2019 (11) TMI 588 - HC - Income Tax

Waiver of interest u/s 220(2A) - payment of tax in arrears - whether the petitioner has satisfied the three conditions provided u/s 220 (2A) - HELD THAT - It is seen that the Appellate Authority has reduced the tax liability of the petitioner. The said order of the Appellate Authority was given effect to by the Assessing Officer on 04.09.2017 by raising a demand of arrears of tax of ₹ 97,22,499/- and interest under Section 220(2) of ₹ 26,82,187/-. It is claimed by the petitioner that the entire tax liability has been paid within 30 days from the date of receipt of the giving effect order. Their dispute is with regard to the interest claimed. Therefore, the petitioner filed the Waiver Petition dated 13.12.2017 under Section 220 (2A). While considering the application for waiver of interest, the first respondent should apply his mind, as to whether the petitioner has satisfied the three conditions provided under Section 220 (2A) of the said Act in order to grant waiver. Therefore, application of mind of the first respondent should be apparent on the face of the order passed under Section 220 (2A). The first respondent has passed the rejection order only on the ground that the Directors of assessee Company have given loans to the assessee and that the assessee has been receiving a rental income of ₹ 1,12,500/- per month, he has not adverted to any of the contentions raised by the assessee in the waiver application in order to decide as to whether, the petitioner is entitled for waiver or not. Therefore, this Court, is inclined to remit the matter back to the first respondent to reconsider the matter afresh and pass orders on the merits and in accordance with law.

Summary

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

Analysis:
The petitioner filed a writ petition challenging the rejection of their waiver application for interest payment under Section 220(2A) of the Income Tax Act, 1961. The case stemmed from an assessment order for the year 2010-11, where the tax liability was initially set at ?1,05,76,151. The petitioner appealed this order, resulting in a reduced tax liability. Subsequently, the Assessing Officer demanded arrears of tax and interest, which the petitioner paid. The waiver application was based on the company's financial losses, cooperation with the Revenue, and circumstances beyond their control causing the tax payment delay. The rejection of the application was disputed by the petitioner, arguing that all conditions under Section 220(2A) were met. The respondents, however, contended that since the company's directors had provided loans for tax payment, they could have covered the interest as well.

Upon hearing both sides, the High Court noted the timeline of events and the petitioner's reasons for seeking interest waiver, emphasizing the need for the Assessing Officer to consider all contentions afresh. The court highlighted that the rejection order lacked detailed consideration of the petitioner's arguments, focusing mainly on the directors' loans and rental income. It stressed that the Assessing Officer must evaluate whether the petitioner meets the conditions of Section 220(2A) and provide a reasoned decision. As a result, the court set aside the impugned order and remitted the matter back to the Assessing Officer for a fresh decision within six weeks, emphasizing the importance of a thorough review based on the statutory provisions.