2017 (12) TMI 1064 - HC - Income Tax

Waiver of interest payable under Sections 234A, 234B and 234C - petitioner s case was that he had no taxable income - consistent case of the assessee is that the property continues to remain undivided and no income arose from the property to the petitioner and as there was no taxable income, returns were not filed - Held that - The petitioner established his bonafides by referring to the suit for partition, which was pending trial, in which the petitioner/assessee is arrayed as 6th defendant. Thus, when the property continues to remain undivided, the assessee cannot anticipate the accrual/receipt of such income. The circular issued by the Board empowering the Chief Commissioner to consider the waiver petition for waiver of interest under Section 234A as well as 234B would show that even in cases covered by Section 234B and even though these provisions are compensatory in nature, special orders for grant of relaxation could be passed. Thus, this Court is convinced that the dispute with regard to the division of property was a bonafide dispute which directly relates to the assessbility of the petitioner to tax. Therefore, if the petitioner is entitled for waiver of interest under Section 234A of the Act for the reasons set out above, the question of payment of advance tax nor a portion thereof will not arise and therefore, the petitioner is entitled for waiver of interest under Sections 234B and 234C.

Summary

Issues:
Challenge to order rejecting waiver of interest under Sections 234A, 234B, and 234C of the Income Tax Act, 1961 based on certain grounds.

Detailed Analysis:

Issue 1: Waiver of Interest under Section 234A
- The petitioner filed for waiver under Section 119(2)(a) due to delay in filing returns.
- Circular No.400 outlines conditions for waiver under Section 234A.
- Respondent rejected waiver citing non-voluntary filing of returns and non-payment of assessed tax.
- Court analyzed the circumstances of the case and relevant circular clauses.
- Court referred to a similar case law to assess the evidentiary value of survey operations.
- Court concluded that the petitioner's case falls under Clause 2(e) of the Circular.
- Court emphasized that the survey did not lead to any deduction by the Assessing Officer.
- Circular on confessions during survey operations supported the petitioner's case.
- Court held that the petitioner qualifies for waiver under Section 234A.

Issue 2: Waiver of Interest under Sections 234B and 234C
- Specific conditions need to be met for waiver under Sections 234B and 234C.
- Petitioner claimed no taxable income and property disputes as reasons for non-filing.
- Property remained undivided, with pending partition suits.
- Returns filed were accepted without additional assessments.
- Court found the property dispute to be a genuine reason for non-filing.
- Circular empowered Chief Commissioner to consider waivers under Sections 234A and 234B.
- Court ruled in favor of the petitioner for waiver under Sections 234B and 234C.
- Revenue did not dispute the absence of taxable income and property disputes.
- Court held that the petitioner is entitled to waiver under Sections 234B and 234C.

Conclusion:
- The writ petition was allowed, setting aside the order rejecting the waiver.
- The petitioner was granted waiver of interest under Sections 234A, 234B, and 234C.
- The court emphasized the genuine reasons presented by the petitioner for non-filing and upheld the waiver based on the circumstances and applicable circular provisions.