1990 (8) TMI 41 - HC - Income Tax

Summary

Issues:
Challenge to legality and validity of orders refusing to waive interest under section 217 for assessment years 1977-78 and 1978-79.

Analysis:
The petitioner challenged the Commissioner's orders refusing to waive interest under section 217 for the assessment years 1977-78 and 1978-79. The petitioner applied for waiver under rules 40 and 117A of the Income-tax Rules, which allow for reduction or waiver of interest under specific circumstances. The petitioner argued that it satisfied the conditions for waiver but the Commissioner rejected the applications. The discretion to waive interest is conditional upon satisfying specific circumstances as per the rules.

The petitioner claimed that due to losses in previous years, it believed it had no obligation to file advance tax estimates. However, the Commissioner rejected this claim, stating that losses do not automatically carry forward to set off against future profits. The Commissioner's conclusion that the petitioner was not prevented by sufficient cause from filing returns in time for the assessment year 1978-79 was upheld, as the petitioner's belief was deemed unjustified.

For interest charged under section 139(8), the Commissioner waived it for the assessment year 1977-78 due to the petitioner being prevented by sufficient cause. However, for the assessment year 1978-79, the Commissioner rejected the waiver, stating that the petitioner could have filed the return in time. The High Court disagreed with the Commissioner's decision for 1978-79, noting that the accounts needed to be audited before filing, and set aside the order refusing waiver for that year.

Citing relevant case law, the High Court distinguished previous judgments where waiver was granted based on specific circumstances. Ultimately, the High Court directed full waiver of interest charged under section 139(8) for the assessment year 1978-79, in line with the waiver granted for 1977-78. However, the order regarding interest charged under section 217 for both years was not interfered with.

In conclusion, the High Court partially allowed the petition, directing full waiver of interest under section 139(8) for the assessment year 1978-79, while upholding the Commissioner's decision on interest charged under section 217 for both years. No costs were awarded in the judgment.