2010 (1) TMI 74 - HC - Income Tax

Settlement of cases waiver of interest - This petition seeks quashing of order passed by the Chief Commissioner of Income-tax, rejecting the application for waiver of interest under section 158BFA(1)(a) Settlement Commission held that the assessee will be liable to pay interest under section I58BFA(1)(a) - Even if the Commission may be able to waive the interest, if so provided under a particular circular, such power cannot be exercised by any other authority in the matter dealt with by the Commission. We, thus, do not find any infirmity with the view taken by the Chief Commissioner in rejecting the application of the assessee.

Summary

Issues:
Seeking quashing of order rejecting application for waiver of interest under section 158BFA(1)(a) of the Income-tax Act, 1961 for assessment years covering 1988-99.

Analysis:
The petition sought to quash the order passed by the Chief Commissioner of Income-tax, rejecting the application for waiver of interest under section 158BFA(1)(a) of the Income-tax Act for the assessment years covering 1988-99. The assessee had filed a return after a search was carried out at their premises, and the block assessment was completed with undisclosed income being assessed. The Settlement Commission disposed of the matter under section 245D(4) of the Act, holding the assessee liable to pay interest under section 158BFA(1)(a) of the Act. The assessee then applied for waiver of interest, but the Chief Commissioner dismissed the application, stating that the order of the Commission could not be amended, and the Chief Commissioner could not waive interest contrary to the Commission's decision.

The main contention raised was that waiver of interest does not amount to modification of the Commission's decision, and the power of waiver lies with the Chief Commissioner after the liability to pay interest has been crystallized. Reference was made to judgments of various High Courts and the Supreme Court to support the argument that waiver is permissible even when the liability to pay is not disputed. However, the court did not accept these submissions, stating that the Commission's working under the law is unique and not comparable to assessing authorities. The court emphasized that even if the Commission could waive interest as per a circular, such power cannot be exercised by any other authority in the matter dealt with by the Commission, especially when the Commission has expressly directed the levy of interest.

The court concluded that there was no infirmity in the Chief Commissioner's decision to reject the application for waiver of interest. The petitioner's counsel argued that the petitioner could approach the Commission itself for relief, but the court did not express any opinion on this matter, stating that if the petitioner has a legal right to approach the Commission, they can pursue that remedy in accordance with the law. Ultimately, the petition seeking the quashing of the order was disposed of by the court.