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TMI Blog2021 (5) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Section 13(1)(bb) of the Income Tax Act. With effect from 01.04.1984 the exemption in form of Section 11(4) was introduced. 3. The petitioner claims that it was under bonafide belief for the period after the introduction of Section 11(4) of the Income Tax Act with effect from 01.04.1984, the petitioner was still exempt from payment of income tax as 75% of its surplus was deployed for the educational purpose in another trust named Aditanar Educational Institution. 4. The learned counsel for the petitioner further submits that right from the beginning, there has been disputed with the respondents Department with regard to the exemption. The matter would get sort out after prolonged litigation. 5. The learned counsel for the petitioner further submits that for the Assessment Years 1979-1980 to 1983-1984, the Division Bench of this Court vide its order dated 19.12.1994, Thanthi Trust Vs Asst.Commissioner of Income Tax 1994 SCC OnLine Mad 781 : (1995) 213 ITR 626 (Mad), had allowed the exemption to the petitioner under Section 13(1)(bb) of the Income Tax Act. Similarly, for the Assessment Years 1984-1985 to 1991-1992, the Division Bench of this Court vide its order dated 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A-II), dated 02.05.1994 and F.No.400/234/95-IT(B), dated 23.05.1996 and F.No.400/234/95-IT(B), dated 30.01.1997. 10. He further submits that the case of the petitioner is covered by the CBDT Circular F.No.400/234/95-IT(B), dated 23.05.1996. The relevant clause from the said clause is reproduced below:- 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) ....................... (b) ...................... (c) ....................... (d) Where any income which was not chargeable to income-tax on the basis of any order passed in the case of an assessee by the High Court within whose jurisdiction he is assessable to incometax, 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, as the case may be, the decision of the Supreme Court in his own case, which event has taken place after the end of any such previous year, in any assessment or reassessment proceedings the advance tax paid by the assessee during the financial ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount have been taken over by the Department and were not available to the tax-payer to prepare his return of income; ii. Where, in the course of search and seizure operations, cash had been seized which was not permitted to be adjusted against arrears of tax or payment of advance tax instalments falling due after the date of the search; iii. Any income other than "Capital gains" which was received or accrued after the date of the first or subsequent instalment of advance tax, which was neither anticipated nor contemplated by the taxpayer and on which advance tax was paid by the taxpayer after the receipt of such income; iv. Where, as a result of any retrospective amendment of law or the decision of the Supreme Court after the end of the relevant previous year, certain receipts which were hitherto treated as exempt, become taxable. Since no advance tax would normally be paid in respect of such receipts during the relevant financial year, penal interest is levied for the default in payment of advance tax; v. Where the return of income is filed voluntarily without detection by the Income-tax Department and due to circumstances beyond the control of the taxpayer such return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that the petitioner satisfied the conditions in Clause 2(d) of the circular of the Board. Having regard to the order passed by this Court in W.P.No.7457 of 2005, dated 12.03.2007, the first respondent should have considered the claim of the petitioner and granted the relief. He further pointed out that having regard to the order of this Court quashing the assessment orders as reported in 213 ITR 626 Thanthi Trust Vs. Assistant Commissioner of Income-tax and 213 ITR 639 (Thanthi Trust Vs. Central Board of Direct Taxes and others) and that the second respondent had passed fresh assessment orders declaring the petitioner as not assessable, the petitioner's claim should have been favourably considered. 8. As rightly pointed out by the learned Senior Counsel appearing for the petitioner, the claim of the petitioner rested not just on the applicability of the circular alone. The petition for waiver narrates the grounds for granting waiver of interest that there was no willful default on his part for non-payment of tax or delayed filing of the return. In the light of the specific plea made by the petitioner placing reliance on the decision of this Court in the assessee's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue finally settled by only the Hon'ble Supreme Court vide order dated 31.01.2001 which was reported in (2001) 2 SCC 707 : (2001) 247 ITR 785 (S.C.) and therefore, the petitioner is entitled for waiver of interest in terms of the above CBDT Notification issued under Section 119(2)(a) of the Income Tax Act, 1961. 18. The learned counsel for the petitioner further drew my attention to a recent decision of the Division Bench of this Court in petitioner's own case in T.C.A.No.822 of 2018, dated 29.10.2020 which pertains to the Assessment Years 2006-2007 to 2009-2010. He further submits that the issue relating to the bonafide of the petitioner's trust was considered by the Division Bench in T.C.A.No.822 of 2018 under Section 12A(a) of the Income Tax Act, 1961 in the context of Circular No.1 of 2011. He further submits that the Division Bench of this Court after considering the said Circular ultimately came to the following conclusion:- 89.Circular No.1 of 2011 will clearly show that the amendment brought out in Section 12AA is applicable with effect from 1 st June, 2010, i.e., from the assessment year 2011-12 and subsequent years. Therefore, the retrospective cancellation of the regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act, 1961 which was introduced by the Finance Act, 1983, w.e.f. 01.04.1984. She submits that these writ petitions pertain to the Assessment Years 1989-1990, 1990-91 and 1991-1992 and advance tax was not paid on the due date as is evident from the dates and the particulars given in these writ petitions which came up for consideration in 1994 SCC OnLine Mad 782 : (1995) 213 ITR 639. 20. She further submits that the writ petitions were filed only during 1989, 1991, 1992 and 1993 and since the advance tax had to be paid for the relevant Assessment Years 1989-1990, 1990-91 and 1991-1992 during the corresponding previous year, it cannot be said that the petitioner entertained a bonafide belief. She also submits that the waiver of interest that was demanded from the petitioner under Section 234B of the Income Tax Act, 1961 is only for the period between the due date and the date of assessment and therefore, there are no merits in the present writ petition. She further submits that the petitioner has also not made out any case for genuine hardship and therefore, the respondent has rightly rejected the request of the petitioner for waiver of interest under Section 234B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto, the Chief Commissioner/Director General of Income Tax has been empowered to impose any other condition, as it may deem fit, while granting reduction or waiver of interest. 11.6. Therefore, what emanates upon perusal of the Circular is that, unless the Assessee's case falls under the circumstances set out in paragraph 2(a) to 2(d) of the Circular dated 26.06.2006, which includes classes of cases and/or classes of incomes, the Chief Commissioner/Director General of Income Tax has no power to reduce or waive interest. 11.7. In the instant case, as indicated in the narration of facts above, though returns were filed for the subject periods, the assessment made in the usual and normal course, was reopened under Section 148 of the 1961 Act. The reassessed tax was paid only after the Revenue had passed the reassessment order. As noted above, the assessee, at that stage, as advised, it appears, has also paid interest under Sections 234A, 234B and 234C of the 1961 Act. 11.8. However, what emerges from the record, is also, that in so far as AY 2001-2002 is concerned, at the assessment stage itself, the deduction claimed under Section 80HHC qua the local sales was denied to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finally, she drew my attention to the decision of this Court in M/s.Rayala Corporation Pvt. Ltd. case referred to supra, in support of her plea that the petitioner has not made out any case for exemption/waiver from the payment of interest under Section 234B of the Income Tax Act, 1961. 25. The petitioner had not only challenged the following assessment orders and few other assessment order for few other assessment years starting from 1984-85 to 1988 -89 but had also CBDT Circular No 372 dated 8.12.1983 reported in [1984] 146 ITR (ST) 9 in W.P.No. 203, 6632, 6633, 10838 of 1989 and in W. P.No. 14032 of 1991 14827 of 1992 and 2228 of 1993 and W.P.No. 8971 of 1993. Serial No Assessment Years Due date for payment of Advance Tax Date Tax Details Interest under Deduction 234B of the Income Tax Act, 1961 1 1989-90 15.9.1988 (20%) 15.12.1988(30%) 15.3.1989(50%) 30.03.1992 6,29,325 4,40,524/- 2. 1990-91 15.9.1989 (20%) 15.12.1989(30%) 15.03.1990(50%) 22.12.1992 1,04,90,045 69,23,400/- 3. 1991-92 15.9.1990 (20%) 15.12.1990(30%) 15.03.1991(50%) 19.02.1993 1,36,37,712 68,23,420/- 26. These writ petitions were answered in favour of the petitioner by a Division B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of bona fides while considering the plea for waiver. It is not denied that the fresh order of assessment itself came to be passed after the Supreme Court decision. In the light of the above facts and considering the scope of the Board's notification, the case of the petitioner merits to be reconsidered and a fresh order passed accordingly. In the circumstances, we set aside the order of the first respondent and direct the first respondent to consider the case of the petitioner afresh and pass orders in accordance with law". 33. The 1st respondent thereafter passed another order dated 3.3.2010. Once again, the 1st respondent rejected the request of the petitioner for the second time. The said order was again set aside by an order dated 23.9.2010 In W.P.No. 5859 of 2010 with the following observation:- " As rightly pointed out by the learned Senior Counsel appearing for the petitioner, the claim of the petitioner rested not just on the applicability of the circular alone. The petition for waiver narrates the grounds for granting waiver of interest that there was no wilful default on his part for non-payment of tax or delayed filing of the return. In the light of the spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also in its written submission filed on 22.01.2011 and on 26.01.2011 frankly admitted that genuine hardship in the shape of financial problem and shortage of liquid funds did not exist in the assessee's case. However, the assessee has contended that payment of interest will cause genuine hardship to the assessee. It is the contention of the assessee that assessee filed nil return of income and it was only because of Supreme Court's order that the assessee had to pay tax and interest. The assessee also pleaded that the assessee has applied huge amounts under section 11 for educational purpose and has also paid huge taxes and further payment of interest will cause genuine hardship to the assessee. Any justifiable demand of tax and interest upheld by the Supreme Court, however, unpleasant it may be, cannot be treated as genuine hardship. Any payment of tax and interest will lead to diminution of gross asset of the assessee and this cannot be treated as hardship. This will lead to an absurd situation where every assessee will contest the payment of interest on the ground of so called hardship. Genuine hardship means lack of liquid resources and acute financial distress and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of an assessee by the High Court within whose jurisdiction such assessee was assessable to income tax, and as a result, such assessee did not pay income tax in relation to such income in any previous year and subsequently, in consequence of any retrospective amendment of law, as the case may be, decision of the Supreme Court in his own case, which event has taken place after the end of any such previous year, in any assessment or reassessment proceedings, the advance tax paid by the assessee during the financial year immediately preceding the relevant assessment years found to be less then the amount of advance tax payable on his current income, the assessee chargeable to interest under section 234B and/or 234C is entitled to reduction of waiver of such interest if the Chief Commissioner of the Director-General of Income Tax is satisfied for grant of such reduction or waiver interest. 40. Thus, the facts as they stand out make it clear that the petitioner was indeed entitled for partial waiver of interest under section 234 B of the Income Tax Act, 1961 inasmuch as there was stay granted by this court on 6.1.1989 and on 12.6.1989. These orders continued to be in force as thes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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