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1998 DIGILAW 1347 (MAD)

Dr. K. Mohan Rao v. Commissioner of Income Tax

1998-10-12

N.V.BALASUBRAMANIAN

body1998
Judgment :- The Order of the Court is as follows: 1. The writ petition is filed to quash the order of the second respondent passed in proceedings No. 21/IV/138/93-IT, dated 8-2-1996 and to direct the Settlement Commissioner to consider the application for waiver of interest leviable under sections 234A, 234B and 234C of the Income-tax Act, 1961 ('the Act'). 2. The petitioner is a doctor by profession. There was a search in his premises and the petitioner moved the Settlement Commission, Additional Bench, Madras, for settlement of his tax liabilities for the assessment years 1987-88 to 1992-93. He also prayed for waiver of interest and penalties leviable under the Act. The Settlement Commission in the order passed initially did not indicate the basis under which it had refused to waive the interest levied under sections 234A, 234B and 234C. The petitioner, therefore, filed a miscellaneous petition for clarification and direction as regards interest under sections 234A, 234B and 234C. Since the Tribunal has observed that the Settlement Commission has the power to waive the interest, he sought for a direction regarding waiver of the interest. He also submitted that the levy of interest is not in accordance have with law and he prayed that the Settlement Commission should have exercised its power to waiver the interest under sections 234A, 234B and 234C. The Settlement Commission passed the impugned order holding that it followed an earlier order of the Special Bench of the Settlement Commission in the case of Ashwani Kumar Aggarwal, In re, wherein it was held that the Settlement Commission has no power to waive interest under sections 234A, 234B and 234C and, hence, it did not consider the application of the petitioner for waiver of interest of the assessment years 1989-90 to 1992-93, as the levy of interest is mandatory in law. It is this order which is the subject-matter of this writ petition. 3. Mr. Ramagopal, the learned counsel for the petitioner submitted that subsequent to the order of the Settlement Commission passed in the present proceedings, the Income-tax Settlement Commission, Mumbai, Special Bench has considered the question in the case of Anjum Mohammed Hussein Ghaswala, In re, and held that the Settlement Commission has the necessary powers to consider the reduction or waiver of interest leviable under sections 234A 234B and 234C on requisite application being filed. He, therefore, submitted that in view of the subsequent decision of the Settlement Commission, Special Bench in Anjum Mohammed Hussein Ghaswala's case (supra), the matter should be remitted to the Settlement Commission to consider the matter once again in the light of the said decision. 4. Mr. S. V. Subramaniam, the learned senior counsel for the first respondent submitted that it is no doubt true that the Settlement Commission has overruled its earlier decision in the case of Ashwani Kumar Aggarwal (supra). He, further submitted that the earlier decision in Ashwani Kumar Aggrwal's case (supra) is pending before the Apex Court for consideration. 5. I have carefully considered the submissions of the learned counsel for the parties. The fact remains that the Settlement Commission in its order in Anjum Mohammed Hussein Ghaswala's case (supra) has overruled its earlier decision in Ashwani Kumar Aggrwal's case (supra) and held as under :- "...... that where orders under section 245D(4) were passed, without considering on the merits, the applicants' request for reduction/waiver of interest under sections 234A, 234B and 234C, on requisite applications being filed in those cases, these may be examined with reference to the facts and circumstances of each case and, where the grant of any relief is justified, such relief may be granted." 6. In view of the aforesaid decision of the Special Bench of the Settlement Commission, the impugned order of the Settlement Commission that it has no power to consider the request of the petitioner for waiver of interest is not legally sustainable in law. The Settlement Commission in Anjum Mohammed Hussein Ghaswala's case (supra) has also made the following observation :- "...... that where orders under section 245D(4) were passed, without considering on the merits, the applicant's request for reduction/waiver of interest under sections 234A, 234B and 234C, on requisite applications being filed in those cases, these may be examined with reference to the facts circumstances of each case and, where the grant of any relief is justified, such relief may be granted." 7. The above direction of the Settlement Commission makes it clear that on requisite application being filed, the Settlement Commission would consider the requisite for reduction or waiver of the interest under sections 234A, 234B and 234C. The above direction of the Settlement Commission makes it clear that on requisite application being filed, the Settlement Commission would consider the requisite for reduction or waiver of the interest under sections 234A, 234B and 234C. On the facts of the case, it is seen, the Settlement Commission by the impugned order reject the request of the petitioner Commission by the impugned order rejected the request of the petitioner for the reduction or waiver of interest on the basis of its earlier decision. However, in view of the decision of the Special Bench of the Settlement Commission in Anjum Mohammed Hussein Ghaswala's case (supra), holding it has powers, the impugned order is set aside. It is also made clear that since the Settlement Commission itself has reversed its earlier order, it is not necessary to consider the question of jurisdiction of the Settlement Commission to grant waiver of interest under section 234A, 234B and 234C and the parties are given the liberty to agitate the question of jurisdiction as and when occasion arises. I further hold that once the impugned order is set aside, it must be held that the application earlier filed by the petitioner before the Settlement Commission must be held to be pending on its file and, hence, it is not necessary for the writ petitioner to file another application before the Settlement Commission to consider his case for the reduction or waiver of interest under sections 234A, 234B and 234C. The Settlement Commission is directed to consider the application earlier filed by the writ petitioner for reduction or waiver of interest under sections 234A, 234B and 234C on merits of the case and in the right of its subsequent decision and pass orders in accordance with the law. Subject to the above, the writ petition is allowed. In the circumstances of the case, there will be no order as to costs.