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TMI Blog2014 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... 02/1997, being the date of filing of the application before the Settlement Commission under Sub-section (1) of Section 245C of the said Act. 2. The assessee, the second respondent herein, is engaged in the business of financing vehicle purchases, constructing and selling of commercial complexes and real estate. A search under Section 132 of the Income-Tax Act, 1961, hereinafter referred to as `the Act' only, was conducted at the residential and business premises of the assessee on 01/02/1996. Notice under Section 158BC of the Act was issued on 13/06/1996 and the assessee filed return of income on 05/12/1996 declaring an amount of 4,50,000/- as undisclosed income for the block period 1986-87 to 1996-97 and the tax payable was worked out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent of granting waiver of interest levied on the assessee under Sub- section (2) of Section 220 of the Act, for the period subsequent to 10/02/1997, being the date of filing of the application before the Settlement Commission under Sub-section (1) of Section 245C of the said Act, the Revenue is before this Court in this Original Petition filed under Article 226 of the Constitution of India. 4. Heard the learned Standing Counsel for the petitioner and the learned counsel appearing for the second respondent. 5. The issue which has to be considered in this Original Petition is whether the Settlement Commission in Ext. P1 was justified in granting waiver of interest levied on the assessee under Sub-section (2) of Section 220 of the Act witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y clear that the said sub-section, which begins with a non-obstante clause, not only overrides the charging provision as contained in Sub-section (2) of Section 220 of the Act, but also restricts the power of the competent authority to reduce or waive the amount of interest paid or payable by an assessee, only if such authority is satisfied that the assessee fulfilled all the three conditions laid down under Sub-section (2A) of Section 220 of the Act. First condition being that, payment of such amount of interest has caused or would cause genuine hardship to the assessee. The second condition being that, the default in the payment of the amount on which interest has been paid or was payable under the Sub- section (2) was due to circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stions the powers of the Settlement Commission to waive interest levied under Sub-section (2) of Section 220 of the Act. Relying the principle in Anjum's case (supra), the Apex Court reversed in part the order of the Settlement Commission in Damani Brothers case (supra), and held that, waiver or reduction of interest under Sub-section (2A) of Section 220 of the Act is hedged with certain conditions and if these conditions are satisfied, the Commission has the power to direct waiver or reduction of interest. Paragraph 13 of the judgment reads thus; "13. Coming to the third question, the answer is provided in Anjum's case (supra). Wherever the Act provides for waiver of interest, the Commission can in appropriate cases direct waiver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the amount of interest. Even though in the said sub-section it is not stated that any reasons are to be recorded in the order deciding such an application, it appears to us that it is implicit in the said provision that whenever such an application is filed the same should be decided by a speaking order. Principles of natural justice in this regard would be clearly applicable. It will be seen that a decision which is taken by the authority under Section 220 (2A) can be subjected to judicial review, as was sought to be done in the present case by filing a petition under Article 226, this being so and where the decision of the application may have repercussion with regard to the amount of interest which an assessee is required to pay it wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Commission in Ext. P1 order has already been reversed in part by the Apex Court in (259 ITR 475). Moreover, Sub-section (2) of Section 220 of the Act restricts the power of the Settlement Commission to reduce or waive the amount of interest paid or payable by an assessee only if such authority is satisfied that the assessee has fulfilled all the three conditions laid down under Sub-section (2A) of Section 220 of the Act. Further, in terms of the law laid down by the Apex Court in the judgments referred supra, while passing an order under Sub- section (2A) of Section 220 of the Act, the Settlement Commission has to exercise its discretion judicially and satisfy that the three conditions laid down under Clauses (i), (ii) and (iii) of Sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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