2012 (10) TMI 843 - HC - Income Tax

Interest u/s 234A, 234B and 234C - non maintenance of proper books of accounts - application for waiver of interest rejected - Held that - Power of waiver has been conferred on the Chief Commissioner and the Director General by virtue of the Board s notification dated 23.5.1996. Notification also provide in clauses (a) to (e), the circumstances in which the waiver can be granted. The contention raised by the assessee that on account of a bona fide mistake, they could not file the return or pay tax in time cannot be said to be one which is covered by any one of the circumstances mentioned in notification - rejection of claim for waiver of interest cannot be said to be illegal - against assessee.

Summary

Issues:
Waiver of interest under Sections 234A, 234B, and 234C of the Income Tax Act based on the Board's notification dated 23.5.1996.

Analysis:
The petitioners, who own Poultry farms, were surveyed under Section 133A of the Income Tax Act and found not maintaining proper books of accounts. Subsequently, they filed returns for the assessment years 1998-99, 1999-00, and 2000-01, returning taxable income. Assessments were completed, and interest under Sections 234A, 234B, and 234C was levied. The petitioners sought waiver of the interest levied by making applications to the Chief Commissioner on Income Tax, which were rejected as per Ext.P4 order, leading to the challenge in the writ petition.

The rejection of the waiver application was based on the grounds that the case of the petitioners did not fall within the circumstances mentioned in clauses (a) to (e) of the Board's notification dated 23.5.1996. While Sections 234A to C do not provide for waiver of interest, the power of waiver was conferred on the Chief Commissioner and the Director General through the said notification. The circumstances under which waiver could be granted were outlined in the notification, and the petitioners' case was evaluated against these circumstances.

The circumstances mentioned in the notification included situations like search conducted under section 132 with seized documents, cash seized not utilized for tax payment, income received after due date, retrospective amendments affecting tax liability, and inability to file return due to unavoidable circumstances. The contention raised by the petitioners was found not to align with any of these circumstances, leading to the dismissal of their claim for waiver of interest.

The judgment concluded that the petitioners' case did not fit within the specified circumstances for waiver of interest as per the Board's notification. Consequently, the rejection of their claim for interest waiver was deemed legal, and the writ petitions were dismissed.