2009 (4) TMI 91 - HC - Income Tax

Non-filing of returns in time due to busy schedule - petitioner is not a habitual defaulter - as per Notification No.400/234/95/IT(B) if return could not be filed by the assessee due to unavoidable circumstances and such return is filed voluntarily, reduction or waiver of interest under Section 234A, 234B or 234C can be considered - impugned order is quashed in so far as the non-granting of waiver of interest in respect of Section 234C and partial consideration of the waiver of interest in respect of Sections 234A and 234B - matter is remitted for fresh consideration, taking into account the unavoidable circumstances explained by the petitioner

Summary

Issues Involved:
1. Waiver of interest under Sections 234A, 234B, and 234C of the Income Tax Act.
2. Consideration of "unavoidable circumstances" for delayed filing of returns.
3. Fulfillment of conditions under Notification No.400/234/95/IT(B) dated 23.05.1996.
4. Voluntary filing of returns without detection by the Assessing Officer.
5. Legal validity of the Assessing Officer's actions and the Chief Commissioner's order.

Issue-Wise Detailed Analysis:

1. Waiver of Interest under Sections 234A, 234B, and 234C:
The petitioner, a playback singer, sought a waiver of interest levied under Sections 234A, 234B, and 234C for the assessment years 1993-94 to 1996-97. The Chief Commissioner of Income Tax partially waived the interest under Sections 234A and 234B but confirmed the interest under Section 234C. The petitioner argued that the delay in filing returns was due to unavoidable circumstances and sought a full waiver of interest.

2. Consideration of "Unavoidable Circumstances":
The petitioner contended that his busy schedule in the cinema industry, working 16 hours a day, prevented him from filing returns on time. The Chief Commissioner accepted this reason partially, waiving interest for a delay of three months under Section 234A but not for the entire period or under Sections 234B and 234C. The court had to determine if a "busy schedule" constituted "unavoidable circumstances" under the relevant notification.

3. Fulfillment of Conditions under Notification No.400/234/95/IT(B) dated 23.05.1996:
The notification allows for the waiver of interest if the delay in filing returns was due to unavoidable circumstances and the returns were filed voluntarily without detection by the Assessing Officer. The petitioner claimed compliance with these conditions, arguing that his delay was due to unavoidable circumstances and that he filed returns voluntarily.

4. Voluntary Filing of Returns without Detection by the Assessing Officer:
The respondents argued that the petitioner did not file returns voluntarily as notices under Section 142(1) were issued, prompting the filing. The petitioner maintained that he filed returns voluntarily and cooperated with the Income Tax Department. The court had to assess whether the returns were truly voluntary and if the delay was justifiable under the notification.

5. Legal Validity of the Assessing Officer's Actions and the Chief Commissioner's Order:
The Assessing Officer accepted the returns under Section 143(3) read with Section 147 and levied interest under Sections 234A, 234B, and 234C. The petitioner filed petitions under Section 154 for rectification of arithmetical errors and appealed the assessment year 1993-94. The Chief Commissioner's order was challenged for not fully waiving the interest despite accepting the reason for delay partially.

Judgment Summary:
The court analyzed the facts and legal provisions, noting that the petitioner, a playback singer, had a busy schedule that could be considered an unavoidable circumstance. The court highlighted that the petitioner was not a habitual defaulter and had filed returns voluntarily, albeit late. The court referred to relevant case law supporting the view that unavoidable circumstances should be considered for waiver of interest.

The court quashed the Chief Commissioner's order to the extent of non-granting full waiver of interest under Sections 234A and 234B and the complete rejection under Section 234C. The matter was remitted back to the Chief Commissioner for fresh consideration, directing him to pass appropriate orders in accordance with law within four weeks, taking into account the unavoidable circumstances explained by the petitioner.

The writ petition was allowed with the above direction, and no costs were imposed.