2014 (1) TMI 1041 - HC - Income Tax

Waiver of penalty and interest u/s 273A - Whether the petitioner had made satisfactory arrangements for the payment of tax - Held that - The petitioner had been unable to show that a satisfactory arrangement had been made for payment of tax and interest for all the years except for one year i.e. 1981 - The learned CIT was of the view that penalty amounts and total dues under Section 220 had to be paid or arranged - The language of the provision i.e. Section 273A(3) of the Act does not talk of one year but of one instance - In this case clearly the view of the Commissioner proceeded on the assumption that the relief could be given one time for one year - the inclusion of any amount over and above the tax and interest payable, such as penalties determined under various provisions as well as the assumption that such amount is collectively payable is without the authority of law. The assessee has been able to demonstrate that payment of tax and interest had been made in respect of the years 1981-82 to 1984-85. The impugned order is set aside in totality in respect of these assessment years

Summary

Issues:
Challenge to order of Commissioner of Income Tax under Section 273A seeking waiver of penalty and interest for assessment years 1980-81 to 1988-89.

Detailed Analysis:

1. The petitioner challenged an order of the Commissioner of Income Tax made under Section 273A seeking waiver of penalty and interest for specific assessment years. The court set aside the impugned order and remitted the matter for reconsideration due to late filing of returns for income from house property.

2. The Commissioner denied the waiver based on the petitioner being a persistent defaulter and not making satisfactory arrangements for tax payment. The petitioner argued that the Commissioner's narrow interpretation of Section 273A was erroneous, citing relevant case laws to support the contention that relief should have been granted collectively.

3. The Commissioner's order under Section 273A was analyzed, highlighting the conditions to be considered, including satisfactory arrangement for tax payment. The petitioner disputed the Commissioner's findings, stating that payments made under various heads were not considered, affecting the assessment of satisfactory arrangements.

4. The court clarified that the requirement for payment of penalty and interest upfront to qualify for relief under Section 273A was incorrect, as it would defeat the purpose of discretion. The court held that penalty under Section 271(1)(e) could not be imposed if statutory conditions were met.

5. The second issue addressed was the meaning of "satisfactory arrangement for payment" of tax and interest. The court adopted the view of the Bombay High Court, emphasizing that the determination of payment sufficiency lies with the revenue authority.

6. The court concluded that the Commissioner's view was erroneous, aligning with various High Court decisions. It held that relief under Section 273A was not limited to one year but applied to instances, setting aside the impugned order for specific assessment years.

7. The court allowed the writ petition, directing the Commissioner to reassess the petitioner's satisfactory arrangements for tax payment without including penalty amounts and dues under Section 220 for the relevant years.

Conclusion:
The court held in favor of the petitioner, setting aside the impugned order and remitting the matter for reassessment of satisfactory arrangements for tax payment for specific assessment years.