2012 (10) TMI 610 - HC - Income Tax

Application for waiver of interest u/s 220(2) - Deduction under Section 80HHC denied - Held that - The first condition of genuine hardship has not been proved by the petitioner. The assessee had cash balance, amounts due from the debtors, amount due towards export incentives and also substantial assets. Even if the assets of assessee are eschewed, he is seen to possess other resources which disproves his claim of genuine hardship - against assessee.

Summary

Issues:
Challenge to Ext.P7 order for deduction under Section 80HHC of the Income Tax Act and waiver of interest under Section 220(2A).

Analysis:

Issue 1: Deduction under Section 80HHC
The petitioner challenged Ext.P7 order related to the deduction under Section 80HHC of the Income Tax Act for the assessment year 92-93. The Tribunal had previously ruled against the petitioner in Ext.P3 judgment. Subsequently, the assessing officer passed Ext.P5 order, which included the levy of interest under Section 220(2) of the Income Tax Act. The petitioner filed Ext.P6 application seeking waiver of the interest. The Commissioner passed Ext.P7 order rejecting the application, leading to the writ petition challenging this order.

Issue 2: Waiver of Interest under Section 220(2A)
The petitioner filed an application under Section 220(2A) seeking waiver of the interest levied by the assessing officer in Ext.P5 order. Section 220(2A) prescribes three conditions for an assessee to claim the benefit of interest reduction or waiver. These conditions include proving genuine hardship, demonstrating that default in payment was due to circumstances beyond control, and cooperating in relevant inquiries or proceedings. The assessing officer's report indicated that the petitioner did not face genuine financial hardship as of a specified date, as evidenced by cash balance, debtors, export incentives receivable, and substantial assets.

Analysis of Ext.P7 Order
The Commissioner's Ext.P7 order rejecting the petitioner's application for interest waiver was based on the finding that the petitioner failed to establish genuine hardship, a prerequisite under Section 220(2A). The court concurred with this assessment, noting the petitioner's financial standing based on available cash, assets, and receivables. Despite the petitioner's argument citing a Supreme Court judgment that assets do not negate financial difficulties, the court found that the petitioner possessed resources beyond the assets, undermining the claim of genuine hardship. Consequently, the court upheld the Commissioner's decision, emphasizing that the petitioner did not meet the conditions stipulated in Section 220(2A) and dismissing the writ petition.

In conclusion, the court's judgment in this case focused on the petitioner's failure to demonstrate genuine financial hardship as required for seeking interest waiver under Section 220(2A) of the Income Tax Act. The court upheld the Commissioner's decision to reject the petitioner's application, emphasizing the petitioner's financial position based on available resources, including assets and cash balances. The court's analysis underscored the importance of meeting statutory conditions for claiming interest reduction or waiver, ultimately leading to the dismissal of the writ petition challenging Ext.P7 order.