PATEL ENGINEERING COMPANY LIMITED v. C. B. RATHI — 1983 DIGILAW 34 (GUJ)

P. D. DESAI, J. ( 1 ) THE petitioner is a Public Limited Company incor- porated under the provisions of the Companies Act 1956 The petitioner is carrying on the business of manufacturing oil engines water pumps etc. The petitioner also carries on the business of exporting oil-engines manufactured by it. ( 2 ) THE petitioner is assessed to income-tax under the Income-tax Act 1961 (hereinafter referred to as the Act ). The question arising for determination in the instant case relates to Assessment year 1975-76 the relevant previous year being Samvat Year 2030. ( 3 ) THE petitioner having been previously assessed to income-tax by way of regular assessment under the Act the Income-tax Officer having jurisdiction over the petitioner made an order under sub-sec. (1) of sec. 210 of the Act requiring the petitioner to pay advance tax in the sum of Rs. 89 438 on the basis of the total income of Rs. 1 55 715 in respect of which the petitioner was assessed to incometax for the Assessment Year 1973-74. The notice of demand dated 13/05/1974 issued in pursuance of the said order specified that the said advance tax was payable in three equal instalments of Rs. 29 813 each during the Financial Year 1974-75. In compliance with the said notice the petitioner paid two instalments of advance tax on June 15 and 15/09/1974 However as the current income of the petitioner was likely to be greater than the income on which the advance tax payable by it had been computed the petitioner sent to the Income- tax Officer an estimate of the current income under sec. 212 (3a) and therein the current income was estimated at Rs. 2 10 336 Be it stated that according to the petitioner the current income was estimated at Rs. 2 10 336 after taking into consideration the deduction allowable under sec. 358 of the Act that is to say the export markets development allowance. The said estimate was sent before the date on which the last instalment of advance tax fell due that is to say before 15/12/1974 The petitioner also calculated in the manner laid down in the relevant provisions of the Act the advance tax payable by it on such current income and paid within time a sum of Rs. The said estimate was sent before the date on which the last instalment of advance tax fell due that is to say before 15/12/1974 The petitioner also calculated in the manner laid down in the relevant provisions of the Act the advance tax payable by it on such current income and paid within time a sum of Rs. 61 879 as and by way of the final instalment of advance tax in accordance with such calculation. The petitioner accordingly paid a total sum of Rs. 1 21 505 by way of advance tax. ( 4 ) ON 30/06/1975 the petitioner furnished the return of income for Assessment Year 1975-76 showing total income of Rs. 4 18 234 The total income was computed after making a deduction in respect of the export markets development allowance permissible under sec. 35b on an expenditure of Rs. 12 76 522 incurred during the relevant previous year. On 19/07/1975 the petitioner furnished a revised return of income showing total income of Rs. 2 29 149 as according to the petitioner there were some mistakes in the return previously filed. The same deduction under sec. 25b was made while computing total income as aforesaid in the revised return. On 28/08/1975 the petitioner paid a sum of Rs. 9 776 as and by way of tax on self assessment under sec. 140a. By an order made on 9/05/1978 under sec. 143 (3) the Income-tax Officer assessed total income of the petitioner at Rs. 4 92 950 In the course of the said order the Income-tax Officer rejected the claim in respect of the export markets development allowance on the expenditure of Rs. 12 76 522 incurred during the relevant previous year except to the extent of Rs. 20 248 which sum reflected the expenditure incurred on travel outside India. The Incometax Officer also directed that interest shall be payable by the petitioner under sec. 215 upon the amount by which the advance tax paid fell short of the assessed tax (See Ex. A ). Be it stated that the interest payable accordingly worked out to Rs. 59 978 ( 5 ) ON 29/05/1978 the petitioner preferred an appeal to the Commissioner of Income-tax (Appeals) against the order of assessment (Ex. A ). The Commissioner by his order dated 30/09/1978 (Ex. D) partly allowed the said appeal. A ). Be it stated that the interest payable accordingly worked out to Rs. 59 978 ( 5 ) ON 29/05/1978 the petitioner preferred an appeal to the Commissioner of Income-tax (Appeals) against the order of assessment (Ex. A ). The Commissioner by his order dated 30/09/1978 (Ex. D) partly allowed the said appeal. The disputed claim of the petitioner in respect of the export markets development allowance under sec. 35b was partly allowed in the appeal and such allowance was held admissible in respect of an expenditure in the sum of Rs. 2 42 523. 38 p. being the commission paid by the petitioner to the Gujarat Export Corporation. B3 it stated that before the Commissioner the petitioner had relied upon the decision of the Income-tax Appellate Tribunal Bombay wherein the provisions of sec. 35b (I)) (iii) were interpreted in support of its claim for the allowance of the whole of the sum claimed by it as and by way of the export markets develop. ment allowance. The Commissioner however disagreed with the view expressed by the Income-tax Appellate Tribunal Bombay and rejected the claim in so far as it was inter alia rested on the said decision. ( 6 ) ON 28/10/1978 the Income-tax Officer having jurisdiction over the petitioner passed an order (Ex. E) giving effect to the aforesaid appellate order and computed the revised total income of the petitioner in respect of the assessment year in question at Rs 4 11 109 In computing the total income as aforesaid the Income-tax Officer inter alia allowed a deduction in the sum of Rs. 81 841 under sec. 35 on the expenditure to the tune of Rs. 2 42 523. 38 p. which was held by the Commissioner of Income-tax (Appeals) as admissible for the purpose of computing the export markets development allowance. The Income-tax Officer further directed that the tax should be recalculated on the basis of the revised total income and that interest under sec. 215 should be charged on the basis of the tax assessed accordingly. ( 7 ) MEANWHILE on 10/06/1978 the petitioner had made an application (Ex. B) to the Income-tax Officer requesting him to waive the interest payable under sec. 215 in exercise of the power conferred by Rule 40 clause (1) of the Income-tax Rules 1962 (hereinafter referred to as the Rules ). ( 7 ) MEANWHILE on 10/06/1978 the petitioner had made an application (Ex. B) to the Income-tax Officer requesting him to waive the interest payable under sec. 215 in exercise of the power conferred by Rule 40 clause (1) of the Income-tax Rules 1962 (hereinafter referred to as the Rules ). The waiver was requested on the ground that the return of income for the assessment year 1975-76 was filed on 30/06/1975 that the revised return was filed on 19/07/1975 that the assessment was completed by the order of assessment made on 9/05/1978 and that the assessment was therefore completed more than one year after the submission of the return although the delay in assessment was not attributable to the petitioner. By an order made on 27/07/1978 (Ex. C) on the said application the Income-tax Officer gave partial relief to the petitioner. The petitioner was held liable to pay interest upon the amount by which the advance tax paid fell short of the assessed tax for the period from 1/04/197 5/06/1976 that is to say for the period from the first day of April of the Financial Year next following the Financial Year 1974-75 upto one year from the date of the filing of the return of income. However the interest payable for the period beyond one year from the date of filing of return of income to the date of assessment was waived. The interest waived accordingly covered the period from July 1 197 6/05/1978 The waiver in the aforesaid terms resulted in the reduction of the liability to pay interest from Rs. 59 978 to Rs. 24 315 Be it stated that in the course of the order (Ex. C) the Income-tax Officer recorded a clear finding that on verification of the records it was seen that though the assessment had been completed more than one year after the submission of the return the delay in assessment was not attributable to the petitioner and that therefore the conditions laid down in Rule 40 clause (1) were satisfied. However while granting the actual relief the Income tax Officer appeared to have proceeded on the footing that under Rule 40 clause (1) the reduction/waiver was permissible only in respect of the period beyond one year from the date of the submission of the return and that no claim for. However while granting the actual relief the Income tax Officer appeared to have proceeded on the footing that under Rule 40 clause (1) the reduction/waiver was permissible only in respect of the period beyond one year from the date of the submission of the return and that no claim for. reduction/waiver could be entertained even if the conditions laid down in Rule 40 clause (1) were satisfied for the period between the 1st day of April next following the relevant financial year and one year from the date of the submission of the return ( 8 ) THE petitioner had made also an application (Ex. F) on 2/09/1978 to the Inspecting Assistant Commissioner praying that the interest payable under sec. 215 should be waived in exercise of the powers conferred by Rule-40 clause-5. In the course of the said application the petitioner referred to the order dated 27/07/1978 (Ex. C) passed by the Income-tax Officer whereunder the interest payable was reduced/waived to the extent of Rs 35 663 and the liability to pay interest was confined to Rs. 24 315 The petitioner requested for the waiver of the reduced interest payable in the sum of Rs. 24 315 on the ground inter alia that the amount paid by way of advance tax had fallen short of the assessed tax because as a result of the rejection of the claim of the petitioner for the export markets development allowance under sec. 35 B the total income was computed at a higher amount and the tax was assessed at a higher figure in the course of the assessment proceedings. The petitioner submitted that its claim for the export markets development allowance was founded on the various decisions of the Income-tax Appellate Tribunal and that therefore it was justified in estimating its current income by making allowance for the said deduction and paying the amount of advance tax in accordance with such estimate under sec. 212 (3a ). Under the circumstances according to the petitioner the waiver of interest was justified. The Inspecting Assistant Commissioner by his order dated 12/10/1978 (Ex. G) rejected the said application by a laconic order stating that after a careful consideration of the facts and circumstances of the case he was disinclined to interfere in the matter. ( 9 ) ON 4/11/1978 the petitioner made a revision application (Ex. H) to the Commissioner of Income-tax under sec. G) rejected the said application by a laconic order stating that after a careful consideration of the facts and circumstances of the case he was disinclined to interfere in the matter. ( 9 ) ON 4/11/1978 the petitioner made a revision application (Ex. H) to the Commissioner of Income-tax under sec. 264 against the order (Ex G) passed by the Inspecting Assistant Commissioner on the application for waiver of interest (Ex. F) The petitioner placed for the consideration of the Commissioner the same facts and circumstances to which the attention of the Inspecting Assistant Commissioner was invited in the course of the proceedings under Rule 40 clause-5. In addition the petitioner submitted before the Commissioner that as a result of the decision recorded in the appeal which it had carried against the original assessment the assessed total income was reduced on account of the partial allowance of the claim for export markets development allowance and that the full claim in that behalf was not allowed because the Commissioner of Income-tax (Appeals) had disagreed with the view expressed by the Income-tax Appellate Tribunal on the correct interpretation of section 35b (iii ). The petitioner submitted that in view of those facts inter alia the circumstances were such that the waiver of interest was justified. ( 10 ) AT the hearing of the revision application before the Commissioner the petitioner directed its challenge against the order of the Income-tax Officer as well as against that of the Inspecting Assistant Commissioner. It was submitted on behalf of the petitioner that its request for waiver of interest in its entirety was rejected by the Income-tax Officer because the relevant provisions of Rule 40 were misconstrued as laying down that interest for the period from the first day of April next following the relevant financial year upto one year from the date of the submission of the return cannot be waived and that interest for the said period will be chargeable even if the conditions laid down in Rule-40 sub-rule (1) were satisfied. Alternatively it was submitted that the Inspecting Assistant Commissioner erred in not appreciating that the petitioner having made an honest estimate of its current income after making a bona fide deduction in respect of the export market development allowance and having paid the advance tax on such current income under sec. Alternatively it was submitted that the Inspecting Assistant Commissioner erred in not appreciating that the petitioner having made an honest estimate of its current income after making a bona fide deduction in respect of the export market development allowance and having paid the advance tax on such current income under sec. 212 (3a) the circumstances were such that the waiver of interest was justified under Rule 40 clause (5 ). ( 11 ) THE Commissioner by his order dated 28/02/1979 (Ex. 1) rejected the revision application. The reasons which weighed with the Commissioner require to be set out in his own words and the relevant portion of this order is therefore extracted and set out hereinbelow:. . WHERE the completion of assessment is delayed beyond one year after the submission of the return and this delay in assessment is not attributable to the assessee Rule 40 (1) provides for reduction of interest. The language of the Rule clearly suggests that in such cases interest shall be charged only upto the end of one year from the submission of the Return. The contention of the assessee that the Rule contemplates complete waiver of interest in such cases if accepted would lead to illogical results. It would mean that in cases where an assessment is com pleted within one year of the filing of the Return interest will be payable upto the date of completion of the assessment but ill cases where the assessment is delayed by more than a year interest will not be charged at all. This obviously could not be the purport of the Rule. The Language of the Rule clearly shows that in such cases where the assessment is unreasonably delayed the liability of the assessee is limited to payment of interest till the end of one year from the filing of the return even though under the provisions of sec. 215 interest would have been payable for the entire period till the completion of the assessment even if the contention of the assessee that it honestly believed its estimate to be correct is accepted the fact remains that by making this estimate it withheld payment of taxes due to the Government and it was therefore rightly liable to pay interest. ( 12 ) BOTH the submissions made by the assessee before the Commissioner were rejected on the abovementioned grounds. ( 12 ) BOTH the submissions made by the assessee before the Commissioner were rejected on the abovementioned grounds. ( 13 ) ON 3/05/1979 the petitioner instituted this writ petition seeking an appropriate writ order or direction quashing and setting aside the order (Ex. 1) and commanding the Commissioner to pass an order in accordance with law waiving the amount of interest charged under sec. 215. By way of interim relief the petitioner prayed for an order restraining the tax authorities from proceeding further with the recovery of interest which the petitioner was held liable to pay under sec. 215. Rule nisi was issued on the petition on 24/07/1979 No interim relief was however granted. The petition has now reached hearing before this Bench. ( 14 ) IN order to appreciate the points in controversy between the parties it would be necessary to make a quick survey of the relevant provisions of law. Chapter XVII of the Act contains provisions relating to the collection and recovery of tax. Part C thereof which comprises secs. 207 to 219 deals with advance payment of tax. Sec. 207 specifies income which is subject to advance tax and provides that such advance tax shall be payable in accordance with the provisions of secs. 208 to 219 Sec. 208 lays down the conditions attracting the liability to pay advance tax. Secs. 209 and 209a prescribe the mode of computation and payment of advance tax. Broadly stated in the case of an assessee who has been previously assessed the amount of advance tax is to be computed on the basis of the total income of the latest previous year in respect of which he has been assessed by way of regular assessment after making certain deductions. In the case of an assessee who has not previously been assessed by way of regular assessment an estimate of his current income and of the advance tax payable on the current income calculated in the manner laid down in sec. 209 has to be made and the advance tax has to be paid. Sec. 210 provides for the making of an order by the Income-tax Officer requiring a person who has been previously assessed by way of regular assessment to pay advance tax. 209 has to be made and the advance tax has to be paid. Sec. 210 provides for the making of an order by the Income-tax Officer requiring a person who has been previously assessed by way of regular assessment to pay advance tax. Sec 211 provides for the payment of advance tax in three equal instalments during the financial year on three specified dates namely 15 June 15 September and 15th December in the case of an assessee whose total income to the extent of 75 percent thereof or more is derived from sources for which the previous year ends on or before 31 day of December and in any other case the instalments are to be paid on 15th September 15 December and 15th March. Sec. 212 enables an assessee who is liable to pay advance tax to make an estimate of his current income and to pay advance tax on the basis of such estimate under certain circumstances. Sub-secs. (1) and (3a) of the said section provide for such an estimate being made by a person previously assessed on regular assessment whereas sub-sec. (3) provides for such an estimate being made by a person not previously so assessed. Broadly speaking sub-sec (1) gives an option to the assessee to estimate his current income and to pay advance tax on the basis of such estimated current income if such income subject to advance tax is likely to be less than that on the basis of which advance tax is demanded. Sub-sec. (3a) deals with a case where the assessees current income is likely to be greater than the income on the basis of which advance tax has been demanded and enjoin upon the assessee in such a case to estimate the current income and pay advance tax thereon. Since in the instant case the petitioner had submitted an estimate of the current income and paid advance tax on the basis of such current income under sub-sec. (3a) it Would be proper to set out verbatim the relevant portion of the said sub-section : (3a) In the case of any assessee who is required to pay advance tax by an order under sec. 210 if by reason of the current income being likely to be greater than the income on which the advance tax payable by him under sec. 210 if by reason of the current income being likely to be greater than the income on which the advance tax payable by him under sec. 210 has been computed or for any other reason the amount of advance tax computed in the manner laid down by sec. 90) on the current income (which shall be estimated by the assessee) exceeds the amount of advance tax demanded from him under sec. 210 by more than 331/2 per cent. of the latter amount he shall at any time before the date on which the last instalment of advance tax is due from him send to the Income-tax Officer an estimate of (i) the current income and (ii) the advance tax payable by him on the current income calculated in the manner laid down in sec. 209 and shall pay such amount of advance tax as accords with his estimate on such of the dates applicable in his case under sec. 211 as have not expired by instalments which may be revised according to sub-sec. (2): xx xx xx xx xx ( 15 ) SEC. 213 is not relevant for the present purposes and it need not be adverted to. Sec. 214 provides for the payment of interest by the Central Government on the advance tax paid by an assessee during any financial year in case the aggregate sum so paid exceeds the amount of tax determined on regular assessment. Secs. 215 216 and 217 provide for the payment of interest by an assessee under certain circumstances. Since in the instant case the question arises in the context of sec. 215 the provisions thereof are set out hereunder :215 Interest payable by assessee: (1) Where in any financial year an assessee has paid advance tax under sec. 212 on the basis of his own estimate and the advance tax so paid is less than seventy-five per cent of the assessed tax simple interest at the rate of twelve per cent. per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax. (2) Where before the date of completion of a regular assessment tax is paid by the assessee under sec. (2) Where before the date of completion of a regular assessment tax is paid by the assessee under sec. 140a or otherwise - (i) interest shall be calculated in accordance with the foregoing provision upto the date on which the tax is so paid; and (ii) thereafter interest shall be calculated at the rate aforesaid on the amount by which the tax as so paid (in so far as it relates to income subject to advance tax) falls short of the assessed tax. (3) Where as a result of an order sec. 154 or sec. 155 or sec. 250 or sec. 254 or sec. 260 or sec. 262 or see. 264 the amount on which interest was payable under this section has been reduced the interest shall be reduced accordingly and the excess interest paid if any shall be refunded. (4) In such cases and under such circumstances as may be prescribed the Income-tax Officer may reduce or waive the interest payable by the assessee under this section. (5) In this section and secs. 217 and 273 assessed tax means the tax determined on the basis of the regular assessment (reduced by the amount of tax deductible in accordance with the provisions of secs. 192 to 194 sec. 194a sec. 194c sec. 194 and sec. 195) so far as such tax relates to income subject to advance tax and so far as it is not due to variations in the rates of tax made by the Finance Act enacted for the year for which the regular assessment is made. ( 16 ) SECS. 218 and 219 are not relevant for the present case and they need not therefore be referred to. 14 Sec. 215 (4) which has been extracted above empowers the Income-tax-Office to reduce or waive the interest payable by an assessee under the said section in such cases and under such circumstances as may be prescribed. Sub-rules (4) and (5) of Rule 40 of the Rules which at the material time read as follows are relevant in this connection and they require to be cited: 40 Waiver of interest. ( 17 ) THE Income-tax Officer may reduce or waive the interest payable under sec. 215 or sec. Sub-rules (4) and (5) of Rule 40 of the Rules which at the material time read as follows are relevant in this connection and they require to be cited: 40 Waiver of interest. ( 17 ) THE Income-tax Officer may reduce or waive the interest payable under sec. 215 or sec. 217 in the cases and under the circumstances mentioned below namely (1) When the relevant assessment is completed more than one year after the submission of the return the delay in assessment not being attributable to the assessee. xx xx xx xx (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 sec. 215 or sec. 117 is justified. 15 Two more statutory provisions may be referred to next before coming to grips with the problem arising for consideration herein. Sec. 264 confers revisional power on the Commissioner in respect of any order (other than an order to which sec. 263 applies) passed by an authority subordinate to him and subject to the provisions of the Act empowers him to pass such orders as he thinks fit but which are not prejudicial to the assessee. The section spells out certain limitations in the exercise of these powers but we are not concerned with the same herein. Sec. 273a which was enacted by the Taxation Laws (Amendment) Act 1975 with effect from 1/10/1975 empowers the Commissioner in his discretion to reduce or waive penalty etc. in certain cases upon fulfilment of certain conditions. The power se conferred on the Commissioner is notwithstanding anything contained in this Act. Under sec. 273 sub-sec. (1) clause (iii) the Commissioner is empowered to reduce or waive the amount of interest paid or payable inter alia under sec. 215 provided he is satisfied that prior to the issue of a notice to him under see. 139 sub-sec. (2) or where no such notice has been issued and the period for the issue of such notice has expired prior to the issue of notice to him under sec. 215 provided he is satisfied that prior to the issue of a notice to him under see. 139 sub-sec. (2) or where no such notice has been issued and the period for the issue of such notice has expired prior to the issue of notice to him under sec. 148 the concerned assessee has voluntarily and in good faith made true and full disclosure of the income and has paid the tax on the income so disclosed and also has co-operated in any enquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under the Act in respect of the relevant assessment year. Under sub-sec. (3) the power of reduction or waiver is exercisable only once. It would thus appear that on and with effect from 1/10/1975 the power to reduce or waive interest payable under sec 215 is conferred upon the Commissioner (subject to certain conditions) addition to the similar power conferred upon the Income-tax in Officer and the Inspecting Assistant Commissioner. ( 18 ) AGAINST the statutory background aforesaid two questions arise for consideration. First whether upon a true construction of sub-rule (1) of Rule 40 the power to reduce or waive the interest payable under sec. 215 is exercisable by the Income-tax Officer only in respect of the amount of interest payable for the period exceeding one year from the date of the submission of the return and secondly whether on the facts and in the circumstances of the case the refusal to waive the interest payable under sec. 215 in exercise of the power conferred by sub-rule (5) of Rule 40 is patently erroneous in law We are of the view that the answer to the second question posed above must be in the affirmative and that the petitioner is entitled to succeed on that ground alone and that it is not necessary therefore to deal with and answer the first question. ( 19 ) BEFORE proceeding to deal with question under consideration in the light of the facts of the case it is worthwhile to recall that it is settled law that where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out and with regard to whom a definition is supplied by the legislature of the conditions upon which they are entitled to call for its exercise that power ought to be exercised and the Court will require it to be exercised (see JULIUS V. LORD BISHOP OF OXFORD (1880) 5 APP. CASES 214 ). In other words if the conditions laid down for the exercise of discretion are satisfied the authority has no discretion to refuse to exercise the discretion The authority is under a statutory duty to exercise the discretion. If there is omission to exercise discretion inter alia on account of the failure on the part of the authority to genuinely address itself to the matter before it or due to misconception of the scope of its power under the statute mandamus can issue directing such authority to rehear and determine the matter afresh according to law. (see MADHUKAR MANILAL MODI V. C. IV. V 113 I. T. R. 318 ). ( 20 ) NOW in the instant case the petitioner. had made an application to the Inspecting Assistant Commissioner invoking the provisions of sub-rule (5) of Rule 40. The petitioner had requested for the waiver of interest on the ground inter alia that the advance tax had fallen short of the assessed tax because as a result of the rejection of the claim of the petitioner for the export markets development allowance under sec. 3513 the total income and consequently the tax was assessed at a higher amount in the course of the assessment proceedings. The petitioner had also submitted that its claim for the export markets development allowance was founded on the various decisions of the Income-tax Appellate Tribunal and that. therefore it was justified in estimating its current income after making deduction in respect of such allowance and in paying the amount of advance tax in accordance with such estimate under sec. 212 (3a ). therefore it was justified in estimating its current income after making deduction in respect of such allowance and in paying the amount of advance tax in accordance with such estimate under sec. 212 (3a ). The Inspecting Assistant Commissioner however rejected the application by a laconic order stating that after a careful consideration of the facts and circumstances of the case he was disinclined to interfere in the matter. In the revision application before the Commissioner of Income tax the abovementioned facts and circumstances were placed for consideration and it was submitted that the claim for export markets development allowance was partially allowed in the appeal against the original assessment and that full claim was not allowed because the Commissioner of Income-tax (Appeals) had disagreed with the view expressed by the Income-tax Appellate Tribunal as regards the correct interpretation of sec. 35b (b) (iii)The submission of the petitioner was that it had made an honest estimate of its current income under sec. 212 (3a) and that it had paid advance tax on such current income and that on the facts and in the circumstance of the case there was a justifiable case for the waiver of interest. The Commissioner while dealing with this submission found that if the contention of the assessee that it honestly believed its estimate to be correct is accepted still there cannot be any reduction or waiver of interest because in fact by making such estimate the payment of tax due to the Government was withheld. . ( 21 ) NOW under sub-sec. (1) of sec. 215 the Legislature has imposed the liability to pay interest in mandatory terms if the conditions therein are shown to be existent in any case. However the Legislature has considered it just and proper to confer power on the Income-tax Officer under sub-sec. (4) to reduce or waive the interest in certain cases and under certain circumstances and left those cases and circumstances to be prescribed by delegated legislation. Rule 40 has been enacted in exercise of the power conferred by the said sub-section. The Income_ tax Officer has the power under the said rule to reduce or waive the interest payable inter alia under sec. Rule 40 has been enacted in exercise of the power conferred by the said sub-section. The Income_ tax Officer has the power under the said rule to reduce or waive the interest payable inter alia under sec. 215 in the cases and under the circumstances therein specified and amongst the cases so specified is any case in which the Inspecting Assistant Commissioner considers that the circumstances are such that a reduction or waiver of the interest. . . . is justified. In a case falling within that category the Inspecting Assistant Commissioner must first apply his mind to the circumstances of the case and if he finds that the circumstances justify a reduction or waiver of interest then he may pass an order accordingly and the Income-tax Officer will have to give effect to such an order. The word justified is a word of wide import. Something could be said to be justified if it is proved or shown to be fair or right or according to justice or backed by sufficient reason. Therefore where the assessee is able to prove or show to the satisfaction of the Inspecting Assistant Commissioner that there were sufficient and genuine reasons which led to the less payment of advance tax so that a reduction or waiver of interest would accord with justice or that even otherwise the circumstances were such that a reduction to waiver of the interest would be just or fair or right the conditions for the exercise of the power of reduction or waiver will have to be satisfied and such power even though discretionary will have to be exercised. It must be remembered in this connection that this power is obviously conferred to mitigate the hardship resulting from the operation of the provisions of sub-sec. (1) of sec. 215 which are mandatory oven in genuine cases where the default might have occurred say for bona fide reasons. If the power is not exercised even in Such cases the Court can give suitable directions to the competent authority. ( 22 ) ONE cannot overlook that sub-secs. (1) and (4) of sec 215 are different parts of a single scheme and that Rule 40 also is a part of that integrated scheme. All those provisions are closely interrelated and each portion works in close unison with the other. ( 22 ) ONE cannot overlook that sub-secs. (1) and (4) of sec 215 are different parts of a single scheme and that Rule 40 also is a part of that integrated scheme. All those provisions are closely interrelated and each portion works in close unison with the other. It would not be correct to assume therefore that merely because the conditions laid down in sec. 215 sub-sec. (1) are satisfied interest becomes payable invariably and in all cases. If that were so sub-sec. (4) of sec. 215 would not have been enacted nor sub-rule (5) of Rule 40 would have been couched in words of such wide import. Therefore even in cases where the advance tax paid is less than 75% of the assessed tax if it is proved or shown that the default was bona fide or for sufficient reasons or such or similar grounds are shown or proved to exist then the power to waive or reduce interest must be exercised so as to provide a just relief. ( 23 ) COMING now to the facts of the instant case the Inspecting Assistant Commissioner gave no reasons whatever for reaching the conclusion that the waiver of interest was not justified. The Inspecting Assistant Commissioner was undoubtedly performing a quasi Judicial function while considering the petitioners claim for waiver of interest. It is settled law that where an authority makes an order in exercise of a quasi-judicial power it must record its reasons in support of the order that it makes. The rule requiring reasons to be given in support of an order is like the principle of audi alteram partem a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. (See RASIKLAL RANCHHODBHAI PATEL V. C. W. T. GUJARAT 121 I. T. R. 219 ). The order of the Inspecting Assistant Commissioner therefore is patently vitiated for want of reasons. When the matter went before the Commissioner he refused to exercise his powers on the ground that even if the petitioner honestly believed its estimate to be correct waiver or reduction could not be allowed because the payment of the tax due to the Government was anyhow withheld. When the matter went before the Commissioner he refused to exercise his powers on the ground that even if the petitioner honestly believed its estimate to be correct waiver or reduction could not be allowed because the payment of the tax due to the Government was anyhow withheld. This approach is manifestly contrary to the object purpose scope and intendment of sub-rule (5) of Rule 40. The authority can be called upon to exercise the power of reduction or waiver only in cases where the conditions for its exercise are satisfied namely where on account of the short payment of advance tax the Government dues are withheld. In such cases what is required to be seen is whether the circumstances were such that the reduction or waiver of interest payable under sec. 2215 is justified. It would thus appear that there was a misconception as to the true object and scope of power under Rule 40 sub-rule (5) on the part of the Commissioner and that there was a failure on his part to genuinely address himself to the matter before him. ( 24 ) IT will be recalled that the less payment of the advance tax in the instant case was clearly due to the partial disallowance of the claim of the petitioner in respect of the export markets development allowance. The circumstances under which the claim was advanced and it was partly rejected have been stated earlier. The Income-tax officer allowed the claim only to a limited extent during the course of the assessment proceedings. On appeal the Commissioner of Income-tax (Appeals) held the claim admissible to a larger extent but not in its entirety. The petitioner was supported in its claim to the full extent by the decisions of the Income-tax Appellate Tribunal. We are not herein concerned with the question whether or not on merits the view taken by the assessing authority is correct. The short question for consideration is whether under such circumstances the diduction could be regarded as one which no reasonable person could have legitimately made while making estimate. We are not herein concerned with the question whether or not on merits the view taken by the assessing authority is correct. The short question for consideration is whether under such circumstances the diduction could be regarded as one which no reasonable person could have legitimately made while making estimate. The answer inevitably is that when the claim depended upon the true effect of a statutory provision and its applicability to the facts of the case and that when the Income-tax Appellate Tribunals view in regard to the interpretation of the relevant statutory provision was in accord with the claim advanced by the petitioner it could not possibly be said that the estimate made by the petitioner after making the deduction in that behalf and the short payment of advance tax on that account was not bona fide. If so the circumstances apparently were such as would justify the waiver or reduction as the case may be of the interest leviable under the relevant statutory provisions. ( 25 ) REFERENCE may be made in this connection to the decision of this Court in C. I. T. V. BHARAT MACHINERY AND HARDWARE MART 136 I. T. R. 875 That was a case in which there was a discrepancy between the income returned by the assessee and the income as assessed by the Income-tax Officer and the discrepancy had arisen by reason of the fact that the assessee had submitted his return on the basis of the books of account maintained by him but the Income-tax Officer did not accept the correctness of the books and acting under sec. 145 (1) he had made an estimate of the gross profits and it was not shown that in prior years the assessment was made by estimate of gross profits. The tax assessed had in those circumstances exceeded the advance tax by more than 331%. This Court took the view that since the difference between the returned income and the assessed income had arisen due to the addition made by the Income-tax Officer by an estimate of the gross profits under the proviso to sec. 145 (1) no interest could be charged under sec. 217 (1a) for failure of the assessee to file an estimate under sec. 212 (3a ). The Income-tax Officer had misapplied the law in levying interest under sec. 145 (1) no interest could be charged under sec. 217 (1a) for failure of the assessee to file an estimate under sec. 212 (3a ). The Income-tax Officer had misapplied the law in levying interest under sec. 217 (1a) and it was a clear case of error of law committed by the Income-tax Officer capable of rectification under sec. 154. It was observed that the assessee concerned could not have anticipated (1) that the Income-tax Officer would not accept the correctness of his books of account and (2) that the Income-tax Officer would make the estimate of the gross profits on the basis of 18 per cent of the total sales. There was no provision in the Act which required an assessee to anticipate or foresee what in fact could not be anticipated or foreseen except possibly by one possessing an E. S. P. (ex sensory perception ). ( 26 ) IN the instant case having been fortified in respect of its claim for deduction in regard to the export markets development allowance by the decisions of the Income-tax Appellate Tribunal the petitioner could not have anticipated or foreseen that its estimate of the current income would not be accepted and that the advance tax paid would be less than the assessed tax by the percentage prescribed in sub-sec. (1) of sec. 215. In our opinion therefore in the present case it was impossible for the authorities reach the conclusion that the circumstances of the case did not justify the waiver of interest No other view could possibly have been taken upon a true appraisal of the scope of sub-rule (5) of Rule 40 and the circumstances prevalent in the case. ( 27 ) THE question then is as to what relief should be granted to the petitioner in the instant case. It was urged on behalf of the revenue that the impugned order of the Commissioner may be quashed and that the matter may be remanded to him for reconsideration of the petitioners claim for waiver of interest in light of the observations made in the course of this judgment. We do not think it is necessary to undertake such an exercise. We have found earlier that on the facts and in the circumstances of the case it is impossible to hold that the waiver of interest is not justified. We do not think it is necessary to undertake such an exercise. We have found earlier that on the facts and in the circumstances of the case it is impossible to hold that the waiver of interest is not justified. To remit the matter to the Commissioner under such circumstances would be only protracting the proceedings by asking the Commissioner to grant the relief which we can ourselves grant to the petitioner in the course of these proceedings. In the context of the wider superintendence jurisdiction of this Court in exercise of its powers under Article 227 we would not be justified in merely quashing the revisional decision of the Commissioner. It would be in the interest of justice to grant any other and further reliefs so as to put an end to these proceedings once and for all. Under the circumstances a writ will issue directing that the interest determined to be payable under sec. 215 by the petitioner shall be treated as waived. ( 28 ) RULE made absolute in terms aforesaid with no order as to costs. Rule made absolute. .