2015 (10) TMI 948 - HC - Income Tax

Waiver of interest under Section 220(2) rejected - non-payment of amount, within time - Held that - A perusal of the impugned order, which is extracted above, shows that the 1st respondent Commissioner, has not considered the grounds raised by the petitioner in the petition filed under Section 220(2A) of the Act and has passed an order bereft of reasons. The settled legal proposition is that the impugned order itself shall contain reasons justifying the decision taken and they cannot be supplemented by way of an affidavit. MOHINDER SINGH GILL v. CHIEF ELECTION COMMR. 1977 (12) TMI 138 - SUPREME COURT The second equal relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. In as much as the impugned order is bereft of any reasons and further the same has not dealt with the contentions raised by the petitioner in his application filed under Section 220(2A) of the Act, and in view of the above facts and circumstances and the law laid down by Apex Court, the impugned order cannot be sustained and the same is hereby set aside. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Assessment of unexplained investment, addition of impounded receipts, appeal before Commissioner of Income Tax (Appeals), appeal before Income Tax Appellate Tribunal, levy of interest under Section 220(2) of the Income Tax Act, rejection of petition for waiver of interest under Section 220(2A) of the Act.

Assessment of Unexplained Investment:
The petitioner, involved in finance and other businesses, was found to have made a payment for the purchase of landed property, which the assessment officer treated as unexplained investment. The Commissioner of Income Tax (Appeals) deleted an additional amount brought to tax but confirmed the unexplained investment. The Income Tax Appellate Tribunal allowed the Revenue's appeal, restoring the initial assessment order. The petitioner challenged the assessment, leading to the Tribunal's decision.

Levy of Interest under Section 220(2):
Due to non-payment of the balance amount within the stipulated time, the assessment officer levied interest under Section 220(2) of the Income Tax Act. The petitioner filed a petition seeking waiver of interest under Section 220(2A), citing circumstances beyond control for the delay in payment. The Principal Commissioner of Income Tax rejected the petition, stating no reasonable grounds or hardship existed for waiver.

Analysis:
The High Court observed that the impugned order lacked reasons and did not address the grounds raised by the petitioner in the waiver petition under Section 220(2A) of the Act. Citing legal precedent, the Court emphasized that orders must contain reasons justifying decisions without supplementation through affidavits. As the order was devoid of reasons and failed to consider the petitioner's contentions, the Court set it aside, directing the Commissioner to reconsider the petition, afford the petitioner a hearing, and issue a reasoned order in accordance with the law.

This comprehensive analysis of the judgment highlights the issues of unexplained investment assessment and interest levy under the Income Tax Act, focusing on the legal aspects and procedural requirements involved in the case.