1996 (12) TMI 13 - HC - Income Tax

Summary

Issues:
1. Assessment of demand under the Estate Duty Act, 1953.
2. Adjustment of amount under Section 50B of the Estate Duty Act in self-assessment tax.
3. Application for waiver of interest under Section 220(2A) of the Income Tax Act.
4. Rejection of waiver application by the CBDT and the CIT.
5. Maintainability of a second application for waiver.
6. Conditions for reducing or waiving interest under Section 220(2A).
7. Justification for not making timely payment of tax.
8. Satisfaction of conditions for waiver of interest.
9. Discretionary powers of the authority under Section 220(2A).
10. Compliance with conditions for waiver of interest.

Analysis:
1. The petitioner, a legal heir, was provisionally assessed for a demand under the Estate Duty Act, 1953, which led to the sale of equity shares to meet the tax liability. The petitioner claimed adjustment of the amount under Section 50B of the Estate Duty Act in the self-assessment tax, which was denied, resulting in a notice of demand under the Income Tax Act.

2. The petitioner filed applications for waiver of interest under Section 220(2A) of the Income Tax Act before the CBDT and the CIT, which were rejected. The petitioner sought relief through a writ petition to quash the orders and requested a mandamus to stop the recovery of interest during the petition's pendency.

3. The court noted that the conditions for waiver of interest under Section 220(2A) required genuine hardship, circumstances beyond the control of the assessee, and cooperation in inquiries. The amendment in 1986 shifted the power to reduce or waive interest to the CIT from the Board.

4. The court found that the second application for waiver before the CIT was not maintainable, as the earlier application to the Board had been rejected on the same grounds. The petitioner failed to challenge the Board's decision and did not provide sufficient justification for filing a second application.

5. The court emphasized that the discretion to reduce or waive interest must be exercised reasonably and objectively, with all conditions under Section 220(2A) being satisfied cumulatively. The petitioner's argument of genuine hardship due to non-payment of tax on capital gains was deemed misconceived.

6. The court analyzed the reasons for the default in payment and found that the circumstances were not beyond the petitioner's control. The petitioner's reliance on entitlement to relief under the Estate Duty Act was not considered relevant for the waiver of interest under the Income Tax Act.

7. The report by the CIT to the Board highlighted that the conditions for waiving interest were not met in the petitioner's case. The court concluded that the writ petition lacked merit and dismissed it, stating that the petitioner was not entitled to relief.