9911796707
TMI Blog1983 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... d to income-tax for the assessment year 1973-74. The notice of demand dated May 13, 1974, issued in pursuance of the said order, specified that the said advance tax was payable in three equal instalments of Rs. 29,813 each (luring the financial year 1974-75. In compliance with the said notice, the petitioner paid two instalments of advance tax on June 15 and September 15, 1974. However, as the current income of the petitioner was likely to be greater than the income on which the advance tax payable by it bad been computed, the petitioner sent to the ITO an estimate of the current income under s. 212(3A) and therein the current income was estimated at Rs. 2,10,336. Be it stated that, according to the petitioner, the current income was estimated as Rs. 2,10,336 after taking into consideration the deduction allowable under section 35B of the Act, that is to say, the export markets development allowance. The said estimate was sent before the date on which the last instalment of advance tax fell due, that is to say, before December 15, 1974. The petitioner also calculated in the manner laid down in the relevant provisions of the Act, the advance tax payable by it, on such current income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preted, in support of its claim for the allowance of the whole of the sum claimed by it as and by way of the export markets development allowance. The Commissioner, however, disagreed with the view expressed by the Income-tax Appellate Tribunal, Bombay, and rejected the claim in so far as it was, inter alia, rested on the said decision. On October 28, 1978, the ITO having jurisdiction over the petitioner, passed an order (Ex. " E ") giving effect to the aforesaid appellate order and computed the revised total income of the petitioner in respect of the assessment year in question at Rs. 4,11,109. In computing the total income as aforesaid, the ITO, inter alia, allowed a deduction in the sum of Rs. 81,841 under s. 35B on the expenditure to the tune of Rs. 2,42,523.38 which was held by the Commissioner of Income-tax (Appeals) as admissible for the purpose of computing the export markets development allowance. The ITO further directed that the tax should be recalculated on the basis of the revised total income and that interest under s. 215 should be charged on the basis of the tax assessed accordingly. Meanwhile, on June 10, 1978, the petitioner had made an application (Ex. " B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn. The petitioner had also made an application (Ex. F) on September 2, 1978, to the IAC praying that the interest payable under s. 215 should be waived in exercise of the powers conferred by rule 40, sub-rule (5). In the course of the said application, the petitioner referred to the order dated July 27, 1978 (Ex. C), passed by the ITO, whereunder the interest payable was reduced/waived to the extent of Rs. 35,663 and the liability to pay interest was confined to Rs. 24,315. The petitioner requested for the waiver of the reduced interest payable in the sum of Rs. 24,315 on the ground, inter alia, that the amount paid by way of advance tax had fallen short of the assessed tax because, as a result of the, rejection of the claim of the petitioner for the export markets development allowance under s. 35B, the total income was computed at a higher amount and the tax was assessed at a higher figure in the course of the assessment proceedings. The petitioner submitted that its claim for the export markets development allowance was founded on various decisions of the Income-tax Appellate Tribunal and that, therefore, it was justified in estimating its current income by making allowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the export markets development allowance and having paid the advance tax on such current income under s. 212(3A), the circumstances were such that the waiver of interest was justified under rule 40, sub-rule (5). The Commissioner, by his order dated February 28, 1979 (Ex. 1), rejected the revision application. The reasons which weighed with the Commissioner require to be set out in his own words and the relevant portion of this order is, therefore, extracted and set out hereinbelow: " ......where the completion of assessment is delayed beyond one year after the submission of the return and this delay in assessment is not attributable to the assessee, rule 40(1) provides for reduction of interest. The language of the rule clearly suggests that in such cases interest shall be charged only up to the end of one year from the submission of the return. The contention of the assessee that the rule contemplates complete waiver of interest in such cases, if accepted, would lead to illogical results. It would mean that in cases where an assessment is completed within one year of the filing of the return, interest will be payable up to the date of completion of the assessment, but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich he has been assessed by way of regular assessment after making certain deductions. In the case, of an assessee who has not previously been assessed by way of regular assessment, an estimate of his current income and of the advance tax payable on the current income calculated in the manner laid down in s. 209 has to be made and the advance tax has to be paid. Section 210 provides for the making of an order by the ITO requiring a person, who has been previously assessed by way of regular assessment, to pay advance tax. Section 211 provides for the payment of advance tax in three equal instalments during the financial year on three specified dates, namely, 15th June, 15th September and 15th December, in the case of an assessee whose total income to the extent of 75 per cent. thereof or more is derived from sources for which the previous year ends on or before 31 st day of December ; and in any other case, the instalments are to be paid on 15th September, 15th December and 15th March. Section 212 enables an assessee, who is liable to pay advance tax, to make an estimate of his current income and to pay advance tax on the basis of such estimate tinder certain circumstances. Sub-ss. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Sections 215, 216 and 217 provide for the payment of interest by an assessee under certain circumstances. Since, in the instance case, the question arises in the context of s. 215, the provisions thereof are set out hereunder : " 215. Interest payable by assessee.-(1) Where, in any financial year, an assessee has paid advance tax under section 212 on the basis of his own estimate, and the advance tax so paid is less than seventy-five per cent. of the assessed tax, simple interest at the rate of twelve per cent. per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax. (2) Where before the date of completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise, (i) interest shall be calculated in accordance with the foregoing provision up to the date on which the tax is so paid; and (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax as so paid (in so far as it relates to income subject to advance tax) falls short of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers him to pass such orders as he thinks fit but which are not prejudicial to the assessee. The section spells out certain limitations in the exercise of these powers, but we are not concerned with the same herein. Section 273A which was enacted by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975, empowers the Commissioner, in his discretion, to reduce or waive penalty, etc., in certain cases upon fulfilment of certain conditions. The power so conferred on the Commissioner is " notwithstanding anything contained in this Act ". Under s. 273A, sub-s. (1), clause (ii),the Commissioner is empowered to reduce or waive the amount of interest paid or payable, inter alia, under s. 215, provided he is satisfied that prior to the issue of a notice to him under s. 139, sub-s. (2), or where no such notice has been issued and the period for the issue of such notice has expired, prior to the issue of notice to him under s. 148, the concerned assessee has voluntarily and in good faith made a true and full disclosure of the income and has paid the tax on the income so disclosed and also has co-operated in any enquiry relating to the assessment of his income and has eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute, mandamus can issue directing such authority to rehear and determine the matter afresh according to law. (See Madhukar Manilal Modi v. CWT [1978] 113 ITR 318 (Guj)). Now, in the instant case, the petitioner had made, an application to the IAC for invoking the provisions of sub-r. (5) of r. 40. The petitioner had requested for the waiver of interest on the ground, inter alia, that the advance tax had fallen short of the assessed tax because, as a result of the rejection of the claim of the petitioner for the export markets development allowance under s. 35B, the total income and, consequently the tax, was assessed at a higher amount in the course of the assessment proceedings. The petitioner had also submitted that its claim for the export markets development allowance was founded on the various decisions of the Income-tax Appellate Tribunal and that, therefore, it was justified in estimating its current income after making deduction in respect of such allowance and in paying the amount of advance tax in accordance with such estimate under s. 212(3A). The IAC, however, rejected the application by a laconic order stating that after a careful consideration of the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of wide import. Something could be said to be justified if it is proved or shown to be fair or right or according to justice or backed by sufficient reason. Therefore, where the assessee is able to prove or show to the satisfaction of the IAC that there were sufficient and genuine reasons which led to the lesser payment of advance tax so that a reduction or waiver of interest would accord with justice or that, even otherwise, the circumstances were such that a reduction or waiver of the interest would be just or fair or right, the conditions for the exercise of the power of reduction or waiver will have been satisfied and such power, even though discretionary, will have to be exercised. It must be remembered in this connection that this power is obviously conferred to mitigate the hardship resulting from the operation of the provisions of sub-s. (1) of s. 215, which are mandatory, even in genuine cases, where the default might have occurred, nay, for bona fide reasons. . if the power is not exercised even in such cases, the court can give suitable directions to the competent authority. One cannot overlook that sub-ss. (1) and (4) of s. 215 are different parts of a single scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the circumstances were such that the reduction or waiver of interest payable under s. 215 is justified. It would thus appear that there was a misconception as to the true object and scope of power under r. 40, sub-r. (5) on the part of the Commissioner and that there was a failure on his part to genuinely address himself to the matter before him. It will be recalled that the lesser payment of advance tax, in the instant case, was clearly due to the partial disallowance of the claim of the petitioner in respect of the export markets development allowance. The circumstances under which the claim was advanced and partly rejected , have been stated earlier. The ITO allowed the claim only to a limited extent during the course of the assessment proceedings. On appeal, the Commissioner of Income-tax (Appeals) held the claim admissible to a larger extent but not in its entirety. The petitioner was supported in its claim to the full extent by the decisions of the Income-tax Appellate Tribunal. We are not herein concerned with the question whether or not, on merits, the view taken by the assessing authority is correct. The short question for consideration is whether, under such circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e what in fact could not be anticipated or foreseen except possibly by one possessing an E.S.P. (extra sensory perception). In the instant case, having been fortified in respect of its claim for deduction in regard to the export markets development allowance by the decisions of the Income-tax Appellate Tribunal, the petitioner could not have anticipated or foreseen that its estimate of the current income would not be accepted and that the advance tax paid would be less than the assessed tax by the percentage prescribed in sub-s. (1) of s. 215. In our opinion, therefore, in the present case, it was impossible for the authorities to reach the conclusion that the circumstances of the case did not justify the waiver of interest. No other view could possibly have been taken upon a true appraisal of the scope of sub-r. (5) of r. 40 and the circumstances prevalent in the case. The question then is as to what relief should be granted to the petitioner in the instant case. It was urged on behalf of the Revenue that the impugned order of the Commissioner may be quashed and that the matter may be remanded to him for reconsideration of the petitioner's claim for waiver of interest in the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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