2011 (11) TMI 670 - HC - Income Tax

Summary

Issues involved:
The judgment involves issues related to the rejection of the petitioner's application for interest reduction, quashing of levy of interest under Section 243A and 243B of the Income Tax Act, and the exercise of discretion by the Commissioner of Income Tax under Section 220 (2A) for waiver of interest.

Details of the Judgment:

*Issue 1: Rejection of Application for Interest Reduction*
The petitioner filed an original return declaring income and paying presumptive tax. Subsequently, assessments were made, appeals were filed, and the Income Tax Appellate Tribunal granted relief on certain amounts. The Income Tax Officer imposed interest on the petitioner, who disputed the levy under Section 234A. The Commissioner of Income Tax reduced the interest by 25%, citing reasons such as hardship to the petitioner, circumstances beyond control, and cooperation in the enquiry. The petitioner contended that the reduction was inadequate, citing relevant legal provisions and case law.

*Issue 2: Quashing of Levy of Interest under Section 243A and 243B*
The petitioner challenged the levy of interest under Section 243A and 243B of the Income Tax Act. The Commissioner of Income Tax reduced the interest by 25% based on considerations of hardship, circumstances, and cooperation. The petitioner argued that the reduction was insufficient and that the Commissioner erred in exercising discretion. The defense contended that the Commissioner rightly exercised jurisdiction, considering the facts and circumstances of the case.

*Issue 3: Exercise of Discretion by the Commissioner under Section 220 (2A)*
The Commissioner of Income Tax, Varanasi, exercised discretion under Section 220 (2A) to reduce interest payable by the petitioner. The Commissioner reduced the interest by 25% based on various factors, including hardship, circumstances, and cooperation. The petitioner argued that the reduction was inadequate, citing legal provisions and case law supporting a more substantial waiver. The defense maintained that the Commissioner's decision was appropriate, considering the circumstances and facts of the case.

In conclusion, the High Court allowed the writ petition, setting aside the Commissioner's order and directing a reconsideration of the waiver of interest in accordance with the statutory conditions laid down in Section 220 (2A) of the Income Tax Act, 1961.