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TMI Blog1999 (8) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... -------------------------------------- 1985-86 38,394 - - 1986-87 24,800 - 21,080 1987-88 - 12,469 5,344 The assessee had applied for waiver of interest to the Dy. Commissioner of Income-tax, Range-I, Coimbatore, who called for a report from the Asstt. Commissioner and directed the Asstt. Commissioner to waive interest under section 139(8)/215/217 in full under Rule 117A(5)and 40(5) of the I.T. Rules, 1962 for the assessment years under consideration, as mentioned above. As a result of such directions issued by the Dy. Commissioner, the Assessing Officer waived interest for the assessment years as mentioned above, vide order dated 28-7-1989. On a perusal of the records, the Commissioner of Income-tax, Coimbatore found that waiver of interest by Assessing Officer under section 139(8)/215/217 granted in the case of the assessee was not in order as the prescribed conditions laid down in rule 40(5)/117A(5) have not been fulfilled. The Commissioner came to the conclusion that the waiver of interest granted by the Assessing Officer after obtaining the approval of the Dy. Commissioner was erroneous and prejudicial to the interests of Revenue. The Commissioner, therefore, issued a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat power has been conferred on the Dy. Commissioner by the Rules and the Rules have binding force. If the Dy. Commissioner issues a memorandum, then it does not mean that it has lost the binding force. Otherwise rule 40(5) has no meaning. According to the learned counsel the Dy. Commissioner has powers to waive interest under rule 40(5) of the I.T. Rules, and unless mala fide is proved the Commissioner cannot say that the order of the Dy. Commissioner was erroneous and prejudicial to the interests of the Revenue. The ld. counsel submitted that the Assessing Officer/Dy. Commissioner have exercised their discretionary powers to waive the interest and the Commissioner cannot interfere with such discretionary powers unless mala fide is proved. It is also stated by the ld. counsel that the Assessing Officer did not send any proposal to the Dy. Commissioner for waiver of interest but the assessee applied for waiver of interest to the Dy. Commissioner and the Dy. Commissioner issued memorandum to the Assessing Officer directing to waive the interest. According to the ld. counsel the levy of interest under section 139(8)/215/217 is discretionary and where discretion has been exercised und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest could be waived. Rule 40(5) lays down that the Dy. Commissioner can consider the circumstances under which interest can be waived and hence this Rule does not give power to waive interest. The ld. D.R. invited our attention to the aforementioned decisions relied on by him to show that the Commissioner can revise an order of assessment in cases where directions under section 144A or 144B are issued by the Dy. Commissioner. 5. We have carefully considered the rival submissions, facts of the case, case law cited and material on record. In order to appreciate the rival submissions it is considered necessary to reproduce the proviso to section 139(8)/215/(4)/217(2) as well as rule 40(5) of the I.T. Rules, 1962 and rule 117A : Section 139(8) proviso : "provided that the Assessing Officer may, in such cases and under such circumstances as may be prescribed, reduce or waive the interest payable by any assessee under this subsection." Section 215(4) : "In such cases and under such circumstances as may be prescribed, the Assessing Officer may reduce or waive the interest payable by the assessee under this section." Section 217(2) : "The provisions of sub-sections (2), (3) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aive the interest payable under section 215 or 217 in the cases and under the circumstances mentioned below." Under this rule also the Assessing Officer has the power to reduce/waive the interest payable under section 215 or 217. However, sub-rule (5) of rule 40 mentions that "any case in which the IAC considers that the circumstances are such that a reduction or waiver of the interest payable under section 215 or section 217 is justified". Under this rule the Dy. Commissioner has only to consider the circumstances regarding reduction or waiver of interest chargeable under section 215 or 217 of the Act. If the circumstances exist for waiver/ reduction of interest under these sections, then the Dy. Commissioner can send a memorandum, instruction or direction to the Assessing Officer and after receipt of such memorandum, instruction or- direction the Assessing Officer can reduce or waive the interest payable under section 215 /217 of the Act. But these sections do not empower the Dy. Commissioner to pass orders waiving or reducing the interest because the provisions of section 215/217 only empower the Assessing Officer to reduce or waive interest payable under those sections. The rol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh consideration, because the issue regarding waiver of interest was not properly considered either by the Assessing Officer or the Dy. Commissioner. When the Assessing Officer has not taken a correct decision and failed to follow the norms properly, the Commissioner can revise the assessment order passed by the Assessing Officer invoking the provisions of section 263 of the Act. In the present case neither the Assessing Officer nor the Dy . Commissioner has explained with reasons is to how the assessee is entitled for waiver of interest under section 139(8)/215/217 of the Act and how the assessee satisfied the conditions for waiver of interest under these sections. Therefore, when the Commissioner realised that the Assessing Officer and the Dy. Commissioner had not applied their mind and the norms are not found to have been followed by them, the Commissioner is fully entitled to set aside such an order acting under section 263 of the Act and directing the Assessing Officer to consider the claim of the assessee afresh in accordance with law. 7. In the case laws cited by the ld. Departmental Representative particularly in the case of V.V.A. Shanmugam their Lordships, after consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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