TMI Blog2009 (9) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. R. Krishnamurthy Senior Counsel for the respondent. JUDGMENT The petitioner has filed the above writ petition for issuance of a Writ of Certiorarified Mandamus to quash the order of the respondent dated 06.03.2006 and for a consequential direction to allow the petition for waiver of interest filed by the petitioner on 18.07.2005. 2. The petitioner, an income tax assessee, is engaged in the business of collecting entrance fees from the markets controlled by the Melur Municipality, Madurai District. He is also a civil contractor and a real estate agent and also carrying on agricultural operations. A search was conducted by the Income Tax department on 05.03.1997 in the business premises of the petitioner. Consequent upon search and seizure operation a notice under Section 158 BC of the Income Tax Act (in short, Act) was issued on 31.03.1997, requiring the petitioner to prepare a true and correct return of his total income including the undisclosed income in respect of which he is assessable for the block period commencing from 01.04.1986 ending 05.03.1997. The petitioner on 08.03.1999 furnished the return of income in Form 2B. After affording an opportunity of hearing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, it is stated by the petitioner that the genuine hardship of the assessee was not taken into consideration and that the default in payment of tax, on which the interest has been levied, was due to the circumstances beyond the control of the assessee and further the conduct of the petitioner in cooperating with the enquiry relating to the assessment, were all relevant factors which ought to have been considered by the respondent. Further, the petitioner would contend that the impugned order is devoid of reasons and on that ground also the impugned order is liable to be set aside. 6. The learned counsel placed reliance on the Judgment of the Honourable Supreme Court in Union Co Operative Bank, Calcutta v. Commissioner of income tax, West Bengal reported in 1999 (4) SCC 599, wherein the Honourable Supreme Court while considering the scope of a circular issued by the Central Board of Direct taxes held in paragraph 9 as follows; " What is the status of these circulars? Section 119(1) of the income-tax Act, 1961 provides that, "The Central Board of Direct Taxes may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the petitioner submitted that the circular issued by the Central Board of Direct Taxes is binding on the department and the petitioner is entitled to the relief. 7. The petitioner placed reliance on the judgment of the Honurable Supreme Court reported in 2001 (8) Supreme 145 ( Commissioner of Income Tax, Mumbai v. Anjum M. H. Ghaswala ), wherein, the Honourable Supreme Court held in paragraph 34 as hereunder; "Learned Solicitor General has pointed out that by virtue of the power vested in the board under Section 119(2)(a) of the Act, the board has issued circulars by notification no.F.400/234/95-IT(B) dated 23.5.1996. As per this circular, it has empowered that the chief commissioner of income tax and director general of income-tax may waive or reduce interest charged under Sections 234A, 234B and 234C of the Act in the class of cases or class of incomes specified in paragraph 2 of the said order for the period and on conditions which are enumerated therein. He submitted that in view of the said circular, the same authority can be exercised by the Commission since the said circular would amount to relaxation of the rigor of sections 234A, 234B and 234C of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orce of the voluntary disclosure scheme and long before the Department could initiate any action in respect of the concealed income. The levy of penalty under Section 271(1© by itself will not be a circumstance to take him out of the purview of Section 271(4-A) of the Act. 9. The learned counsel by placing reliance on the judgment of the Honourable Division Bench of this Court in M.Ganesan v. The Vice-Chairman, The Settlement Commission (IT WT) Additional Bench Chennai Another reported in CDJ 2007 MHC 1515, wherein the Division Bench held in paragraph 7 as follows; "The perusal of the Board's order dated 23.5.1996 lists out the circumstances under which a reduction or WAIVER OF INTEREST under Section 234-A, 234-B or 234-C can be considered. Given this power of waiver and the circumstances under which it could be considered, the authority before whom a petition is made, is bound to consider the circumstances warranting a rejection or a reduction. Devoid of reasons indicated for reduction, it is difficult to uphold the order of the first respondent. The first respondent had given the waiver of 50% as regards the interest chargeable under Sections 139(8), 215 and 217 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ petition. It is suffice to say that the first respondent shall consider the circumstances under which the petitioner was unable to pay the tax earlier and also the justification of his seeking for waiver and refund of the interest amount paid. The petitioner also shall be given an opportunity by the first respondent to put forth any additional points in his favour. The first respondent shall consider the representation of the petitioner and also any additional representation made by him and pass an appropriate order within a period of four weeks from the date of receipt of a copy of this order." 12. The petitioner also placed reliance on the decision of the Honourable Supreme Court reported in (2008) 10 SCC 617 ( B. M. Malani v. Commissioner of Income Tax Another ), thereunder the Honourable Supreme Court was considering the validity of an order passed by the Commissioner of Income Tax rejecting the application of waiver under Section 220(2A), wherein the Honourable Supreme Court in paragraph 8 held as hereunder; "8....... However, another principle should also be borne in mind, namely, that a statutory authority must act within the four corners of the statute. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the petitioner made a representation on 09.09.2004 praying for stay of collection of tax till the disposal of the second appeal, which was rejected on 02.11.2004. Again on a representation made by the petitioner, the entire tax arrears including interest under Section 220(2) was directed to be paid from 16.11.2004 in five monthly installments and the petitioner defaulted in the said installment payment and sale proceedings were initiated. Thereafter, the petitioner again file a stay petition to the Chief Commissioner of Income Tax on 15.03.2005 and the Chief Commissioner of Income Tax by proceedings dated 21.03.2005 stayed the collection subject to the condition that the petitioner has to pay Rs.1,00,000/- on or before 28.03.2005. Therefore, the learned Senior Standing Counsel for the department would submit that the petitioner failed to honour the opportunity given at different point of time and there has been a total non cooperation in the recovery proceedings, which is one of the conditions which are required to fulfill under Section 220(2A) and therefore, the petitioner is not entitled for any further indulgence. 16. Regarding the circular relied on by the petitioner, iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). It is to be kept in mind that for claiming reduction or waiver under section 220(2A), the assessee has to satisfy all the three conditions cumulatively. In other words, he has to not only to show that the payment of the amount has caused or would cause genuine hardship to him but also that the default in payment of the amount on which interest has been paid or was payable under section 220(2) was due to circumstances beyond his control and further that he had co-opearted in the enquiry relating to the assessment or any proceeding for recovery of any amount due from him [see, Metalurgical Engineering Consultants (India) Ltd. v. CIT , (1999) 103 Taxman 542, 546 (Pat)]. 21. Section 220(2A) of the Act provides three conditions and for the interest to be waived, all the three conditions are to be satisfied. First of such condition being that payment of said amount would cause genuine hardship to the assessee. Lack of hardship or failure to establish financial difficulties, have been held not to be causes of genuine hardship and therefore not eligible for waiver. The second condition to be fulfilled is that the default in payment of tax is due to circumstances beyond the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rala 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 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. The learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner. 33. The Honourable Supreme Court in S.N. Mukkerjee v. Union of India reported in AIR 1990 SC 1984 has observed as follows; "In view of the expanding horizon of the principles of natural justice, the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by administrative authorities. The rules of natural justice are not embodied rules. The extent of their application depends upon the particular statutory framework whereunder jurisdiction has been conferred on the administrative authority. With regard to the exercise of a particular power by an administrative authority including exercise of judicial or quasi-judicial functions the legislature, while conferring the said power, may feel that it would not be in the larger public interest that the reasons for the order passed by the administrative authority be recorded in the order and be communicated to the aggrieved party and it may dispense with such a requirement. It may do so by making an express provision to that effect. Such an exclusion can also arise by necessary implication from the nature of the subject matter, the scheme and the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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