1999 (8) TMI 21 - HC - Income Tax

Summary

Issues:
1. Petition seeking waiver of interest levied under s. 158BFA(1) of the IT Act, 1961.
2. Applicability of Board Circular dated 23rd May, 1996, for waiver of interest under s. 158BFA(1).
3. Power of respondent No. 2 to waive interest charged under s. 158BFA(1).

Analysis:
1. The petitioner, a partnership firm, filed a writ petition against the order rejecting its request for waiver of interest levied under s. 158BFA(1) of the IT Act, 1961. The firm was subjected to search and seizure operations, and despite a notice to file the return of income within 15 days, the return was filed late by four months and 28 days. The interest levied amounted to Rs. 18 lakhs, which the petitioner sought to have waived due to certain grounds, including the cash seized by the Department before the notice and delays in obtaining necessary documents.

2. The petition for waiver was rejected on the grounds that there was no provision in the Act allowing for the waiver of interest under s. 158BFA(1). The Board Circular dated 23rd May, 1996, cited by the petitioner was deemed inapplicable as it pertained to interest under a different section of the Act, namely s. 234A, and not s. 158BFA(1).

3. The petitioner's counsel argued that the nature of interest under ss. 234A and 158BFA(1) was similar, and therefore, the guidelines in the Board Circular could be applied to waive interest under s. 158BFA(1). However, the Court found no provision empowering respondent No. 2 to waive the interest charged under s. 158BFA(1). The Board Circular was issued for a different section of the Act and did not apply to s. 158BFA(1). The Court emphasized that the legislature had not granted the CBDT the power to relax provisions for levy of interest under s. 158BFA(1). The Court dismissed the petition, citing a lack of merit and referencing a previous case where waiver of interest was allowed under a specific statutory provision, unlike in the current case.

In conclusion, the Court held that respondent No. 2 did not have the authority to waive interest charged under s. 158BFA(1) of the IT Act, 1961, and the Board Circular dated 23rd May, 1996, was not applicable to the current situation. The Court emphasized the absence of a statutory provision allowing for such waivers and dismissed the petition seeking relief from the interest levied.