2017 (1) TMI 317 - HC - Income Tax

Stay on recovery of demand - Application filed under Section 220(2) rejected - genuine hardship - attachment of property by way of enforcement of law by the department - Held that - The schedule of the properties which were attached as per the documents produced by the petitioners themselves at Annexure- G shows that there are huge immovable properties totally 12 in number in the peripheral area of Bangalore city. Therefore, if a person is having large number of immovable properties and can pay the amount of interest by sale or realization of money from the property, it cannot be said to be a genuine hardship as sought to be canvassed. On the contrary, the quantum of amount of ₹ 45,11,093/- is a tip in the iceburg in comparison to huge value of 12 properties belonging to the assessee. If the person has the capacity to pay, may be by out of his movable or immovable properties and inspite of that the ground is contended as of hardship, same cannot be termed as genuine hardship. If such hardship is treated as genuine hardship, it would defeat the purpose of consideration of the genuine hardship. No case is made out for interference.

Summary

Issues:
- Appeal against order dismissing petitions under Section 220(2) of the Income Tax Act.
- Consideration of waiver of interest under Section 220(2A) based on hardship.
- Lack of proof of genuine hardship due to enforcement of law.
- Contention of genuine hardship based on property attachment.
- Comparison of amount due with the value of attached properties.
- Reliance on previous court decisions regarding waiver of interest.

Analysis:
- The appeals were filed against an order dismissing petitions under Section 220(2) of the Income Tax Act. The appellant contended that no reasons were given for rejecting the application and argued that the attachment of property in 2010 hindered business activity, causing hardship in paying interest. The appellant sought consideration based on Section 220(2A) for waiver of interest due to demonstrated hardship, financial status, uncontrollable circumstances, and cooperation in proceedings.

- The court examined the case and found that the appellant did not file returns on time, leading to coercive measures like property attachment. Despite the attachment being lifted after five years upon payment, the appellant failed to cooperate in assessment proceedings or payment of taxes. The court emphasized that genuine hardship must be proven beyond enforcement of the law, requiring evidence of financial distress.

- The appellant's sole contention was the property attachment as a hardship, but no other grounds were presented. The court noted the significant number of valuable properties owned by the appellant, suggesting the ability to pay interest from property sales. The court highlighted that the claimed hardship should not be based on the mere enforcement of the law to maintain the rule of law.

- The court referenced previous judgments to distinguish cases where voluntary actions were taken to pay dues from cases lacking such initiatives. The court emphasized the need for genuine hardship beyond mere claims, especially when substantial assets are available for liquidation. The court found no error in the single judge's decision, leading to the dismissal of the appeals.

- Ultimately, the court dismissed the appeals, concluding that the single judge's decision was not erroneous and did not warrant interference in an intra-court appeal. The court upheld the importance of proving genuine hardship beyond the enforcement of the law and the availability of significant assets for payment of dues.