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2023 (9) TMI 615 - HC - Income TaxWaiver of the interest demanded u/s 158BFA - demand of interest u/s 245D(6A) - interest being leviable for delayed payment of taxes determined as payable by the Settlement Commission - HELD THAT - Reasons cited in the order of the CBDT rejecting his claim for waiver of the interest demanded under Section 158BFA of the Act, we find that while it may be a fact that the CBDT in the impugned order had cited an erroneous reason, that by itself does not persuade us to take a different view in the matter since we find that the return filed by the appellant in response to the Section 158BC notice was only on 01.05.2000, well beyond the time prescribed under the Act for filing the said return. As already noticed, the levy of interest under the said provision is automatic and the power to waive the said interest while lies with the CBDT u/s 119 (2)(a) of the Act, the said power can be exercised only in relation to a class of cases and not to individual cases. Thus, even if we were persuaded to remit the matter to the CBDT for a fresh consideration, taking note of the erroneous reason furnished by them in the impugned order, we are of the view that it would be an exercise of futility for the appellant does not fall under any class of cases in respect of which alone the CBDT can exercise its discretion to grant waiver of the interest demanded. Demand of interest u/s 245D(6A), we find that the said interest is levied for the delayed payment of the tax determined as payable by the Settlement Commission, which was a forum chose by the appellant himself for settlement of the dispute with the Income Tax Department. The provision being part of the Code under Chapter XIX-A of the Act, the interest levied thereunder cannot be waived since it has to be seen as forming an integral part of the Settlement that resulted pursuant to the appellant approaching the Settlement Commission of his own volition. Thus in any view of the matter, we see no reason to interfere with the judgment of the learned Judge.
Issues involved:
The issues involved in this legal judgment include the challenge against demand of interest under Section 158BFA and Section 245D(6A) of the Income Tax Act, 1961. The appellant contested the demand of interest under Section 158BFA based on rejection of waiver application by the Central Board of Direct Taxes (CBDT) and the erroneous reasoning cited by CBDT. Additionally, the appellant disputed the demand of interest under Section 245D(6A) due to financial difficulties faced by the family and delay in filing returns. Challenge against demand of interest under Section 158BFA: The appellant challenged the demand of interest under Section 158BFA by invoking Section 119(2)(a) of the Act, arguing that the Settlement Commission did not have the power to grant waiver of interest under this section. The appellant contended that the CBDT had erred in rejecting the waiver application, citing Supreme Court decisions to support the claim. However, the learned Single Judge rejected the contentions, stating that the levy of interest under Section 158BFA was automatic once the tax payable was determined by the Settlement Commission. The Single Judge also noted that the CBDT's power to waive interest could only be exercised in relation to a class of cases, not individual cases. Challenge against demand of interest under Section 245D(6A): Regarding the demand of interest under Section 245D(6A), the appellant mistakenly assumed it was levied under Section 220(2) of the Act. The appellant approached the Principal Chief Commissioner of Income Tax seeking waiver of interest, but no order was passed. The learned Single Judge dismissed the appellant's contentions, emphasizing that the interest under Section 245D(6A) was part of the Settlement Commission's decision and could not be waived by either the Settlement Commission or the CBDT. The Judge considered the appellant's delayed approach to the CBDT and financial difficulties faced by the family in denying relief and dismissing the writ petition. Decision and Rationale: The Writ Appeal challenging the demand of interest under Section 158BFA and Section 245D(6A) was dismissed. The Court found that the levy of interest under Section 158BFA was automatic due to the delayed filing of returns beyond the prescribed period. The CBDT's power to waive interest under this section applied to a class of cases, not individual cases. The Court also upheld the demand of interest under Section 245D(6A) as part of the Settlement Commission's decision, which could not be waived. The Court directed the respondents to issue a fresh demand notice, considering any payments made by the appellant, within six weeks from the date of the judgment.
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