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2003 DIGILAW 941 (PNJ)

Baso Devi v. Chief Commissioner Of Income Tax

2003-07-14

G.S.SINGHVI, K.S.GAREWAL

body2003
Judgment G.S.Singhvi, J. 1. This petition is directed against order dt. 27th Nov., 2002 (Annexure P.1) vide which Chief CIT, Haryana, Panchkula (respondent No. 1) dismissed the petitioners application for waiver of interest charged under Section 234A, 234B and 234C of the IT Act, 1961 (for short, the 1961 Act). The facts 2. Land measuring 33 Acres and 10 Marias belonging to late Shri Megh Raj (predecessor-in-interest of the petitioners) was acquired by the Government of Haryana vide Notifications dt. 7th Feb., 1986 and 18th Feb., 1986, issued under Sections 4 and 6 of the Land Acquisition Act, 1894 (for short, the 1894 Act). The Land Acquisition Collector passed award dt. 27th Aug., 1987. On an application filed by Shri Megh Raj under Section 18 of the 1894 Act, the compensation was enhanced by Additional District Judge, Kurukshetra from Rs. 70,000 to Rs. 1,00,000 per Acre. The Government of Haryana challenged the enhancement by filing Regular First Appeal which is pending in the High Court. The whole of the compensation, i.e., Rs. 53,76,900 received by him was deposited by Shri Megh Raj in the form of fixed deposits in the following banks : 1. State Bank of Patiala, Thanesar. 2. State Bank of India, Thanesar. 3. Punjab National Bank, Ratgal. 4. State Bank of India, Mini Secretariat, Thanesar. Shri Megh Raj filed returns on 15th Nov., 2000, for the asst. yrs. 1990-91 to 1995-96. On 3rd Feb., 2000, he filed returns for the asst. yrs. 1996-97 to 1999-2000. After about one year, he was served with notice under Section 148 of the 1961 Act for asst. yrs. 1990-91 to 1997-98. In response to that notice, Shri Megh Raj filed reply dt. 12th Feb., 2001. Thereafter, vide order dt. 23rd Aug., 2001, he was assessed for various years and a liability to the tune of Rs. 1,04,01,430 was created in the form of interest accruing on the FDRs and interest payable under Sections 234A to 234C of the 1961 Act. Shri Megh Raj died on 21st Aug., 2001, i.e., 2 days before finalisation of the assessment. After his death, the petitioners filed an application under Section 119(2) of the 1961 Act for waiver of interest in terms of Circular No. 400/335/95-IT(B), dt. 23rd May, 1996, issued by the Central Board of Direct Taxes (for short, the CBDT). Shri Megh Raj died on 21st Aug., 2001, i.e., 2 days before finalisation of the assessment. After his death, the petitioners filed an application under Section 119(2) of the 1961 Act for waiver of interest in terms of Circular No. 400/335/95-IT(B), dt. 23rd May, 1996, issued by the Central Board of Direct Taxes (for short, the CBDT). They relied on para 2(e) of the circular and pleaded that interest may be waived because, (a) the assessee was an illiterate agriculturist and was not aware of intricacies of the IT laws; (b) the assessee was under a bona fide belief that income from interest on FDRs was not taxable because w.e.f. 1st July, 1995, all the banks had deducted TDS except State Bank of Patiala; (c) the assessee had distributed the whole money among his nine married daughters and had filed returns voluntarily; (d) all the dues except interest on FDRs had been paid; and (e) the AO sent letter dt. 22nd May, 2001 (Annexure P. 9) recommending the waiver of interest. Respondent No. 1 dismissed the application of the petitioners vide order Annexure P. 1 by assigning the following reasons : "The facts of the assessees case have been carefully considered. It is observed that assessee has received compensation which was deposited in different banks. Substantial amount of interest exceeding the taxable limit for all the assessment years under consideration was received by the assessee. The assessee also furnished From No. 15H to the bank which were examined by the AO. In the Form No. 15H the assessee had certified that he had no taxable income and TDS should not be deducted out of interest payment to him by the bank. The certification made by the assessee was proved to be incorrect. The details of bank interest earned by the assessee for the asst. yrs. 1990-91 to 1999-2000 are as under : Rs. 1990-91 2,43,654 1991-92 4,48,021 1992-93 6,77,162 1993-94 9,10,618 1994-95 10,46,284 1995-96 11,39,159 1996-97 18,03,348 1997-98 21,37,949 1998-99 22,12,182 1999-2000 26,89,768 It is apparent from the above that the assessee earned substantial amount of interest from asst. yr. 1990-91 onwards but had submitted incorrect particulars in Form No. 15H to the banks to avoid payment of taxes and submit the returns of income in time. The authorised representatives contention that the AO. yr. 1990-91 onwards but had submitted incorrect particulars in Form No. 15H to the banks to avoid payment of taxes and submit the returns of income in time. The authorised representatives contention that the AO. All the returns were filed after the AO through a perusal of Form No. 15H filed by the assessee for his bankers detected that the assessee was having taxable income but not filing his returns of income. All the returns were filed by the assessee belatedly and without their being any unavoidable circumstances for not furnishing the returns of income. Therefore, the case of the assessee does not fall within the parameters laid down in para (e) of the CBDT circular cited supra. The judgments relied upon by the authorised representative are not relevant being not with reference to the CBDTs circulars under which waiver petition has been filed. Considering the facts and circumstances of the case and in view of the above discussion, I hold that assessees petition for waiver of interest under Sections 234A, 234B and 234C of the IT Act is not covered within the CBDTs circular cited supra and hence the same is rejected." 3 We have heard learned counsel for the parties and carefully perused the record. The main ground on which Respondent No. 1 declined the petitioners prayer for waiver or interest is that late Shri Megh Raj had furnished incorrect particulars in Form 15H in order to avoid the payment of taxes. However, while taking that view, Respondent No. 1 overlooked the fact that in his reply dt. 8th Feb., 2000, sent to ITO, Ward-I, Kurukshetra, Shri Megh Raj had clearly stated that he was an illiterate person of 70 years age and had signed Form 15H as asked by the bank manager without knowing what its contents were. Similar reply was sent by his chartered accountant on 3rd Oct., 2000. Respondent No. 1 also overlooked the fact that the AO had strongly recommended for waiver of interest. In our opinion, non-consideration of these factors has the effect of vitiating the conclusion recorded by Respondent No. 1 that the assessee had furnished incorrect particulars in Form 15H. 4. Similar reply was sent by his chartered accountant on 3rd Oct., 2000. Respondent No. 1 also overlooked the fact that the AO had strongly recommended for waiver of interest. In our opinion, non-consideration of these factors has the effect of vitiating the conclusion recorded by Respondent No. 1 that the assessee had furnished incorrect particulars in Form 15H. 4. We are also inclined to agree with the learned counsel for the petitioners that filing of incorrect particulars in Form 15H cannot lead to an inference that Shri Megh Raj had deliberately tried to mislead the authorities and wanted to avoid payment of tax or to file the return in time. The old age and illiteracy of the assessee were important factors which Respondent No. 1 should have taken into account while judging the veracity of the assertion made by him that he had signed Form 15H on the dotted lines. Therefore, without examining other issues raised in the petition, we deem it proper to remand the case to Respondent No. 1 for deciding the petitioners application for waiver of interest afresh. 5. Hence, the writ petition is allowed and order Annexure P-1 is quashed with a direction to Respondent No. 1 to decide the application filed by the petitioners under Section 119(2)(a) of the 1961 Act afresh. 6. The petitioners are directed to appear before Respondent No. 1 in person or through their advocate on 18th Aug., 2003, who, we expect, will pass a fresh order within next two months.