2018 (3) TMI 1165 - HC - Income Tax

Seeking waiver of interest payable under Section 220(2) - delay in payment of the tax for the block period 1st January, 1985 to 24th August, 1995 - Held that - It is an undisputed fact that the tax payable is in respect of the period 1985 to 1995. The petitioners have chosen not to pay the tax even though it was conscious of the fact that in case it fails in its challenge, it would have to pay the interest due on the same. Thus, it was a call which the petitioner took at a time when the demand was confirmed by the Assessing Officer. Moreover, the Commissioner, in the impugned order, also found that during the assessment proceedings, statements were made and retracted. This would by itself establish the fact that, full co-operation was lacking during the assessment proceedings. Thus holding the petitioner is not entitled to waiver.

Summary

Issues:
Challenge to order rejecting waiver of interest under Section 220(2A) of the Income Tax Act, 1961.

Analysis:
1. The petitioner challenged an order rejecting waiver of interest of ?2,19,99,482 payable under Section 220(2) of the Act due to delay in tax payment for the block period 1st January, 1985 to 24th August, 1995.
2. The assessment was completed in 1996 after a search under Section 132 of the Act, determining ?1,10,72,290 as tax payable, which was paid only in September 2016.
3. The petitioner filed a waiver application in April 2016, which was rejected in May 2017 after considering conditions under Section 220(2A) of the Act.
4. The conditions for waiver under Section 220(2A) were not met as the petitioner did not satisfy genuine hardship, lack of control in payment default, and cooperation in assessment and recovery proceedings.
5. The petitioner's argument of genuine hardship due to changes in the Video Cassette Industry was rejected as non-payment was not beyond their control, partners had funds, and prolonged litigation was not a valid reason for delay.
6. The petitioner's plea to reconsider the order based on decisions of other courts was dismissed as the facts of those cases were different, and the petitioner failed to demonstrate genuine difficulty in paying taxes.

Conclusion:
The High Court upheld the Commissioner's order, stating that the petitioner's failure to pay taxes despite awareness of interest implications and lack of cooperation during assessment proceedings justified the rejection of the waiver application. The Court found the Commissioner's decision reasonable and declined to interfere under Article 226 of the Constitution of India, ultimately dismissing the petition.