9911796707
TMI Blog2012 (4) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... ull and void; and for an appropriate writ, order or direction to strike down Paragraph 3 of the Order dated 26/6/2006 (ANNEXURE "B" TO THE PETITION); (C) This Hon'ble Court also be pleased to issue an appropriate writ, order or direction, commanding the Respondent No. 1 to grant waiver of interest and the consequent refund of interest paid by the Petitioners under Sections 234B and 234C of the Income Tax Act for the Financial Year 2007-2008 and the Assessment Year 2008-2009 along with interest as may be deemed fit; (D) In the alternate, this Hon'ble Court be pleased to direct the Respondent No.1 to reconsider the Petitioners' application for seeking waiver/ reduction of interest paid by the Petitioners under Section 234B and 234C of the said Act for the Financial Year 2007-2008 and the Assessment year 2008-2009 and pass orders thereon within a time bound schedule; (E) For such other and further relief that this Hon'ble Court deems fit and proper; (F) For costs." 5. Petitioners' case is as under: Petitioner no.1 is a Company incorporated under the Companies Act, 1956, of which petitioner no. 2 is the authorised representative. The Company was incorporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Board of Direct Taxes (CBDT). In the alternative, paragraph 3 of the said Order, to the extent it declines the benefit of waiver of interest charged under Section 234B and 234C to the class or classes referred to in paragraph 2(a) and 2(d) of the said order dated 26/06/2006, is arbitrary and unequal and is in violation of Article 14 of the Constitution of India. The position of payment of advance tax for the Financial Year 2007-2008 i.e. the Assessment Year 2008-2009 is as follows: "(a) No advance tax came to be paid for the first quarter ending on 15/06/2007 because there was no real estate transaction (sale) upto 14/09/2007. No sales were anticipated during this period and based upon final return filed by September, 2008, 15% of the total tax paid and therefore, payable by the first quarter ending 15/06/2007 would be Rs. 83 Lakhs. Since there were no sales and no transactions, the petitioner no. 1 Company would never have been faulted for not effecting the payment of advance tax at the quarter ending 15/06/2007. The levy of interest is, therefore, completely unjustified and waiver was certainly due. (b) No advance tax came to be paid for the quarter ending o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profits came to be declared as Rs.16,52,35,104/- which includes the interest component of Rs.44,58,258/- and the taxes of Rs.6,06,21,700/- again paid under Sections 234B and 234C of the said Act. As it turns out, the profits indicated for the financial year 2007-2008 and the assessment year 2008-2009 do not reflect the correct financial position/ picture, the petitioners were advised against filing of any revised returns for the financial year 2007-2008. However, the facts, circumstances and the legal position warrants at least waiver of interest to the tune of Rs.44,58,258/- paid by petitioner no. 1 Company under Section 234B and 234C of the said Act for the financial year 2007-2008 and the assessment year 2008-2009. The petitioners, therefore, filed an application dated 19/03/2009 to respondent no. 1 invoking the provisions of Section 119 of the said Act and seeking for waiver/ refund of the interest already paid under Sections 234B and 234C of the said Act. Respondent no. 1, relying almost entirely upon the said Order declined waiver vide order dated 12/07/2010. Respondent no. 1 has failed to exercise powers and jurisdictions as vested in it by Section 119 of the said Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tipulated for waiver of altogether different types of defaults ought to be in variance, for the said reason. In so far as the constitutional validity of the said Order is concerned, it is for the legislature to determine the objects on which tax shall be levied and the rates thereof and the Court will not strike down the Act as denying the equal protection of law merely because the other objects could have been, but are not taxed by the legislature. A State does not have to tax everything in order to tax something. The legislature is competent to classify persons or person into different categories and tax them differently and classification made is rational. The Taxing Statute cannot be challenged merely because different rates of taxation are prescribed for different categories of persons or objects. The interest under Sections 234A, 234B and 234C of the said Act are chargeable mandatorily as they are compensatory in nature. No discretion is allowed to the Assessing Officer. The powers, to waive the interest so charged, are specifically conferred under Section 119(2) of the said Act upon the CBDT and are further delegated to the Chief Commissioner subject to conditions specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof, on income voluntarily declared in the returns of income and there was no basis for revising the income declared and for waiver of interest under Sections 234B and 234C of the said Act amounting to Rs.44.58 Lakhs thereon. A perusal of the said Order reveals that the CBDT has categorically mentioned in paragraph 3 that the class of cases referred to in paragraphs 2(a) and 2(d) are applicable only for the purposes of waiver of interest under Section 234A of the said Act. A reading of the conditions given in paragraph 2 of the said Order reveals that while the conditions at 2(a) and 2(d) specifically refer to the cases of delay in furnishing the returns of income, under the scheme of any tax, the delay in furnishing returns of income involves levy of interest under Section 234A and, therefore, these conditions are not extendable to interest charged under Sections 234B and 234C of the said Act and paragraph 2(c) is specifically made applicable to sections 234B and 234C of the said Act. It is clear that the subordinate legislations made by CBDT in the form of orders under Section 119(1) of the said Act are within the powers conferred upon it by the said Act and do not transgress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done so, they are bound to pay the interest as charged. She argued that there is no scope for interference with the order dated 12/07/2010 passed by the CCIT. 13. We have gone through the entire material on record. 14. A perusal of the application dated 19/03/2009, made by the petitioners before the CCIT and the impugned order dated 12/07/2010 of the CCIT reveals that what has been claimed by the petitioners is waiver of interest under sections 234B and 234C of the said Act and nowhere the expression "reduction of interest" is used. Thus, the submission of Shri M. S. Sonak that the application of the petitioners was for waiver as well as for reduction of interest is not correct. Such a claim has been made, by way of an afterthought, in this petition. 15. Clauses (a) and (b) of Sub-Section (2) of Section 119 of the said Act provide as under : "(2) Without prejudice to the generality of the foregoing power, - (a) the board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the assessment officer. Paragraph 3 of the said Order, however, provides that the class of cases referred to in paragraph 2(a) and 2(d) are specified only for the purposes of waiver of interest charged under section 234A of the said Act. 17. The petitioners had prayed for waiver of interest under section 234B and section 234C of the said Act. The criteria under paragraph 2(d) of the said Order, which pertains to inability to file the return due to unavoidable circumstances, is available only for the purposes of waiver of interest charged under section 234A of the said Order and this is clear from paragraph 3 of the said Order. Paragraph 2(b) exclusively applies to section 234C and paragraph 2(c) applies to sections 234B and 234C of the said Act. The jurisdiction for grant of waiver is to be exercised under section 119 of the said Act, but the same has to be done in accordance with the orders, instructions and directions issued from time to time by the CBDT. The general orders, directions, circulars issued under section 119(2)(a) of the said Act are binding on the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, the learned CCIT in paragraph 5 of the impugned order has indicated the break up of the administrative expenses of the petitioners during the year ending 31/3/2007 and 31/3/2008, by way of a chart which clearly reveals that the majority of the expenditure was ascertained and quantifiable. The said chart is based on the returns filed by the petitioners. The petitioners could have anticipated the income pertaining to the Financial Year 2007-2008 and the difficulties which the petitioners have mentioned in estimating the advance tax had nothing to do with quantifying further expenditure on the land purchased. In paragraph 12 of the Affidavit-in-reply, the Assistant Commissioner of Income Tax has furnished the details of the advance tax payable and paid by the petitioners during 2007-2008. It is seen that as against requirement of payment of Rs.5.55 Crores as advance tax (excluding TDS), the petitioners had paid only Rs.1.75 Crores as advance tax. The petitioners could have paid advance tax on the income already accrued during the Financial year. The learned CCIT has referred to an admission made by the petitioners in the Notes to Accounts vide items no.(2) and (3) of schedule 15, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and to the extent the Chief Commissioner of Income-tax/Director General of Income-tax may deem fit. However, no reduction or waiver of such interest shall be ordered unless the assessee has filed the return of income for the relevant assessment year and paid the entire income-tax (principal component of demand) due on the income as assessed. The Chief Commissioner of Income-tax or Director General of Income-tax may also impose any other conditions as deemed fit for the said reduction or waiver of interest. 2. The class of incomes or class of cases in which the reduction or waiver of interest under section 234A or section 234B or, as the case may be, section 234C can be considered, are as follows : (a) Where during the course of proceedings for search and seizure under section 132 of the Income-tax Act, or otherwise, the books of account and other incriminating documents have been seized, and the assessee has been unable to furnish the return of income for the previous year, during which the action under section 132 has taken place, within the time specified in this behalf, and the Chief Commissioner/Director General is satisfied, having regard to the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he past was allowed in accordance with the Orders under section 119(2) (a) dated 23-5-1996 and 30-1-1997, such Orders allowing waiver should not be reopened/revised as per the guidelines contained in this Order." 23. A bare perusal of the said Order which is issued in exercise of powers conferred under Clause (a) of subsection (2) of Section 119 of the said Act, would indicate that it directs that the Chief Commissioner of Income Tax or Director General of Income Tax may reduce or waive interest in the interest charged under these provisions in the classes of cases or classes of income specified in paragraph 2 of the said Order for the period and to the extent the Chief Commissioner of Income Tax or the Director General of Income Tax may deem fit. However, no reduction or waiver of such interest shall be ordered, unless the assessee has filed the return of income for the relevant assessment year and paid the entire income tax (principal component of demand) due on the income as assessed. The Chief Commissioner/Director General may also impose any other condition as deemed fit for the said reduction or waiver of interest. The argument of Shri Sonak that this part which confers powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor General is satisfied, in the facts and circumstances of each case that reduction or waiver of any interest should be granted as the income chargeable to income-tax under any head of income, other than 'Capital Gains' is received or accrued after due date of payment of the first or subsequent installments of advance tax and secondly, if such income was not anticipated nor was in the contemplation of the assessee. Thirdly, the advance tax on such income is paid in the remaining installment or installments. Therefore, this is a reduction or waiver of interest for deferment of advance tax. 25. The other case covered is under paragraph 2(c) of the said Order wherein the income was not chargeable to income tax in the case of an assessee on the basis of any order passed by the High Court within whose jurisdiction he is assessable to income tax and as a result, he did not pay income tax in relation to such income in any previous year, and subsequently, in consequence of any retrospective amendment of law or the decision of a superior Court, in any assessment or re-assessment proceedings the advance tax paid by the assessee during such financial year is found to be less than the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. There is no question of grouping distinct classes and treating them equally. The grouping itself is to cover different cases or income. Thus, this is not a case of Class Legislation, but a reasonable classification having definite nexus with the object sought to be achieved. The object is to confer discretionary power to reduce or waive interest in cases of three defaults. The defaults have been identified and interest is chargeable for the same, under separate provisions of the Income-tax Act. Once, we see the said Order in this light, then, this is not a case where unequal treatment has been given to equals. Unequal treatment can be faulted if the cases are equal. Therefore, there is no violation of the mandate of Article 14 of the Constitution of India and the order cannot be declared as unconstitutional, null and void. 28. We agree with Ms. Dessai that in fiscal matters there is certain degree of latitude and discretion and we have to proceed on the basis that the legislature is aware of the several facets and aspects of imposition of taxes and particularly the income tax. In these circumstances, and when we find that the exercise undertaken by the Board is neither unco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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