2009 (6) TMI 18 - HC - Income Tax

Interest u/s 234, 234B, 234C - Circular No.400/234/95-IT(B), dated 23.5.96 - waiver of interest where tax is paid voluntarily - it is seen in the present case that the petitioner has paid the tax voluntarily and has also pleaded a good and sufficient reason for the non payment of tax on time. The fact of the death of petitioner s father who was looking after the business, and as well as the petitioner s mother and guardian was an house wife unfamiliar with such transactions, is not denied by the respondent. On the contrary, he has given some logical interpretation for overruling the claim made by the petitioner. - Held that. The claim made by the petitioner is bona fide and genuine and the respondent has not exercised his discretion in terms of law interest levied under Sections 234A, 234B and 234C is set aside and it is declared that the petitioner need not pay any interest for those two assessment years - At the same time, if any excess amount had been paid, she is also not entitled to seek refund of the same.

Summary

Issues:
Challenge to order of interest levied under Sections 234B and 234C for assessment years 1991-92 and 1992-93.

Analysis:
- The petitioner, a minor during the relevant assessment years, filed returns voluntarily but faced interest levied under Sections 234B and 234C of the IT Act. The tax liability was determined after processing the returns, resulting in a balance to be paid.
- The petitioner sought to waive the interest based on the circumstances of being a minor and the death of the father who managed the family affairs. The respondent rejected the request citing non-payment of advance tax for 1991-92 and payment for 1992-93 after the father's demise.
- A circular authorized waiver in cases where returns could not be filed due to unavoidable circumstances. The Division Bench emphasized that waiver is discretionary but dependent on satisfying authorities of appropriate circumstances.
- Previous judgments highlighted the need for authorities to consider circumstances for rejecting or reducing interest, stressing the requirement for reasons in decisions.
- The court found the petitioner's reasons for non-payment genuine, considering the family situation and voluntary tax payments. The respondent's failure to exercise discretion led to setting aside the interest levied for the assessment years.
- The judgment allowed the writ petitions, declaring the petitioner not liable to pay interest for the mentioned assessment years but denying a refund for any excess amount paid. No costs were awarded in the matter.