2000 (11) TMI 97 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the Commissioner's order rejecting the waiver of interest under section 220(2A) of the Income-tax Act, 1961.
2. Applicability of section 220(2A) of the Income-tax Act, 1961, to the Voluntary Disclosure of Income and Wealth Act, 1976.
3. Assessment of genuine hardship and circumstances beyond control as per section 220(2A).

Detailed Analysis:

1. Legality of the Commissioner's Order:
The writ petition challenges the order of the Commissioner of Income-tax, Tamil Nadu-V, Madras, dated October 29, 1990, which rejected the petitioner-company's application for waiver of interest under section 220(2A) of the Income-tax Act, 1961. The petitioner-company declared an income of Rs. 115 lakhs under the Voluntary Disclosure of Income and Wealth Act, 1976, and paid the corresponding tax of Rs. 69 lakhs in installments over 53 months, incurring an interest liability of Rs. 22,23,941 for delayed payment. The petitioner-company applied for waiver of this interest, which was ultimately rejected by the Commissioner.

2. Applicability of Section 220(2A) to the Voluntary Disclosure Act:
The petitioner-company argued that the interest waiver provision under section 220(2A) of the Income-tax Act, 1961, should apply to the Voluntary Disclosure Act. However, the court noted that the Voluntary Disclosure Act, 1976, is a self-contained code with no provision for waiver of interest. Section 6 of the Voluntary Disclosure Act mandates the payment of interest for delayed tax payments. The court emphasized that section 220(2A) was introduced in the Income-tax Act in 1984, after the Voluntary Disclosure Act had already been enacted, and thus does not apply retroactively to the Voluntary Disclosure Act.

3. Assessment of Genuine Hardship and Circumstances Beyond Control:
The court examined whether the petitioner-company met the conditions for interest waiver under section 220(2A), which include proving genuine hardship, circumstances beyond control, and cooperation with the tax authorities. The petitioner-company claimed that it faced genuine hardship and had cooperated fully by declaring its income and paying the tax ahead of the installment schedule. However, the Commissioner found that the petitioner-company did not provide sufficient evidence to support its claims of genuine hardship. The court agreed with the Commissioner, noting that the petitioner-company's assets and income did not indicate any undue hardship. The court also referenced the company's substantial rental income and net profit, which contradicted the claim of financial distress.

Conclusion:
The court upheld the Commissioner's decision, stating that the Voluntary Disclosure Act does not provide for interest waiver and that the petitioner-company did not meet the criteria for waiver under section 220(2A) of the Income-tax Act. The court found no error or infirmity in the Commissioner's order and dismissed the writ petition.