2018 (1) TMI 514 - HC - Income Tax

Waiver of interest charged under Sections 234A, 234B and 234C - Held that - The discretion conferred upon the respondent is clearly circumscribed and set out in paragraphs 2(a) to 2(d) of the Circular dated 26.06.2006. The right to claim waiver of the interest is not a statutory right given to the Assessee but based on the Circular and therefore, strict interpretation of the Circular has to be done. Facts of the case clearly reveals that the petitioner does not fall under any of the Clauses 2(a) and 2(d) of the Circular, dated 26.06.2006. Therefore, the respondent was fully justified in not exercising his discretion and waiving the interest levied. Thus, there is no error in the impugned order. Accordingly, the writ petition fails and dismissed

Summary

Issues:
Challenge to order under Income Tax Act for waiver of interest charges.

Analysis:
The writ petition challenged an order under Section 119 (2) (a) of the Income Tax Act 1961, seeking waiver of interest charges totaling ?12.30 lakhs for assessment years 1989-90 and 1990-91. The petitioner's disclosure was not voluntary but made after detection during a search under Section 132. The Assessing Officer issued a notice under Section 148 in 1991, leading to the Assessee filing a return in 1994. The conduct of the Assessee was crucial in determining eligibility for interest waiver under Sections 234A, 234B, and 234C of the Act.

The judgment referred to the case of Chief Commissioner of Income Tax Vs. Rajanikant & Sons, highlighting the Circular dated 26.06.2006, which empowered the Chief Commissioner and/or the Director General of Income Tax to reduce or waive interest under specified circumstances. The Circular mandated that no reduction or waiver of interest could be ordered unless the assessee filed a return of income for the relevant assessment year and paid the entire income tax due. The discretion to waive interest was limited to cases falling under specific circumstances outlined in the Circular.

The discretion granted to the respondent was clearly outlined in the Circular dated 26.06.2006, restricting the right to claim interest waiver to cases falling within the specified clauses. The judgment emphasized that the right to claim waiver of interest was not a statutory right but based on the Circular, requiring a strict interpretation. In this case, the petitioner did not meet the criteria specified in the Circular, leading to the respondent's decision not to waive the interest charges. The High Court upheld the respondent's decision, concluding that there was no error in the impugned order and dismissing the writ petition without costs.