2019 (4) TMI 1175 - HC - Income Tax

Waiver of interest u/s 220 - levy of interest for non-payment of tax - application for waiver of interest rejected by CIT - HELD THAT - In the present case, the assessee, at every stage, has challenged the order passed by the authorities. It is not a case where the assessee was ready to deposit the income tax. After the assessment order was passed by the Assessing Officer pursuant to the seizure operation, the Commissioner, keeping in view the conduct of the petitioner, has exercised its discretion judiciously and the three conditions laid down u/s 220 (2A) of the Income Tax Act, 1961 have not been fulfilled enabling the Commissioner to waive out the interest. Every person is having certain compulsion while paying interest and that cannot be the sole ground for allowing the application in respect of waiver of the interest. As relying on BM MALANI VERSUS COMMR. OF INCOME TAX ANR. 2008 (10) TMI 2 - SUPREME COURT he assessee is not entitled for any relief of whatsoever kind.

Summary

Issues:
1. Calculation of interest under Section 220(2) of the Income Tax Act, 1961.
2. Rejection of waiver application under Section 220(2A) of the Income Tax Act, 1961.
3. Compliance with conditions for waiver of interest.
4. Interpretation of "genuine hardship" under the Income Tax Act, 1961.

Analysis:
1. The judgment concerns a writ petition filed by the petitioner challenging the order of the Principal Commissioner of Income Tax calculating interest under Section 220(2) of the Income Tax Act, 1961. The petitioner's grievance was that the interest amount was causing hardship as it was deemed excessive. The petitioner had disclosed undisclosed income, but the assessing authority assessed the income at a higher amount, leading to a demand for a substantial sum including interest. The petitioner sought waiver of interest under Section 220(2A) based on genuine hardship claims.

2. The petitioner's application for waiver of interest was rejected by the Principal Commissioner, leading to the writ petition. The petitioner relied on legal precedents including judgments from the Supreme Court and the High Court of Madras to support the request for quashing the impugned order. The Income Tax Department argued that the petitioner did not satisfy the three conditions specified under Section 220(2) of the Income Tax Act, 1961, justifying the rejection of the waiver application.

3. The impugned order highlighted that the petitioner failed to provide evidence justifying the request for waiver of interest. The order emphasized the three conditions under Section 220(2) of the Income Tax Act, 1961, which the petitioner did not fulfill. The order detailed the proceedings and submissions made by the petitioner, ultimately concluding that the request for waiver of interest was not justified based on the facts and circumstances of the case.

4. The judgment delved into the interpretation of "genuine hardship" under the Income Tax Act, 1961, citing legal principles and precedents. The court referred to the definition of "genuine" and emphasized that hardship must be genuine and not self-imposed. The court analyzed the discretionary power of the Commissioner to waive interest, highlighting the need for a judicious exercise of discretion based on the fulfillment of specified conditions. The court concluded that the petitioner's conduct did not meet the criteria for waiver of interest, considering the circumstances of willful tax evasion and lack of fulfillment of statutory conditions.

In conclusion, the High Court dismissed the writ petition, upholding the decision of the Principal Commissioner regarding the calculation of interest and rejection of the waiver application under the Income Tax Act, 1961. The judgment emphasized the importance of meeting statutory conditions for waiver of interest and the necessity for genuine hardship to warrant such relief.