2013 (3) TMI 220 - HC - Income Tax

Wavier of interest seeked pursuant to notification dated 23.05.1996 issued u/s 119(2)(a) - additional demand of tax and interest - status of a registered firm disallowed - Held that - Clause (d) of the notification which is relied on for waiver is applicable in a case where tax has been paid relying on the judgment of the High Court or Supreme Court and that subsequently, the liability got increased on account of reversal of the judgment relied on by the assessee. Having closely perused the assessee s applications no ground raised by the petitioners, which can be traced to Clause(d) of the notification dated 23.05.1996 also evident from the orders passed by the respondents rejecting the applications.

Summary

Issues:
1. Rejection of claim of registered firm status for assessment year 1990-1991.
2. Additional demand of tax and interest due to reversal of appellate orders.
3. Rejection of applications for waiver of interest under Section 119(2)(a) of the Income Tax Act based on notification dated 23.05.1996.
4. Similar rejection of waiver applications for assessment years 1989-1990, 1996-1997, 1997-1998, and 1998-1999.
5. Interpretation of Clause (d) of the notification dated 23.05.1996 for waiver of interest.
6. Failure to establish grounds under Clause (d) in waiver applications leading to rejection.

Analysis:
The High Court of Kerala heard several writ petitions concerning common issues and decided to address them collectively. In one case for the assessment year 1990-1991, a partnership firm's claim of being a registered firm was initially declined by the Assessing Officer but later allowed in an appeal. However, a Division Bench of the Court reversed the appellate orders, resulting in an additional tax and interest demand. The firm sought waiver of interest under a government notification, which was rejected, leading to a writ petition challenging the rejection.

Similarly, in other cases for different assessment years, applications for waiver of interest under the same notification were rejected, prompting further writ petitions. The petitioners argued that their cases should fall under Clause (d) of the notification dated 23.05.1996, which allows for reduction or waiver of interest in specific circumstances. The Court examined the applications closely and found that the grounds raised did not align with Clause (d) requirements. The rejection of the waiver applications was upheld as the petitioners failed to establish a case covered by the relevant clause, and the impugned orders were deemed valid. Consequently, the Court dismissed the writ petitions, emphasizing the importance of meeting the criteria specified in the notification for claiming waiver of interest under Section 119(2)(a) of the Income Tax Act.