2016 (5) TMI 74 - HC - Income Tax

Waiver of levy of interest u/s 234B - Application made u/s 119(2)(a) before CCIT - Chief Commissioner Income Tax Rejected the application on the ground that there is no way to escape from that legal position - Held that - The plea on behalf of the appellant that Ext.P3 (b) does not evidence an order under Section 119 (2)(a) is unsustainable for reasons more than one. Ext.P3(b) is an order shown to have been issued by the Central Board of Direct Taxes; CBDT hereinafter; in exercise of the powers conferred under clauses 2(a) of Section 119 of the Act. It is wholly unacceptable to say that it is not an order under that provision but only a communication, unless, of course, reliable cogent material is produced by the appellant to denounce the credibility of Ext.P3(b). That document expresses the decision of the CBDT and contains directions to the Chief Commissioners and Directors General of Income Tax requiring compliance of the decision contained in that order. It is a statutory order. There is no way to escape from that legal position. Hence, we repel the plea of the appellant that it is not Ext.P3(b) that would apply. That Ext.P3(b) order of CBDT was communicated to the Chief Commissioner of Income Tax, Kochi, is beyond any pale of doubt because what the appellant has produced as Ext.P3(b) is nothing but the photostat copy of what would be available in the Office of the Chief Commissioner of Income Tax, Kochi. We cannot but infer so since Ext.P3 (b), at the top of its first page, contains the seal of that office, imposed on 31.7.2006. The Chief Commissioners cannot exercise that power except in accordance with directions which are issued by the CBDT. When the regulatory mechanisms in a fiscal legislation govern a situation; that cannot be visited in exercise of power under Article 226 and appellate jurisdiction through an intra-court appeal since that would be in defeasance of the statutory impact of a fiscal legislation in the nature of the Income Tax Act, 1961. An equitable remedy cannot be carved out in defeasance of; and eroding the statutory situation. No such plenary power rests with the High Court to criss-cross the impact of the relevant fiscal statutory provisions; more so since, in law, equity would be subservient to; and, cannot override; statute. For the foregoing reasons, we find no factual or legal infirmity in the impugned judgment warranting interference through this intra-court appeal under Section 5 of the High Court Act. - Decided against the assessee.

Summary

Issues:
Challenge to order under Section 119(2)(a) of the Income Tax Act, 1961 for waiver of interest on capital gains.

Analysis:
The appellant challenged the dismissal of his writ petition against the Chief Commissioner of Income Tax's order under Section 119(2)(a) of the Income Tax Act, 1961. The appellant sold a property, leading to an assessment order with interest under section 234B. He sought waiver of this interest, which was denied by the Chief Commissioner and upheld by the single Judge. The appellant argued eligibility for benefit under Ext.P3(a) notification and claimed Ext.P3(b) was not a valid notification under Section 119(2)(a). The Department's counsel contended that Ext.P3(b) applied to the period and differed significantly from Ext.P3(a) terms.

The appellant relied on a court decision but the single Judge held it did not apply to the case. The Judge found that the appellant voluntarily filed a return without disclosing capital gains liability, not due to unavoidable circumstances. The appellant's argument that Ext.P3(b) was not an order under Section 119(2)(a) was dismissed. Ext.P3(b) was confirmed as a statutory order by the Central Board of Direct Taxes (CBDT), communicated to the Chief Commissioner of Income Tax, Kochi.

The appellant requested an equitable decision for partial waiver of interest, but the Court explained that waiver is a statutory matter governed by CBDT directions. The Court emphasized that equitable remedies cannot override statutory provisions like the Income Tax Act, 1961. As such, the High Court lacked the power to interfere with the statutory impact of fiscal legislation. Therefore, the appeal was dismissed as there was no legal or factual flaw in the judgment justifying intervention under Section 5 of the High Court Act.