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TMI Blog2004 (7) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ef Commissioner of Income-tax, to entertain the petitioner's application for waiver of interest - - - - - Dated:- 1-7-2004 - Judge(s) : M. S. SHAH., D. A. MEHTA. JUDGMENT The judgment of the court was delivered by M.S. Shah J.- At the oral request of Mr. S.N. Divetia, learned counsel for the petitioner, leave to add Chief Commissioner of Income-tax-I, Aayakar Bhavan, Ashram Road, Ahmedabad, as respondent No. 4. Notice of rule to the newly added party returnable today. Mr. Manish Bhatt, learned standing counsel waives service of rule for the newly added party. In the facts and circumstances of the case, the petition is taken up for final disposal today. This petition under article 226 of the Constitution challenges the order dated March 31, 1994 (annexure M), passed by the Commissioner of Income-tax, Gujarat-I, Ahmedabad rejecting the petitioner's revision petition under section 264 of the Income-tax Act, 1961 ("the Act" for short), and rejecting the petitioner's claim to delete the interest of Rs. 3,48,122 levied under section 234B of the Act for the assessment year 1989-90. The petitioner has also challenged the legality of the order dated January 21/28, 1993 (anne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash assistance of Rs. 7,68,751 and two other similar items with which we are not concerned in this petition. The Assessing Officer also levied interest of Rs. 3,48,122 under section 234B of the Act on the ground that the advance tax paid by the petitioner under section 210 was less than 90 per cent. of the assessed tax. The said amount of interest was subsequently recovered from the petitioner by adjusting it against the refund for the subsequent assessment year 1990-91. When the petitioner filed an appeal against the aforesaid order under 12 section 143(3) of the Act challenging the additions and levy of interest under section 234B of the Act, the Commissioner of Income-tax (Appeals) granted relief in respect of other items, but held that the appeal was not maintainable against charging of interest under section 234B of the Act, but the petitioner would be at liberty to take other remedial actions under section 154 or section 264 of the Act. The petitioner, therefore, made a rectification application under section 154 of the Act before the Assessing Officer, respondent No. 3 herein, for deleting interest of Rs. 3,48,122 levied under section 234B of the Act which came to be rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 1991. Mr. Divetia has submitted that in any view of the matter, the interest levied under section 234B of the Act was required to be waived. In support of the said submission, Mr. Divetia has placed strong reliance on the decisions of the apex court in CIT v. Hindustan Electro Graphites Ltd. [2000] 243 ITR 48 and in CIT v. Anjum M.H. Ghaswala [2001] 252 ITR 1. Mr. Divetia has also heavily relied on the Central Board of Direct Taxes Notification No. 400/234/95-IT(B), dated May 23, 1996, and the subsequent Circular No. 783, dated November 18, 1999, in support of his contention that where any income which was not chargeable to income-tax on the date of filing of the return, but subsequently in consequence of any retrospective amendment of law, the amount becomes chargeable to income-tax and interest is charged thereon under section 234B, it is a fit case for reduction or waiver of such interest. On the other hand, Mr. Manish Bhatt, learned standing counsel for the respondent authorities, has relied on the affidavit in reply of the Deputy Commissioner of Income-tax (Assessment), Special Range-I, Ahmedabad, contending that, as held by the hon'ble Supreme Court in Swadeshi Cotto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the date of filing of the return, the cash compensatory support also came within the sweep of section 28. When additional tax has the imprint of penalty the Revenue cannot say that levy of additional tax is automatic under section 143(1A) of the Act. If additional tax could be levied in such circumstances it will be punishing the assessee for no fault of his. That cannot ever be the legislative intent. In the circumstances of the case, levy of additional tax taking into account the income by way of cash compensatory support was not warranted. Although the above observations were in the context of levy of additional tax under section 143(1A), the same reasoning would apply in the matter of waiver of interest under section 234B of the Act. On the date when the assessee was required to pay advance tax and even on the date of filing of the return, the assessee could not have been expected to pay tax on the export cash assistance received by him in the year ended March 31, 1989, nor to show the same as income in the return filed on December 29, 1989. It was after the expiry of the assessment year that there was a statutory amendment with retrospective effect making the export cash ..... X X X X Extracts X X X X X X X X Extracts X X X X
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