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Krishnan Gopi Vs. P.S. Bhaskaran, Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberWrit Petition No. 1693 of 1981
Judge
Reported in(1986)53CTR(Bom)113; [1986]161ITR631(Bom)
ActsIncome Tax Act, 1961 - Sections 139(8), 140A(3), 217, 220(2), 271, 271(1), 273 and 273A
AppellantKrishnan Gopi
RespondentP.S. Bhaskaran, Commissioner of Income-tax
Excerpt:
.....june 15, 1974, (2) the assessee's not paying tax as per the estimate, (3) delay in filing the return, (4) non-payment of a part of the self-assessment tax, and (5) delay in payment of some portion of the self-assessment tax. it was precisely on account of these delays that interest and penalty were sought to be levied. the petitioner, however, has not been denied relief on the ground that he has not paid interest under section 217 and section 139(8) of the income-tax act, 1961. under the relevant provisions of section 273a, the commissioner may exercise his discretion if he is satisfied that the petitioner has 'either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this act 'had this non-payment been..........showing a total income of rs. 50,000. the tax payable on the said amount was rs. 13,000. the return of income for the assessment year 1975-76 should have been filed by the petitioner on or before july 30, 1975. the petitioner, however, filed the return on september 15, 1976. the return showed a total income of rs.59,290. the petitioner did not pay the income-tax due under the said return. he paid a sum of rs. 18,000 as self-assessment tax on november 23,1977. the petitioner also had earlier paid an advance tax of rs. 753. the assessment order in respect of the said year was passed on march 2,1978. while completing the assessment, the income-tax officer levied interest under sections 217, 139(8) and 220(2) of the income-tax act, 1961. this interest was in respect of delay in filing.....
Judgment:

Mrs. Sujata V. Manohar, J.

1. The petitioner carries on business under the name and style of M/s. Honest Engineering Corporation at Mulund, Bombay. The petitioner is assessed as an individual under the provisions of the Income-tax Act, 1961.

2. For the assessment year 1975-76, the petitioner was served with a notice of demand dated June 15, 1974, calling upon him to pay advance tax of Rs. 1,505. Inadvertently this amount was not paid by the petitioner. Subsequently, on March 12, 1975, the petitioner filed an estimate showing a total income of Rs. 50,000. The tax payable on the said amount was Rs. 13,000. The return of income for the assessment year 1975-76 should have been filed by the petitioner on or before July 30, 1975. The petitioner, however, filed the return on September 15, 1976. The return showed a total income of Rs.59,290. The petitioner did not pay the income-tax due under the said return. He paid a sum of Rs. 18,000 as self-assessment tax on November 23,1977. The petitioner also had earlier paid an advance tax of Rs. 753. The assessment order in respect of the said year was passed on March 2,1978. While completing the assessment, the Income-tax Officer levied interest under sections 217, 139(8) and 220(2) of the Income-tax Act, 1961. This interest was in respect of delay in filing the return, delay in payment of advance tax and delay in payment of tax as specified in those sections.

3. The petitioner was served with a demand notice dated March 29,1978, calling upon him to pay a sum of Rs. 30,207. This demand notice did not take into account the self-assessment tax paid by the petitioner. Hence, after correction of the mistake, a new demand notice dated August 27,1979, was issued for a sum of Rs. 13,173. Pursuant to the said notice, the petitioner paid in October, 1979, income-tax amounting to Rs. 2,145, interest under section 220(2) of the Income-tax Act, 1961, of Rs. 1,710 plus further interest under section 220(2) up to date of Rs. 145. The petitioner made an application for waiver of interest under section 217 and section 139(8) of the said Act, amounting to Rs. 6,396 and Rs. 2,652, respectively. The petitioner also applied for waiver of penalties sought to be levied under section 271(1)(a), section 273(a) and section 140A(3) of the said Act.

4. The Commissioner of Income-tax by his order dated December 4, 1980, has rejected the application of the petitioner under section 273A of the Income-tax Act, 1961, for waiver of these amounts for the following reasons :

'The return appears to have been filed voluntarily and before service of any notice. The assessee also appears to have co-operated in the completion of all proceedings. However, it is obvious from the facts stated that the assessee has not co-operated in the payment of taxes.'

5. He said that all the conditions for waiver of penalty and interest are not satisfied and hence he rejected the petition.

6. Section 273A of the Income-tax Act, 1961, deals with power to reduce or waive penalty in certain cases. Under this section, the Commissioner in his discretion has the power to reduce or waive, inter alia, penalties imposable under section 271(1)(a) of the said Act as also under section 273(a). A similar power is given to the Commissioner also to reduce or waive the amount of interest payable under section 139(8) and section 217 of the said Act. This section, however, provides that this reduction or waiver will be granted if the Commissioner is satisfied, inter alia, that the assessee has co-operated in any enquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year.

7. In the present case, the petitioner has paid the full amount of tax as well as interest under section 220(2) of the Income-tax Act, 1961. His petition for waiver is rejected on the ground that the assessee has not co-operated in the payment of taxes. In this connection, the Commissioner has relied upon the facts stated in the earlier paragraphs of his order. The earlier paragraphs of his order deal with (1) the assessee's failure to pay advance tax pursuant to the notice of demand dated June 15, 1974, (2) the assessee's not paying tax as per the estimate, (3) delay in filing the return, (4) non-payment of a part of the self-assessment tax, and (5) delay in payment of some portion of the self-assessment tax. It was precisely on account of these delays that interest and penalty were sought to be levied. Hence, the petitioner filed a petition for waiving interest and penalty under section 273A of the said Act. If an occasion had not arisen to levy such penalty or interest, there would have been no occasion for filing an application under section 273A. Hence, to say that discretion should not be exercised in favour of the petitioner under section 273A because the petitioner has committed various acts which invite penalties and interest is, in effect, tantamount to a refusal to exercise discretion without any valid reason. The question of exercising discretion will arise only when there are circumstances which invite imposition of interest and penalty. In such cases, looking to the conduct of the assessee and other relevant circumstances, the Commissioner has to decide whether he should exercise his powers under section 273A or not. In the present case, this has not been done.

8. Mr. Devadhar, learned advocate for the respondents, pointed out that under section 273A of the Income-tax Act, 1961, the petitioner should have paid the full amount of interest levied before asking for the benefit of section 273A. The petitioner, however, has not been denied relief on the ground that he has not paid interest under section 217 and section 139(8) of the Income-tax Act, 1961. Under the relevant provisions of section 273A, the Commissioner may exercise his discretion if he is satisfied that the petitioner has 'either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act '. Had this non-payment been pointed out to the petitioner, the petitioner could have made satisfactory arrangements for the payment of the said amount. Mr. Bhujle, for the petitioner, states that the petitioner is in a position to give a bank guarantee for the payment of the impugned interest if he is called upon to do so. Hence, at this stage, the petitioner cannot be denied relief on this ground.

9. In these circumstances, this is a fit case where the petition should be allowed and the matter should be remanded to the Commissioner for reconsideration, taking into account all the relevant circumstances of the case. In the premises. the petition is allowed. The order dated December 4, 1980 (exhibit 'G'), is set aside and the matter is remanded to the 1st respondent. The 1st respondent is directed to dispose of the petitioner's application dated October 10/13, 1980, on merits.

10. The rule is made absolute accordingly with costs.


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