2017 (11) TMI 262 - HC - Income Tax

Stay of demand - assessee in default - Petitioner s application under Section 220(2A) rejected - petitioner did not comply with the orders regarding payment of tax by way of instalment schedule granted, which indicates lack of reciprocity and cooperation on the part of the petitioner and Assessee possessed necessary means to make payment of tax, but failed to do so. Held that - The twin reasons, which have been referred to in the impugned order, are not reasons by themselves to reject the petitioner s application seeking waiver. The officer, who has given parawise comments to the learned Standing Counsel for the Revenue, has taken a strong exception to the use of the expression unreasonable in the affidavit filed in support of the writ petition. The expression unreasonable denotes anything, which is not reasonable and which will not stand to reason. In the instant case, unreasonableness would be in not providing an adequate opportunity to the petitioner to put forth her stand especially when the application for waiver was taken up for hearing nearly after 6 1/2 years. The petitioner cannot be blamed for the delay caused at the Departmental level. Therefore, any opportunity to be given to the petitioner should be adequate, real and sufficient. If these factors are not fulfilled, then it would undoubtedly mean that the petitioner did not have reasonable opportunity, resultantly terming the impugned order to be unreasonable. This Court deems it appropriate to observe that the petitioner, being the legal heir of the original assessee, had complied with the directions issued by the Settlement Commission and since the properties of the assessee having been attached by the Income Tax Officer, prima facie, it appears that this is a fit case where the respondent can exercise his powers under Section 220(2A) of the Act. For all the above reasons, the writ petition is allowed, the impugned order is set aside and the matter is remitted back to the respondent for a fresh consideration.

Summary

Issues:
Challenge to order under Section 220(2A) of the Income Tax Act, 1961.

Analysis:
The petitioner, a widow, challenged an order rejecting her application under Section 220(2A) of the Income Tax Act, 1961. The petitioner's late husband had filed an application before the Settlement Commission for assessment years 1988-89, 1989-90, 1991-92, and 1992-93. After his death, the petitioner pursued the matter, leading to a final order in 2002 allowing tax payment in instalments. The petitioner complied and paid the total amount by 2010. However, in 2011, the Tax Recovery Officer demanded interest on interest, prompting the petitioner to seek a waiver, which was rejected by the respondent.

The petitioner contended that she was not given adequate opportunity to present her case during the hearing on the waiver application. The respondent's reasons for rejection included non-compliance with the instalment schedule and the belief that the petitioner had means to pay the tax. However, the petitioner's properties were attached, raising doubts about her financial capacity. The respondent also criticized the petitioner for lack of reciprocity and cooperation, despite her compliance with the Settlement Commission's directions.

The court found the respondent's reasons insufficient to reject the waiver application. It emphasized the need for a quasi-judicial decision under Section 220(2A) and the requirement to record reasons for reducing or waiving interest. The court noted the delay in processing the waiver application and the petitioner's compliance with previous directives. It criticized the respondent for not providing a reasonable opportunity for the petitioner to present her case adequately. Ultimately, the court allowed the writ petition, set aside the impugned order, and remitted the matter back to the respondent for a fresh consideration with proper opportunity for the petitioner to be heard.

In conclusion, the judgment highlighted the importance of procedural fairness, the need for reasoned decisions in quasi-judicial matters, and the obligation to provide adequate opportunities for parties to present their case effectively. The court's decision to set aside the rejection of the waiver application and remit the matter for reconsideration underscored the significance of due process and substantive justice in tax matters.