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1998 DIGILAW 1033 (MAD)

C. Shanwas v. Commissioner of Income Tax

1998-08-04

T.MEENA KUMARI

body1998
Judgment :- SMT. T. MEENAKUMARI, J. The petitioner has filed this writ petition to issue a writ of certiorarified Mandamus calling for the records of the respondent relating to his order dt. 17th July, 1989, in C.No. 2031/1995, 94, 92/1988-89 for the asst. yrs. 1979-80 to 1982-83 declining to grant waiver of interest under s. 220(2A) of the IT Act, 1961 and quash the same and direct the respondent to grant waiver of interest as prayed for in respect of asst. yrs. 1979-80 to 1982-83 amounting to Rs. 31, 806. 2. The case of the petitioner is that one of the Members of the AOP consisting of the petitioner, his brother and the said AOP was represented by father and guardian C. N. Basha. The petitioner contends that for the asst. yrs. 1979-80 to 1982-83, assessments were made in respect of income from 'other sources' in the status of AOP and a huge demand was raised against the AOP and the abovesaid assessments were made on 20th June, 1986, and 19th June, 1987, respectively. The guardian of the petitioner was called upon to pay the income-tax arrears as the business carried on by the AOP was declined. There were arrears for earlier assessments. In order to clear of the arrears, the guardian of the petitioner has sold the properties belonging to him at No. 15, Malony Road, Madras 17, and the sale proceeds of Rs. seven lakhs was given over to the IT Department in discharge of the tax arrears of the AOP, due to the Department. In view of the delayed payment of income-tax arrears of the AOP, the interest under s. 220(2) of the IT Act, 1961, was levied for the abovesaid assessment years and the interest under s. 220(2) of the Act together with arrears of income were fully discharged by the petitioner. Thereafter, the guardian of the petitioner realised that the levy and collection of interest under s. 220(2) of the Act, for the so-called delayed payment of income-tax arrears, was without any justification and invalid and sought for waiver of interest, and gave his representation on 13th October, 1988 to the respondent for the same. Thereafter, the guardian of the petitioner realised that the levy and collection of interest under s. 220(2) of the Act, for the so-called delayed payment of income-tax arrears, was without any justification and invalid and sought for waiver of interest, and gave his representation on 13th October, 1988 to the respondent for the same. The guardian submitted before respondent that the arrears of income-tax could not be paid due to genuine financial difficulties and absence of income from which it could meet the said liability, that the assessee had cooperated with the Department in the completion of assessments and in payment of the entire demand raised and the levy of interest under s. 220(2) of the Act and the levy of interest resulted in considerable hardship and injury to the AOP. The petitioner has complied with the conditions laid down under s. 220(2)(A) of the Act and the respondent could have prevented the waiver of the interest. But instead, they have chosen to come to the conclusion that the property at Pudupet (Panruti) yielding an income of Rs. 3, 000 to Rs. 3, 500 p.m. The respondent did not consider the plea of waiver of interest from the proper perspectiveThe findings of the respondent do not support any materials on record and hence, the order has to be set aside. 3. Learned counsel for the respondent, on the other hand, would argue that as per s. 220(2A) of the Act, the CIT has to satisfy before adjusting or waiving the interest payable by the assessee, that the payment of such amount is genuine one or not, an as the CIT has not satisfied with the payment of arrears, and would not cause hardship to the assessee. 4. On a perusal of the impugned order dt. 17th July, 1989, it is clear that the property at Pudupet at Panruti yields an income of Rs. 3, 000 or Rs. 3, 500, has no basis as he has not placed any materials for the same, and in the impugned order the respondent has stated thus, "........ In the case of the two minors. I gather that they own a property at Pudupet near Panruti which is yielding an income Rs. 3, 000 to Rs. 3, 000 or Rs. 3, 500, has no basis as he has not placed any materials for the same, and in the impugned order the respondent has stated thus, "........ In the case of the two minors. I gather that they own a property at Pudupet near Panruti which is yielding an income Rs. 3, 000 to Rs. 3, 500 p.m. In my opinion, this income should be classified as one which would keep the minors above want and not lead them to any financial problems." " I am therefore of the opinion that the cases in the case of Minors and the AOP, do not satisfy the conditions laid down under s. 220(2A) of the Act." The CIT has also further opined as follows: " I would consequently refuse to interfere." From the above it could be seen that the CIT has clubbed the income of the minors to that of the AOP to come to the conclusion that he was not satisfied under s. 220(2A) of the Act. On the other hand he has come to the conclusion that the income of the minors would be Rs. 3, 000 to Rs. 3, 500. Hence, he could not have clubbed the income of the minors with that of the AOP, to satisfy himself whether the payment of such amount would cause genuine hardship to the minors. In view of the above, the findings of the CIT that they have not satisfied conditions laid down under s. 220(2A) of the Act is hereby set aside and the matter is remanded to the respondent to hear the matter afresh after giving opportunity to the petitioner and the petitioner is entitled to raise objections before the concerned officer. 5. With the above observation, the writ petition is allowed. No costs.