2007 (3) TMI 182 - HC - Income Tax

Waiver of the entire interest levied under Section 139(8) and 217 of the Act - petitioner pleaded that the petitioner was suffering huge financial strain and that there were no fixed assets - The petitioner has projected the reasons for granting waiver taking a considerate view. The first respondent herein has stated that there is no whisper of any facts and circumstances which compelled the inaction on the part of the assessee. The perusal of the order shows that the first respondent has not considered the various circumstances projected in its petition and the explanations offered on the question of its financial difficulties and hardships faced. In the circumstances we accept the plea of the petitioner herein to the extent that the matter requires re-consideration at the hands of the first respondent. Considering the detailed petition made by the petitioner herein in fitness of things it is necessary that the Commissioner considers the facts projected and pass orders in accordance with law. We set aside the order of the first respondent and remit the matter back to the first respondent for a de novo consideration and pass orders in accordance with law within a period of three months from the date of receipt of a copy of this order after affording reasonable opportunity to the petitioner herein to substantiate its claim.

Summary

Issues:
Challenge to order of Commissioner of Income Tax denying exemption under Section 80P(2) of the Income Tax Act for a Cooperative Society. Appeal for waiver of interest levied under Section 139(8) and 217 of the Act due to financial strain. Rejection of waiver plea by authorities. Writ petition filed seeking review of the order.

Analysis:
The judgment pertains to a writ petition filed against the order of the Commissioner of Income Tax denying exemption under Section 80P(2) of the Income Tax Act to a Cooperative Society engaged in marketing silk sarees produced by its members. The society sought waiver of interest levied under Section 139(8) and 217 of the Act due to financial strain. The Additional Commissioner of Income Tax initially waived interest attributable to a specific period but rejected the overall plea for waiver. The society filed a petition for review, emphasizing its financial crisis and statutory obligations regarding investments. The Commissioner of Income Tax also rejected the plea for waiver, citing lack of exceptional circumstances and financial hardship as the sole basis. The petitioner then approached the High Court through a writ petition challenging the rejection of the waiver plea.

The High Court observed that the exercise of discretion for granting waiver is conditional upon the satisfaction of authorities regarding the existence of appropriate circumstances. It emphasized that the conclusion on waiver plea is primarily a finding of fact, and interference by the Court is limited to cases where the authorities' decision is unsustainable or lacks reasonable basis. The Court noted that the first respondent did not adequately consider the petitioner's circumstances and financial difficulties while rejecting the waiver plea. Consequently, the Court set aside the order of the first respondent and remitted the matter back for a fresh consideration, directing the Commissioner to pass orders in accordance with the law after affording a reasonable opportunity to the petitioner to substantiate its claim.

In conclusion, the High Court allowed the writ petition, directing a re-consideration of the waiver plea by the Commissioner of Income Tax within three months. The Court stressed the need for a detailed assessment of the petitioner's circumstances and a fair determination of the waiver request based on legal provisions and factual considerations.