1983 (6) TMI 27 - HC - Income Tax

Summary

Issues:
1. Whether the assessing authority is bound to waive interest if an assessee is prevented by sufficient cause from filing the return in time.
2. Interpretation of the terms "reduce" and "waive" in the context of interest payable under section 139(8) of the Income Tax Act.
3. Consideration of relevant factors by the assessing authority in deciding on the reduction or waiver of interest.

Analysis:
Issue 1:
The petitioner argued that once the assessing authority is satisfied that an assessee was prevented by sufficient cause from filing the return in time, the interest should be waived entirely. The proviso to section 139(8) allows for the reduction or waiver of interest under prescribed circumstances. The petitioner contended that the word "reduce" should mean complete obliteration of interest if conditions are met. However, the assessing authority has discretionary power to reduce or waive interest based on the circumstances, including loss of government revenue due to delayed tax payment.

Issue 2:
The petitioner claimed that the terms "reduce" and "waive" in the proviso to section 139(8) should be interpreted interchangeably, leading to complete waiver of interest when sufficient cause is proven. The court analyzed various dictionary definitions of "reduce" and "waive" to determine their distinct meanings. The use of both terms in the statute indicates different powers conferred on the assessing authority, with "reduce" implying a decrease and "waive" suggesting relinquishment or forgoing.

Issue 3:
The assessing authority considered relevant factors, including loss of government revenue and the compensatory nature of interest for delayed filing, in deciding on the reduction of interest. The court upheld the authority's discretion in determining the extent of interest waiver based on the circumstances presented. The power to levy interest under section 139(8) is compensatory, not punitive, as established in previous judgments, and the authority's decision was found to be within jurisdiction.

In conclusion, the court dismissed the original petition, stating that the assessing authority had appropriately exercised discretion in reducing the interest charged. The judgment affirmed the assessing authority's power to consider various factors in determining the reduction or waiver of interest under the Income Tax Act.