2021 (12) TMI 1082 - HC - Income Tax

Proceedings u/s 220 (2A) - applications for waiver of interest levied on the tax demanded from the appellant by the respondents - HELD THAT - We are of the view that the report of Assessing Officer is considered or would be constituting the basis for recording the reasons under sub-section (2A) of Section 220 of the Act, or for rejecting the applications of appellant, it would be in the fitness of things as well as would be conforming to the requirement of affording an opportunity of being heard, if a copy of Assessing Officer's report is also made available to the representative of the assessee or to the assessee. Upon such copy being made available to the assessee or his representative, the effectiveness with which the assessee would have presented a case before the second respondent is different from presenting the case without a copy of the report submitted by the Assessing Officer or appreciating the circumstances stated against the assessee. After perusing the operative portion of the order impugned in Ext.P11 series, we are of the view that the case of appellant under sub-section (2A) of Section 220 of the Act has not been considered in the manner in which the jurisdiction has been conferred on the second respondent and for the said reason alone, orders in Ext.P11 series are liable to set aside and accordingly set aside. Writ appeal is allowed by this Judgment, by setting aside the judgment of learned Single Judge - Matter remitted to second respondent for consideration and disposal afresh in accordance with law. The second respondent on receipt of a copy of this judgment, furnishes a copy of Assessing Officer s report within two weeks thereafter to the assessee by Registered Post Acknowledgment Due/EMS speed post.

Issues:
1. Application for waiver of interest under Section 220(2A) of the Income Tax Act.
2. Rejection of the appellant's application by the second respondent.
3. Compliance with the requirements of sub-section (2A) of Section 220.
4. Review of the order under Article 226 of the Constitution of India.
5. Consideration of Assessing Officer's report in decision-making process.

Issue 1: Application for Waiver of Interest under Section 220(2A) of the Income Tax Act:
The appellant filed a writ petition challenging the orders of the second respondent under Section 220(2A) of the Income Tax Act, seeking waiver of interest on tax demanded. The appellant argued that the discretion under this section must be exercised based on specific criteria, including genuine hardship to the assessee, default beyond the assessee's control, and cooperation in the assessment process. The appellant contended that the second respondent did not consider these criteria properly, leading to the rejection of the application.

Issue 2: Rejection of the Appellant's Application by the Second Respondent:
The second respondent, through orders in Exts.P11 series, rejected the appellant's applications for waiver of interest. The appellant challenged these orders in a writ petition, which was dismissed by the learned Single Judge. The appellant argued that the second respondent primarily relied on the report of the Assessing Officer without providing the appellant with a copy of the report, rendering any hearing or participation by the appellant as ineffective.

Issue 3: Compliance with the Requirements of Sub-section (2A) of Section 220:
The appellant's counsel emphasized that the second respondent's exercise of discretion under sub-section (2A) of Section 220 should be guided by the criteria specified in the provision. The counsel argued that the second respondent's decision-making process, as evident from the orders in Exts.P11 series, did not adhere to the requirements of law and natural justice. The court found that the report of the Assessing Officer should have been made available to the appellant for a fair consideration of the case.

Issue 4: Review of the Order under Article 226 of the Constitution of India:
The learned Standing Counsel contended that the scope of judicial review in this matter is limited to established grounds and that the decision-making process by the respondents was in compliance with the law and principles of natural justice. The court acknowledged the submissions of both parties and examined the record to determine if the second respondent's orders met the legal standards and afforded the appellant a fair opportunity to present their case.

Issue 5: Consideration of Assessing Officer's Report in Decision-Making Process:
The court found that the failure to provide the appellant with a copy of the Assessing Officer's report, which formed the basis for rejecting the appellant's request for waiver of interest, undermined the fairness of the decision-making process. Consequently, the court set aside the orders in Exts.P11 series, remitted the matter to the second respondent for reconsideration in accordance with the law, and directed the second respondent to provide the appellant with a copy of the Assessing Officer's report for a fair review.

In conclusion, the court allowed the writ appeal, set aside the judgment of the learned Single Judge, and provided specific directions for the reconsideration of the appellant's application for waiver of interest under Section 220(2A) of the Income Tax Act.

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