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TMI Blog1999 (5) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... , HUF (MVPH) against the combined order dated 17th March, 1992, for assessment years 1984-85 to 1987-88. All the appeals have a common background and emanate from the same set of circumstances. All the four assessees have a common grievance against the respective orders passed by the Commissioner under section 263. Hence, we find it convenient to dispose off all the fourteen appeals by this consolidated order. The following common grounds are raised in all the appeals: 1. On the facts and in the circumstances of the case the Commissioner erred in holding that the orders passed by the Assessing Officer for waiving interest under rule 117A and rule 40 were erroneous and prejudicial to the interest of the Revenue. The Commissioner consequently erred in cancelling the orders for assessment years 1984-85 to 1987-88 with a direction to the Assessing Officer to re-examine the issue of waiver under rr. 40 and 117A. 2. Without prejudice to the claim in ground No. 1 the Commissioner erred in not appreciating that the entire taxes were paid at one time and that all the particulars which were called for were furnished. The Commissioner consequently should have held that this was a fit case f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was well-nigh impossible to hold that the Department was able to detect any concealment justifying the levy of penalty. 5. In the light of this background we now see the facts in the present appeals. In the preceding paragraph, the facts regarding waiver of interest is mentioned. Interest of varying amounts have been waived under rr. 40 and 117A in each of the years in all the cases before us. While waiving the interest, inter alia, Dy. Commissioner took note of the fact that while completing the assessment, assessee was not given proper and sufficient opportunity to explain the return of income and the final accounts. Further, the assessment was completed hurriedly and summarily, without verification of the explanation and details. Though appeals were filed against the assessments and the assessees were expecting substantial relief, they were withdrawn in order to co-operate with the Department and thereby the assessments could be treated as agreed assessments. Thus, on these and other grounds, interest under various provisions stood waived. 6. The Commissioner, assuming jurisdiction under section 263, was of the view that charging of interest and levy of penalties were dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 1986. An affidavit was thereafter filed by Sri Mehta, an ex-employee of the assessee before no less than the D.I. himself the existence of which is not at all in dispute by the Department wherein it was categorically stated that a false complaint was lodged by Sri Mehta against Sri Parekh, his family members and his business concerns wherein lot of untenable and false allegations about the concealment of wealth and income were levelled. Sri Mehta also admits and he was misguided by one Sri H.R. Mehta whom he knew for the last 15 years and also distantly related to him. Not only this, Sri Mehta says that he was advised to create false papers and other documents and rough records which should prima facie look as genuine transactions of Sri Parekh and the same should be done very carefully without the knowledge of Sri Parekh or his other members and further I should keep them in such a way that it may look as a set of papers and reflect income concealed by them. Sri Mehta further says, "I got a chance to keep lot of papers and other documents in one of the empty barrels, which was lying in the godown and the same was informed to the Income-tax Department that Sri Parekh h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee should be accepted either in full or be rejected in full. Accepting only that part which is favourable to the Revenue was unjustifiable. 10. In his reply the learned Departmental Representative contended that it was a moot question as to whether the surrender by the assessee was voluntary or otherwise. There was nothing on record to show that it was a voluntary surrender. In all the assessments, interest was charged and hence assessee should have realised that the offer was not accepted. Despite this, assessee did not file appeals except for the assessment year 1984-85. Assuming that the offer was accepted, the same could be accepted conditionally or otherwise. Penalties, it was contended, could or could not be levied depending upon the circumstances of each case. However, so far as charging of interest was concerned, it was mandatory as per the decision of the Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. v. Commissioner (1986) 160 ITR 961 (SC). For the proposition that an order is rendered erroneous if interest is not charged, reliance was placed on the decisions in Sudarsan Trading Co. Ltd. v. Commissioner (1995) 215 ITR 245 (Mad), Prem Chand Sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) of section 183. (4) Where the previous year is the financial year or any year ending about the close of the financial year and large profits are made after the 1st March, (or the 15th March in cases where the proviso to section 211 applies), in circumstances which could not be foreseen. (5) Any case in which the Dy. Commissioner considers that the circumstances are such that a reduction or waiver of the interest payable under section 215 or section 217 is justified. (6) Nothing contained in this rule shall apply in respect of any assessment for the assessment year commencing on the first day of April, 1989, or any subsequent assessment year." Of the above six circumstances, Assessing Officer has exercised his discretion in the circumstances mentioned in clause (5). Thus, it is for our consideration to examine as to whether circumstances in the present case warranted the waiver of interest under section 215/217. Earlier we have referred to the order of the Tribunal in Income-tax Appeal Nos. 5433 to 5435/Bom/1991, dated 31st March, 1992, in the case of NPE and NPAI, from which the basic facts, as narrated earlier were culled out. This order of the Tribunal, because of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Department was able to detect any concealment. This fact has been admitted by the learned Commissioner also in the impugned order. Under these circumstances, for the present appeals also, we are convinced that since the assessments were completed on agreed basis, shortfall of advance tax cannot be attributed to the assessee. In fact, in Income-tax Appeal Nos. 3486 and 3487/Bom/1992, dated 6th January, 1999, in cases of NPE and NPAI respectively, as also in Income-tax Appeal Nos. 2324 & 2325/Bom/1991 in the case of NPAI, penalties under section 273(2)(c) have been cancelled by the Tribunal after taking note of the fact that interest under section 215/217 had been waived by the Department. We, therefore, are of the view that the Dy. Commissioner was well justified in waiving the interest under rule 40 of the Rules. The learned Commissioner was, in our opinion, not justified in holding the order under rule 40 waiving interest under section 215/217 to be erroneous and prejudicial to the interests of the Revenue. 15. Now we come to the second part of the issue and that is the waiver of interest levied under section 139(8), the relevant rule being rule 117A of the Rules. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied about the circumstances mentioned in clause (v) of rule 117A, waived the interest under section 139(8). 17. In our opinion, not only there existed reasonable causes for filing the returns late, but otherwise also, considering the circumstances under which the quantum of assessment was arrived at and assessments made accordingly, it is difficult for us to hold that assessee deliberately delayed the returns and payment of taxes which would warrant compensation by way of interest under section 139 (8). Thus, on this aspect also we are of the view that the Assessing Officer was justified in waiving interest under section 139(8). 18. In the preceding paragraphs, on facts, we have held that the orders of the Assessing Officer waiving interest not to be erroneous and prejudicial to the interests of the Revenue. However, on legal ground also we are of the view that Commissioner was not justified in assuming jurisdiction under section 263 in the present cases. If the clauses of the relevant rules under which interest has been waived, are read carefully, it would be seen that it is the satisfaction of the Assessing Officer that should prevail while reducing or waiving the interest. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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