2010 (1) TMI 113 - HC - Income Tax

Waiver of interest under section 119(2) 234C Advance tax The appellant is a public limited company and they filed the return of income on December 31 1990 for the assessment year 1990-91. The assessee filed an application before the Board and sought for waiver of interest. In this case Madras High Court-held that the order is liable to be set aside and the appeal is allowed. The matter is remitted back to the Chief Commissioner of Income-tax for fresh consideration of the application filed by the appellant-assessee regarding the waiver of interest for the assessment year 1990-91 and the Chief Commissioner of Income-tax is expected to dispose of the application as expeditiously as possible after the receipt of the copy of the order from the appellant. No costs.

Summary

Issues:
1. Whether the Central Board of Direct Taxes can entertain an application from an individual assessee against the order of the Assessing Officer declining the waiver of interest chargeable under section 234C of the Income-tax Act.
2. Whether the Board is obligated to give reasons while considering and passing orders on such application.

Issue 1: Entertaining Application for Waiver of Interest:
The High Court considered the provisions of section 119(2)(a) of the Income-tax Act, 1961, to determine if the Central Board of Direct Taxes can entertain an application from an individual assessee seeking waiver of interest chargeable under section 234C. The Court noted that the Board, under this provision, can issue general or special orders in respect of any class of incomes or cases for the proper management of revenue collection. It was established that the power of the Board includes issuing guidelines and principles, which covers matters like waiver of interest. The Court emphasized that when the Board entertains such applications, it acts as a quasi-judicial authority and is expected to consider and pass orders, including reasons, on the request for waiver of interest.

Issue 2: Obligation to Provide Reasons:
The Court analyzed whether the Board is obligated to give reasons while considering and passing orders on applications made by individual assessees under section 119(2)(a). It was argued that the Board, when acting in a quasi-judicial capacity, should provide reasons for its decisions. The Court referred to legal principles, including the requirement for administrative or quasi-judicial authorities to record reasons for decisions as a principle of natural justice. Citing relevant case law, the Court emphasized that a quasi-judicial authority must give reasons for its orders. Despite a judgment related to personal hearings not being applicable in this context, the Court concluded that when an application is entertained, it should be disposed of with reasons. Therefore, the Court held that the Board, while acting as a quasi-judicial authority, should give reasons even if not explicitly required by the provision.

In conclusion, the High Court set aside the order under appeal and allowed the appeal. The matter was remitted back to the Chief Commissioner of Income-tax for fresh consideration of the application for waiver of interest for the assessment year 1990-91. The Court emphasized the importance of providing reasons in quasi-judicial decisions and highlighted the duty to give reasons as a fundamental aspect of due process and justice.