2004 (3) TMI 35 - HC - Income Tax

Chief Commissioner of Income-tax, u/s 119(2)(a) read with sections 234A, 234B and 234C granting partial waiver of interest under section 234A and rejecting the petitioner s request for waiver of interest under sections 234B and 234C - since we have found that the Chief Commissioner declined to consider the request for reduction/waiver of interest under sections 234B and 234C by refusing to exercise the jurisdiction vested in him and also because the Chief Commissioner has not given reasons for limiting the reduction of interest under section 234A to only 50 per cent, the impugned order would deserve to be quashed and set aside - However, instead of remanding the matter to the Chief Commissioner for considering the petitioner s request for full waiver of interest at this stage, we are of the view that this is a fit case for granting waiver under sections 234A, 234B and 234C to the extent of 75 per cent.

Summary

Issues Involved:
1. Waiver of interest under sections 234A, 234B, and 234C of the Income-tax Act, 1961.
2. Applicability of circular dated May 23, 1996, for waiver of interest.
3. Consideration of unavoidable circumstances for waiver of interest.

Issue-wise Detailed Analysis:

1. Waiver of Interest under Sections 234A, 234B, and 234C:
The petitioner challenged the order dated October 14, 2003, by the Chief Commissioner of Income-tax, Surat, which granted partial waiver of interest under section 234A but rejected the waiver under sections 234B and 234C. The interest levied for the assessment years 1992-93, 1993-94, and 1994-95 amounted to Rs. 7,55,496. The petitioner's request for waiver was based on the death of her husband and son-in-law, her advanced age, and the lack of assistance in managing tax matters.

2. Applicability of Circular Dated May 23, 1996:
The Chief Commissioner based his decision on the circular dated May 23, 1996, which allows waiver of interest under sections 234A, 234B, and 234C in cases of unavoidable circumstances. The Chief Commissioner granted a 50% waiver under section 234A but denied waiver under sections 234B and 234C, interpreting the circular as applicable only to section 234A. The court clarified that the circular's intent is to provide relief in cases of unavoidable circumstances, and the same circumstances should apply to sections 234B and 234C.

3. Consideration of Unavoidable Circumstances:
The court reviewed the tragic circumstances faced by the petitioner, including the death of her husband and son-in-law, her advanced age, and the abrupt departure of the employee managing tax matters. These circumstances were deemed unavoidable and beyond the petitioner's control. The court emphasized that the same set of circumstances should qualify for waiver of interest under sections 234B and 234C, just as they did for section 234A.

Conclusion:
The court found that the Chief Commissioner erred in not considering the same unavoidable circumstances for sections 234B and 234C. The court referenced the case of Vinodchandra C. Patel v. CIT, where partial waivers were granted, and concluded that the petitioner's circumstances merited a similar approach. The court modified the impugned order, granting a 75% waiver of interest under sections 234A, 234B, and 234C for the assessment years 1992-93, 1993-94, and 1994-95. The petition was partly allowed, and the rule was made absolute to the extent of the 75% waiver.