TMI Blog2020 (2) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... not factored a situation like the present case where an assessee is legally incapacitated from making any payments as it was ordered to be wound up. It was under a legal disability. Though the notification has not considered the above situation petitioner is entitled for a partial relief for the above reason dehors the above notification. The date of winding up dates back to the date of petition and during the aforesaid period, there was a legal disability to pay the tax by the company as the official liquidator obtained leave of the company court under the Companies Act, 1956. Since the 1st respondent has no power to grant waiver of interest in the light of the specific instruction of the Central Board Of Direct Taxes, the Court in the exercise of its power under Article 226 of the Constitution of India can order waiver applying the legal principles applicable in the case of winding up of a company, The effect of an order of winding up is to put the company into the hands of the official liquidator for completing the process of liquidating it. Till an order of the Court for distribution of the company s assets is obtained and assets are distributed, the properties of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase for granting partial relief to the petitioner. There should be a waiver of interest under Section 234A, Section 234B and Section 234C of the Income Tax Act, 1961 for the period between 18.06.2001 and 27.10.2006 alone. Remit the case back to the 2nd respondent to compute the interest payable by the petitioner from the due date upto 18.06.2001 and for the period commencing from 27.10.2006 upto the actual date of payment under the aforesaid provision of the Income Tax Act, 1961. While computing the interest payable by the petitioner, the 2nd respondent shall exclude the period between 18.06.2001 and 27.10.2006. 2nd respondent shall compute the interest and communicate to the petitioner for the aforesaid period within a period of 30 days from date of receipt of a copy of this order. Petitioner shall pay the amount determined by the 2nd respondent within 15 days thereafter. In case, there is a failure on the part of the petitioner to pay an amount within the aforesaid period, the relief granted to the petitioner herein shall come to an end sine die and the impugned order shall stand revived. - W.P.No.12500 of 2010 And M.P.No.1 of 2010 - - - Dated:- 10-2-2020 - Mr. Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner. 6. For the Assessment Year 1997-98, the petitioner had filed the returns on 01.12.1997. The assessment was completed on 31.03.1999. Thereafter, on 26.03.2002 based on best judgment method the petitioner was assessed to a total income of ₹ 3,27,34,870/- and was required to pay a tax of ₹ 1,00,90,165/. Petitioner was also called upon to pay interest under Section 234A and 234B of the Income Tax Act, 1961 for an amount of ₹ 21,69,372/- and ₹ 52,97,303/- respectively. 7. It is the contention of the petitioner that the petitioner company was engaged in business of sale of motor vehicles and also operated as a Non-Banking Financial Company (NBFC) and it had encountered difficulties in servicing the deposits to its depositors as a result of which it faced several hardships including arrest of its Managing Director T. Arunachalam. All the other directors and principal and responsible officers of the petitioner company had resigned, as a result of which the interest of the company could not be protected. The official liquidator also failed to protect the petitioner. 8. The petitioner has accepted the tax liability but prayed for waiver of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R.Mani Vs. The Chief Commissioner of Income Tax, Tiruchirapalli , 2017 SCC OnLine Mad 15884, wherein it was held that the circular issued by the Board empowering the Chief Commissioner to consider the waiver petition for waiver of interest under Section 234A as well as 234B would show that even if these provisions are compensatory in nature and are covered by Section 234B, special orders for grant of relaxation could be passed. 14. Per contra, the learned Standing Counsel for the respondent submitted that the issue is squarely covered against the petitioner by decisions of the Division Bench of this court rendered in Chief Commissioner of Income-tax, Chennai-34 Vs. Rajanikant Sons , dated 06.06.2017 in W.A.Nos.2020 to 2024 of 2010 and in Tushin T.Mehta Vs. The Chief Commissioner of Income Tax , dated 14.08.2019 passed by this Court in W.P.No.15097 of 2007 and therefore the impugned order cannot be assailed. 15. In Chief Commissioner of Income-tax, Chennai-34 Vs. Rajanikant Sons ( supra ), while dealing with Circular dated 26.06.2006, the Court held that what emanates upon perusal of the Circular is that, unless the Assessee s case falls under the circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be attributed to the assessee. ( b ) Any income chargeable to income-tax under any head of income, other than Capital gains is received or accrued after due date of payment of the first or subsequent instalments of advance tax which was neither anticipated nor was in the contemplation of the assessee, and the advance tax on such income is paid in the remaining instalment or instalments, and the Chief Commissioner/Director General is satisfied on the facts and circumstances of the case that this is a fit case for reduction or waiver of the interest chargeable under section 234C of the Income-tax Act. ( c ) Where any income was not chargeable to income-tax in the case of an assessee on the basis of any order passed by the High Court within whose jurisdiction he is assessable to income-tax, and as result, he did not pay income-tax in relation to such income in any previous year, and subsequently, in consequence of any retrospective amendment of law or the decision of the Supreme Court of India, or as the case may be, a decision of a Larger Bench of the jurisdictional High Court (which was not challenged before the Supreme Court and has become final), in any assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company. The company under liquidation continues to exist as a juristic personality only till an order under Section 481 of the Companies Act, 1956 is passed for its eventual dissolution. 24. It is only thereafter, the company ceases to exist in the eye of law. Thus, during the period in dispute between 18.06.2001 and 27.10.2006, the petitioner company by itself was under a disability and could not discharge any liability without the permission of the court. In this case no attempt was made for recovery of tax from the petitioner company by the Income Tax Authorities by obtaining suitable orders of this court nor the official liquidator took any steps in that direction. 25. It should also be borne in mind that the petitioner had filed income tax return in time which also culminated in separate assessment orders of the assessing officers on 16.03.1998, 25.03.1999 and 31.03.1999 respectively for the respective Assessment Years. 26. During this period, the petitioner company was facing a threat of being wound up apart from threat of arrest of its directors. The petitioner has also demonstrated that there was an en mass resignation by the directors of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to transfer the accounts of the company and relevant books to the Sponsors to enable the latter to settle the claims of the creditors immediately. 33. Thus, the Official Liquidator was discharged of his responsibilities only thereafter. The said order was followed by a final order dated 13.11.2007 in C.P.No.146 of 2006, wherein the promoters and directors of the petitioner company were also discharged from all pending proceedings. Since the petitioner company was being wound up, there cannot be any levy of interest under the provisions of the Income Tax Act, 1961 as it suffered a legal disability to pay the tax. 34. As the petitioner was under a legal disability during the period between 18.06.2001 and 27.10.2006, during the subsistence of winding up order and since the petitioner company was under the control of this court and the official liquidator, I am of the view, this is a fit case for granting partial relief to the petitioner. 35. Under these circumstances, I am of the view that there should be a waiver of interest under Section 234A, Section 234B and Section 234C of the Income Tax Act, 1961 for the period between 18.06.2001 and 27.10.2006 alone. 36. I t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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