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TMI Blog1974 (1) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... tners who constitute the said firm. They relate to the assessment years 1965-66, 1966-67, 1967-68 and 1968-69. In these petitions, the petitioners have challenged the constitutional validity of section 217 of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), under the following circumstances : The firm, M/s. Nagappa and its partners, had not been assessed to income-tax at any time prior to the assessment year 1965-66. The orders of assessment in respect of the years 1965-66, 1966-67, 1967-68 and 1968-69 were passed by the Income-tax Officer in the year 1969. While passing the said orders of assessment, the Income-tax Officer levied interest at the prevailing rate under section 217(1) of the Act in respect of the advance t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act ; 2. Persons against whom an order is passed under section 210 of the Act but who under section 212(1) of the Act have filed their own estimate before the Income-tax Officer stating that their income during the relevant year would be less than the amount mentioned in the order under section 210 ; 3. Persons who have filed revised estimates under section 212(2) of the Act ; 4. Persons who have not been previously assessed either under the Act or under the Indian Income-tax Act of 1922 but who have filed an estimate of their income under section 212(3) ; and 5. Persons who have not been previously assessed either under the Act or under the Indian Income-tax Act of 1922 and who have not filed any estimate as required by sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order with regard to the contentions that may possibly be urged on behalf of persons falling under categories Nos. 2, 3 and 4. The contention of Sri Srinivasan urged on behalf of the petitioners who fall under category No. 5 is no doubt attractive but unsound. It is difficult to agree with the submission that persons falling under category No. 5 stand in the same position in all material respects with persons falling under category No. 1. Although the interest payable under section 217(1) is not in the nature of penalty, it has a purpose to fulfil and that is that persons who have withheld money payable to Government beyond the prescribed period and who have had the benefit of it should suitably compensate the Government. In so far as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : " Waiver of interest.-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 submission of the return, the delay in assessment not being attributable to the assessee. 2. Where a person is under section 163 treated as an agent of another person and is assessed upon the latter's income. 3. Where the assessee has income from an unregistered firm assessed under the provisions of clause (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 M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer can either reduce or waive the interest are set out. It is no doubt true that in sub-rule (5), the circumstances in which such power can be exercised are not set out with any particularity. The object of enacting rule 40 as can be seen from sub-rules (1) to (4) is that, in certain circumstances which are referred to therein, the assessee should be shown concession with regard to the interest payable by him under law. Sub-rule (5) confers the discretion on the Inspecting Assistant Commissioner to give relief under other circumstances in which reduction or waiver of interest is justified. The said power is conferred on an officer of the income-tax department who, by the time he is called upon to exercise the said power, would have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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