2014 (10) TMI 704 - HC - Income Tax

Waiver of interest Adjustment of advance tax - Held that - Revenue seized ₹ 21 lacs from M/s Ram Lal Kesar Dass, of which the petitioner and one Sh.Kesar Dass were partners - no credible reason has been assigned for rejecting the assessee s prayer for adjustment or for treating him differently - assessee s application has been rejected by referring to irrelevant provisions and facts that were not germane to the controversy and without considering whether benefit granted to the firm and Sh. Kesar Dass should also be granted to the assessee by adjusting the amount towards advance tax thus, the matter is to be remitted back to the AO for fresh consideration Decided in favour of assessee.

Summary

Issues: Petition for issuance of a writ of certiorari to quash an order by the Deputy Commissioner of Income-tax and a writ of mandamus directing the respondents to waive interest.

Analysis:
The petitioner, a partner in a firm where cash was seized by the Income Tax Department, sought adjustment of tax payable out of the seized cash. Despite adjustments made for the firm and another partner, the petitioner faced a demand for interest. The petitioner filed multiple petitions requesting waiver of interest, which were either not addressed or rejected. The petitioner argued that the same treatment should have been given as in the case of the firm and the partner, where advance tax was adjusted without levying interest. The revenue contended that the interest imposed was legal due to the petitioner's failure to pay advance tax as required by law.

Upon review, the High Court found that the Income Tax Department had seized cash from the firm, which was adjusted against advance tax without levying interest, unlike in the petitioner's case. The court noted that the impugned order lacked a credible reason for rejecting the petitioner's request for adjustment and treating him differently. The rejection was based on irrelevant provisions and facts not pertinent to the issue at hand. The court emphasized that the benefit granted to the firm and the partner should also extend to the petitioner by adjusting the amount towards advance tax.

As a result, the High Court allowed the writ petition, setting aside the order dated 14.12.1994, and remitted the matter back to the assessing officer for a fresh decision. The assessing officer was directed to reconsider the case, provide an opportunity for a hearing, and consider the orders in the cases of the firm and the partner.