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Issues involved: Challenge to exhibit P-3 order under section 119(2)(a) of the Income Tax Act, 1961 for waiver of interest under sections 234B and 234C for the assessment year 1997-98.
Analysis: The case involved a challenge by a partnership firm, Universal Trades Corporation, against the exhibit P-3 order issued under section 119(2)(a) of the Income Tax Act, 1961, regarding the waiver of interest under sections 234B and 234C for the assessment year 1997-98. The firm, being an exporter of sea foods, had submitted a return of income for the said assessment year but could not provide supporting documents for their claims under the double taxation avoidance agreement with the Netherlands. Consequently, the Assessing Officer raised a demand that included interest under sections 234B and 234C. The firm then approached the Chief Commissioner of Income-tax seeking a waiver of interest through a petition. However, during the hearing, the firm could not substantiate their claim based on the Board's order dated May 23, 1996, leading to the rejection of their application for waiver of interest in exhibit P-3. The advocate representing the firm argued that the firm had a bona fide claim under G. S. R. No. 382(E) and was not given a fair hearing during assessment, violating principles of natural justice. The advocate also highlighted that the Board's circular, referenced in exhibit P-3, was published as a press note on May 21, 1996, and the firm had diligently followed the instructions. The Revenue's standing counsel, on the other hand, emphasized the strict nature of tax liability and that the firm failed to provide necessary documents for claiming relief, leading to the imposition of interest under sections 234B and 234C. The court considered the compensatory nature of interest under sections 234A and 234B, citing precedents such as Ranchi Club Ltd. v. CIT and A. M. Sainalabdeen Musaliar v. Union of India. The court also addressed the argument regarding the Board's order dated May 23, 1996, emphasizing the authenticity of exhibit R-1(A) over the press note. Additionally, the court discussed cases like CIT v. Hindustan Electro Graphites Ltd. and Evershine Plastics v. Asst. Commissioner, highlighting the distinction between interest as a levy and punishment. Ultimately, the court found no substantial reason to interfere in the matter, noting that while there could have been a possibility to reconsider the firm's claims based on exhibit R-I(A), the special circumstances were not included in the authentic copy of the circular. As a result, the court dismissed the original petition challenging the exhibit P-3 order under section 119(2)(a) of the Income Tax Act, 1961 for waiver of interest under sections 234B and 234C for the assessment year 1997-98.
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