officers report dated 27.07.2005 shows that the assessee has not honoured the installment payment provided by the Joint Commissioner of Income Tax, the assessee has not co-operated in the payment of installment granted and thus one of the conditions stipulated in clause (iii) of 220(2A) has not been fulfilled. Therefore, waiver application is rejected. 28.. to 33 .. 34. Thus, in terms of the law laid down in the judgments referred supra, the respondent is bound to consider the petition, as to whether the petitioner fulfilled all the three conditions laid down under section 220(2A) and record reasons as to how the petitioner is not entitled to the waiver of penal interest. The impugned order does not satisfy the tests laid down by the Hon'ble Supreme Court and this Court, as referred supra and therefore, the impugned order deserves interference. For the forgoing reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances. For a hardship to be 'undue' it must be shown that the particular burden to have to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it. The word undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant.' 29. The next judgment relied upon by the learned standing counsel for Revenue is Mookambika Associates case cited supra, where the following passages are relied upon: 6. The relevant material considered by the authority is that there is no proof produced to show that the payment of interest would cause genuine hardship to the assessee. The matter rests on the aspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee 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 income and that he owns 5.22 acres of coconut garden and 1.10 acres of cashew plantation. These facts found by the first respondent in Ext.P9 order are not even contended to be incorrect. If that be so, on the materials available before this court, I am unable to infer that the payment of interest by the assessee would cause any genuine hardship justifying invocation of power under section 220 (2A) of the Act. Consequently, Ext.P9 order challenged in W.P.(C) No. 14634/08 has to be upheld. 6. This view taken by me is fortified by the fact that levy of interest under section 220 (2) is for delay in payment of tax for the periods subsequent to completion of assessment. One of the contention raised by the assessee that non-payment was due to circumstances beyond his control is that the assessment was necessitated on account of addition of taxable income of the firm of which he is a partner. This reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand was only rupees ₹ 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 case, cannot be construed as a genuine hardship and therefore, the assessee did not fulfill the condition under section 220(2A), therefore, the rejection of the waiver application was justified in that case. 37. However, here in the case in hand, it is the finding of the respondent that, except the land and machineries, no other immovable property had been shown in the account of the assessee. Therefore, the said decision referred to by the learned standing counsel on facts, cannot be made applicable to the present facts of the case. 38. The learned standing counsel would also heavily rely upon the decision made in, K.C. Mohanan case (supra). In that case also, it was a factual finding that, the assessee, apart from being the owner and partner of the business for which the assessment was made, has also been a partner in two firms, which were doing business in liquor and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Court in Corborundum Universal Ltd. (supra), case and accordingly based on the peculiar facts of that case in Corborundum Universal Ltd. (supra), it was decided in favour of the petitioner/assessee and therefore, the said principle made in Corborundum Universal Ltd., in fact, is against the assessee and in favour of the Revenue. Therefore, taking the clue from the Corborundum Universal Ltd. (supra), case, the assessee cannot make out a case stating that an opportunity of being heard should have been given to the assessee before taking the decision under 220(2A). 44. Insofar as the said plea of opportunity of being heard is concerned, as has been rightly pointed out by the standing counsel for Revenue, the plea has never been raised by the assessee and in fact, there had been no written request in this respect made by the assessee seeking for such personal hearing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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 but the financial hardship as held by the Apex Court as cited above, the present reason cited by the Revenue in the impugned order, in the considered view of this court, cannot be considered to be a worthy reason for rejecting the plea made by the assessee for waiver. 49. Since the assessee already complied with the third condition and in respect of the 1 and 2 conditions, which are coupled with each other, regarding the genuine hardship, to some extent the assessee was able to demonstrate the reasoning, it should have been considered in proper perspective by the Revenue. 50. In this context, if at all, any further supporting document or materials required by the Revenue, that could have been called for from the assessee. No doubt, the issue with regard to the chance of personal hearing is not decided in this case for the reason set out above, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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