2012 (3) TMI 78 - HC - Income Tax

Plea for waiver of interest u/s 234A delay in filing Return Of Income A.Y. 1993-94 and 1994-95 - books of accounts/documents seized during search conducted in August 1993 assessee allowed to obtain photo copies of the seized books of accounts and documents from February 1994 - long time consumed in obtaining photocopies - prayer for waiver of interest to CIT disposed by him after long delay on 07.04.2008 Held that - It is apparent that the petitioner has been making payment to the respondents from time to time. Amounts paid, it appears have been adjusted first towards the interest due and then towards the principal amount. However, at the same time petitioner have not been able to show and establish that the entire delay in filing of the returns can be attributed to failure to permit inspection and photocopy of documents/records. Therefore, we are inclined to direct that the petitioner will be entitled to waiver of interest to the extent of 30% in the two assessment years Decided partly in favor of assessee.

Summary

Issues:
1. Impugned consolidated order rejecting application for waiver of interest under Section 234A of the Income Tax Act for assessment years 1993-94 and 1994-95.
2. Interpretation of circular/notification dated 23rd May, 1996 empowering Chief Commissioner to waive interest under Section 234A, 234B, and 234C in specified cases.
3. Attribution of delay in filing returns of income to the assessee.
4. Consideration of waiver of interest under Section 234A based on circumstances beyond the control of the assessee.
5. Delay in disposing of applications for waiver of interest.
6. Payment of tax due and its impact on the application for waiver of interest.
7. Assessment of the reasons for delay in filing returns and the casual approach of the petitioner.
8. Decision on the extent of waiver of interest in the assessment years 1993-94 and 1994-95.

Analysis:
1. The judgment by the Delhi High Court pertains to two writ petitions challenging a consolidated order rejecting the application for waiver of interest under Section 234A of the Income Tax Act for the assessment years 1993-94 and 1994-95. The impugned order was passed by the Chief Commissioner, Income Tax, Delhi-IV, based on a circular/notification dated 23rd May, 1996, empowering the Chief Commissioner to waive interest under specified circumstances.

2. The crux of the matter lay in determining the attribution of the delay in filing returns of income to the assessee. The Chief Commissioner's order highlighted that the delay was attributable to the assessee as they were given sufficient opportunities to obtain photocopies of seized materials before the due dates for filing returns. The circular specified conditions under which waiver of interest could be considered, emphasizing reasons beyond the control of the assessee.

3. The court considered the timeline of events, including the installation of a photocopy machine by the petitioner and the continuous process of photocopying documents for over 50 days. The petitioner claimed restrictions on operating the photocopying machine, leading to delays in completing the audit and filing returns. The court acknowledged the conscious efforts of the authorities in permitting inspections and photocopying, indicating the relevance of the seized documents for filing returns.

4. Delays in disposing of applications for waiver of interest were noted, with the petitioner approaching different tax authorities over time. The court highlighted the lack of response to initial applications and subsequent delays in addressing the petitioner's requests, leading to prolonged litigation.

5. The issue of tax payments due and its impact on the application for waiver of interest was raised by the respondents. However, the court found discrepancies in the records and emphasized that the impugned order did not mention outstanding tax amounts, focusing on the interest due and adjustments made by the petitioner.

6. Assessing the reasons for the delay in filing returns, the court noted lapses on the petitioner's part, indicating a casual approach. Despite the petitioner's contentions regarding restrictions on photocopying and inspection, the court deemed the delays as indicative of negligence and lack of diligence.

7. Ultimately, the court decided to grant a 30% waiver of interest in the two assessment years, considering the factual matrix and the need to avoid further delays in the interest of justice. The judgment modified the impugned order to reflect the partial waiver of interest, thereby disposing of the writ petitions.