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TMI Blog1962 (1) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer, Madura, issued notices under section 18A(1) of the Indian Income-tax Act for payment of advance tax on the basis of the preceding year's income. It was open to the assessee to submit a revised estimate of his income under section 18A(2) in respect of the year in question and Ramaswami Iyer--who was at the material time the manager--availed himself of the option to submit a revised estimate and estimated the income for each of the assessment years 1946-47 and 1948-49 at Rs. 45,000. The assessments of these two years were completed respectively on November 28, 1950, and February 29, 1951, and the income received from the Madura Knitting Company was included in the assessments under section 23(5). The Income-tax Officer assessed the total income of the Hindu undivided family for the year 1946-47 at Rs. 1,01,335 and for the year 1948-49 at Rs. 3,10,697. As the total income assessed far exceeded the estimate of Rs. 45,000, submitted by the manager of the assessee family, the Income-tax Officer in making the assessment ordered the respondent to pay Rs. 6,999-12-0 and Rs. 36,687 respectively for the assessment years 1946-47 and 1948-49 as interest. In appeals against the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the Madras High Court held that the provision imposing liability to pay interest under sub-section (6) of section 18A was not opposed to law and could be enforced against the legal representative of the deceased manager, who was a partner of the assessee firm. The High Court, however, was of the view that as the Income-tax Officer and the Inspecting Assistant Commissioner had failed to consider whether, in the circumstances of the case, the reduction or waiver of the interest was justified, it be ordered that the Income-tax Officer do decide whether the petitioner had made out a case for the exercise of the discretion vested in the Income-tax Officer to waive or reduce the interest under the powers conferred on him by the 5th proviso of clause (6) of section 18A. Against that order with certifirates of fitness these appeals are preferred by the Commissioner of Income-tax. Section 18A which imposes liability upon the taxpayer to make advance payment of tax was incorporated into the Indian Income-tax Act by Act 11 of 1944. That section enables the Income-tax Officer on or after the 1st day of April in any financial year, by order in writing, to require an assessee to pay to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the submission of the return, the delay in assessment not being attributable to the assessee. (2) Where a person is under section 43 deemed to be an agent of another person and is assessed upont he latter's income. (3) Where the assessee has income from an unregistered firm to which the provisions of clause (b) of sub-section (5) of section 23 are applied. (4) Where the 'previous year' is the financial year or any year ending near about the close of the financial year and large profits are made after the 15th of March in circumstances which could not be foreseen. (5) Any case in which the Inspecting Assistant Commissioner considers that the circumstances are such that a reduction or waiver of the interest payable under section 18A(6) is justified." The effect of the incorporation of the 5th proviso in section 18A(6) and of rule 48 was manifestly to authorise the Income-tax Officer in exercise of his discretion to relieve against the rigour of the inflexible rule originally enacted in clause (6) about payment of interest by the assessee when the tax paid by him on his estimate fell below 80% of the tax payable on regular assessment. The only question which falls to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. The question which falls to be determined is whether in an assessment subject to an appeal which is pending, or which may be lawfully filed, the power to reduce or waive the interest can be exercised. There is, in our judgment, inherent evidence in the rule indicating that such a power can be exercised even if the regular assessment is completed by the Income-tax Officer before April 1, 1952. The power vested in the Income-tax Officer to reduce or waive interest payable by an assessee is exercisable " in such cases or such circumstances as may be prescribed " by the rules. By rule 48 the Income-tax Officer is given the power to reduce or waive interest payable under section 18A(6) in the events specified therein. By the 1st clause of rule 48 where the assessment is completed more than one year after the submission of the return--the delay in assessment not being attributable to the assessee--the power of the Income-tax Officer may be exercised. There is nothing in the rule which indicates that the power to grant relief may be exercised only before the regular assessment is completed by the Income-tax Officer. The terms of clauses (1) and (5) of the rule clearly support the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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