9911796707
TMI Blog1983 (10) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... n proportion to the relief in quantum allowed by him. According to the assessee, the decision of the Commissioner is unexceptionable. 2. Certain basic facts have to be set out before adverting to the statutory provision. In the financial year 1978-79 which is relevant to the assessment year 1979-80, now under consideration, a demand of advance tax of Rs. 19,039 was first raised on 6-6-1978. This demand was revised on 27-11-1978 to Rs. 24,731 based on total income of Rs. 67,610 which was assessed for the assessment year 1978-79. On 13-3-1978, the assessee filed an estimate apparently under section 212(3A) of the Act estimating the advance tax payable at Rs. 25,249, on a total income of Rs. 68,510. Eventually, the return of income was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est should not have been cancelled. We may, to complete the records, state that the total income assessed was reduced by Rs. 21,000 by the Commissioner (Appeals). The learned departmental representative sought to amplify the grounds taken in appeal by submitting that the question of the Commissioner remitting the interest levied did not arise. According to him, no plea for waiver had been made prior to completion of the assessment and the question of waiver could be gone into only by the ITO and by none else. 4. The learned counsel for the assessee, on the other hand, submitted that the ITO should be deemed to have considered whether interest was to be levied or waived and the decision of the ITO levying interest could be subject-matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n." The provisions of section 215(4) of the Act, therefore, become applicable for considering whether interest is leviable or not under the provisions of section 217(1A) by virtue of the provisions of section 217(2). Section 215(4) provides that in such cases and in such circumstances as may be prescribed the ITO, may reduce or waive the interest payable by an assessee. The relevant, rule for waiver of interest is rule 40 of the Income-tax Rules, 1962 ('the Rules'). This reads as under : "The Income-tax Officer may reduce or waive the interest payable under section 215 or section 217 in the cases and under the circumstances mentioned below, namely:--- (1) When the relevant assessment is completed more than one year after the submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch a case can be made where an application is not made by the assessee. In other words, the point for decision is whether the existence of an application making a request for waiver is a condition precedent to the ITO exercising his discretion within the terms of rule 40(1). In the present case, admittedly, there was no application for waiver of interest prior to the computation of the assessment which was on 24-5-1982. An application for waiver was submitted to the ITO dated 10-6-1982 which speaks of receipt of order of assessment whereby interest was levied under section 217(1A) of Rs. 31,708. In S.A.L. Narayan Row v. Ishwarlal Bhagwandas [1965] 57 ITR 149, the Supreme Court having regard to the provisions of rule 48(1) of the Rules fram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame effective as from December 1953, when the rules were framed. In so holding, the Commissioner committed an error of law apparent on the face of the record. The High Court was, therefore, right in setting aside the order which was passed by the Commissioner without considering the proviso to section 18A(6) which was clearly applicable to the case of the assessee and in the light of rule 48 which was enacted in pursuance of that proviso." The Supreme Court held that the amendment to the Rules which came into operation in later years in view of the retrospective operation be deemed to be then extant and the ITO must be bound in law to consider whether the assessee was entitled to reduction or waiver of interest as provided under rule 48(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment having been made on 24-5-1982 and the return having been filed on 16-8-1979. He further found that on an examination of the records the assessee had throughout co-operated with the department providing all necessary information whenever called and the delay in completing the assessment could not be attributed to the assessee. The requirements of rule 40(1) were, therefore, fully satisfied and in such circumstances, in the absence of any other reason being given, the ITO necessarily should have waived the interest. This, not having been done, and the case being a fit and proper one for waiver of interest, the Commissioner (Appeals) in exercise of his appellate functions rendered appropriate justice by cancelling the interest levi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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