1999 (8) TMI 129 - AT - Income Tax

Issues Involved:
1. Jurisdiction of the Commissioner of Income-tax to review the order of waiver of interest.
2. Validity of the waiver of interest under sections 139(8), 215, and 217 of the I.T. Act, 1961.
3. Role and powers of the Dy. Commissioner and Assessing Officer in waiving interest.
4. Applicability of Rule 40(5) and Rule 117A of the I.T. Rules, 1962.
5. Requirement for a speaking order and adherence to proper norms in waiving interest.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commissioner of Income-tax to review the order of waiver of interest:
The Commissioner of Income-tax, Coimbatore, set aside the order of waiver of interest charged under sections 215, 217, and 139(8) for the assessment years 1985-86, 1986-87, and 1987-88. The Commissioner concluded that the waiver of interest granted by the Assessing Officer, after obtaining the approval of the Dy. Commissioner, was erroneous and prejudicial to the interests of Revenue. The Commissioner issued a show cause notice under section 263 to the assessee and, after considering the objections, directed the Assessing Officer to reconsider the issue. The Tribunal upheld the Commissioner's jurisdiction to revise the order, stating that the Commissioner is competent to revise the order under section 263 if it is found to be erroneous and prejudicial to the interests of Revenue.

2. Validity of the waiver of interest under sections 139(8), 215, and 217 of the I.T. Act, 1961:
The Tribunal noted that the waiver of interest by the Assessing Officer was not in order as the prescribed conditions laid down in rule 40(5) and 117A(5) were not fulfilled. The Commissioner found that the assessee had not provided valid reasons for not filing the returns of income in time and had sufficient funds to make payment of advance-tax/tax. The Tribunal agreed with the Commissioner's finding that the waiver of interest was not justified and upheld the setting aside of the waiver order for fresh consideration.

3. Role and powers of the Dy. Commissioner and Assessing Officer in waiving interest:
The Tribunal clarified that only the Assessing Officer has the power to waive or reduce the interest charged under sections 139(8), 215, and 217, with the previous approval of the Dy. Commissioner if the amount exceeds Rs. 1,000. The Dy. Commissioner's role is limited to considering the circumstances justifying the waiver or reduction of interest and issuing a memorandum or direction to the Assessing Officer. The Dy. Commissioner does not have the power to pass an order waiving or reducing the interest.

4. Applicability of Rule 40(5) and Rule 117A of the I.T. Rules, 1962:
The Tribunal explained that Rule 40(5) and Rule 117A empower only the Assessing Officer to reduce or waive interest chargeable under sections 139(8), 215, and 217. The Dy. Commissioner's role under these rules is to consider the circumstances for waiver/reduction and provide approval if the amount exceeds Rs. 1,000. The Tribunal emphasized that the Dy. Commissioner does not have the authority to directly waive or reduce the interest.

5. Requirement for a speaking order and adherence to proper norms in waiving interest:
The Tribunal highlighted that the waiver of interest should be based on a speaking order with proper reasons and adherence to prescribed norms. The Commissioner found that neither the Dy. Commissioner nor the Assessing Officer provided a speaking order justifying the waiver of interest. The Tribunal agreed with the Commissioner's observation that the orders lacked proper reasoning and adherence to norms, justifying the setting aside of the waiver orders for fresh consideration.

Conclusion:
The Tribunal dismissed the assessee's appeals and upheld the Commissioner's order under section 263, directing the Assessing Officer to reconsider the issue of waiver of interest for the assessment years 1985-86, 1986-87, and 1987-88. The Tribunal emphasized the importance of proper reasoning, adherence to norms, and the limited role of the Dy. Commissioner in the waiver of interest under sections 139(8), 215, and 217 of the I.T. Act, 1961.

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