2016 (9) TMI 1559 - HC - Income Tax

Waiver of interest chargeable u/s 234B and 234C - circumstances responsible for the delay in filing the return of income - HELD THAT - Identical case was considered in the case of VINODCHANDRA C.PATEL v. CIT 1993 (10) TMI 10 - GUJARAT HIGH COURT wherein pointed out that when circumstances resulting into late payment of taxes and when the same set of circumstances are considered to be unavoidable circumstances responsible for the delay in filing the return of income, ordinarily, such circumstances would also qualify to be considered to be unavoidable circumstances responsible for the delay in the late payment of taxes. After noting the factual circumstances in the said case, it was pointed out that if the circumstances have been considered to be unavoidable circumstances for the purpose of waiver of interest under section 234A, in the facts of the case, the same would have to be considered as unavoidable circumstances for the purpose of reduction/waiver of interest under sections 234B and 234C as well. Accordingly, whatever waiver granted under section 234A, shall also be extended with regard to waiver of interest under sections 234B and 234C of the Act. As noticed above, the respondent was satisfied with the fact that the petitioner has made out a case for waiver of interest under section 234A of the Act and the respondent recorded that it is a reasonable cause for delay in filing the return of income. Applying the reasons assigned by the Hon'ble Division Bench of the Gujarat High Court, this Court is of the view that the same reasoning should be adopted while considering the claim of waiver of interest under sections 234B and 234C of the Act.

Summary

Issues:
Challenge to order denying waiver of interest under sections 234B and 234C of the Income Tax Act, 1961.

Analysis:
1. The petitioner challenged the order denying waiver of interest under sections 234B and 234C of the Income Tax Act, 1961. The respondent had granted waiver under Section 234A after considering the petitioner's explanation for the delay in filing the return of income. However, the authority did not consider the same reasons for waiver under sections 234B and 234C, stating that the circumstances mentioned in a specific notification were not satisfied for granting waiver under these sections.

2. The Hon'ble Division Bench of Gujarat High Court in a similar case highlighted that circumstances leading to late payment of taxes could be considered unavoidable circumstances for the delay in filing the return of income. The court referred to a notification empowering the waiver of interest under sections 234A, 234B, or 234C, emphasizing that such waiver could be granted only after the assessee filed the return of income and paid the entire tax due except the interest amount in question.

3. The court noted that if circumstances were deemed unavoidable for waiver under section 234A, they should also be considered so for waiver under sections 234B and 234C. Therefore, the waiver granted under section 234A should be extended to interest under sections 234B and 234C as well. The court held that the reasoning applied by the Gujarat High Court should be adopted in this case for consistency.

4. Considering the petitioner's reasonable cause for delay in filing the return of income and following the Gujarat High Court's reasoning, the Madras High Court allowed the Writ Petition, set aside the impugned order, and directed the respondent to grant waiver of interest under sections 234B and 234C for the assessment year in question, 1989-90. The court made this decision without imposing any costs on the parties involved.