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M.N. Jadhav (Decd. by Legal Representatives) Vs. Fourth Income-tax Officer and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberWrit Petition Nos. 20663 and 20664 of 1980
Judge
Reported in(1987)60CTR(Kar)177; [1986]161ITR275(KAR); [1986]161ITR275(Karn); [1986]24TAXMAN686(Kar)
ActsIncome Tax Act, 1961 - Sections 156, 220(2), 250 and 271(1); Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964
AppellantM.N. Jadhav (Decd. by Legal Representatives)
RespondentFourth Income-tax Officer and anr.
Appellant AdvocateS.G. Shivaram, Adv.
Respondent AdvocateG. Sarangan, Adv.
Excerpt:
.....that being so, the i additional district judge, was not justified in dismissing the petition filed under section10 of the act, as not maintainable. the court has to consider the application filed by the petitioner under section 10 of the religious endowments act, 1863 (act xx of 18863). - but that success was a short lived one as the tribunal itself later in conformity with the orders of this court in i. notwithstanding anything contained in sub-section (2), the board may reduce or waive the amount of interest payable by an assessee under the said sub-section if, on the recommendation made by the commissioner in this behalf, it is satisfied that -(i) payment of such amount would cause genuine hardship to the assessee;.....commissioner was correct and legal. in compliance with the said order of the tribunal, the ivth income-tax officer, hubli, has passed two consequential orders on february 15, 1979 (annexures 'a' and 'b'), calling upon the petitioner to pay the balance of penalty and the interest accrued thereon under section 220(2) of the act. in these petitions under article 226 of the constitution, the petitioner has challenged the said orders made by the income-tax officer in so far as they demand interest on penalty levied by the inspecting assistant commissioner. 2. sri s. g. shivaram, learned advocate, appeared for the petitioner. sri g. sarangan, learned special standing counsel for the income-tax department, appeared for the respondents. 3. sri shivaram contends that notwithstanding the orders.....
Judgment:

Puttaswamy, J.

1. M. N. Jadhav of Hubli, the original petitioner before me, who is now dead and is represented by his legal representatives, was an assessee under the Income-tax Act, 1961 (Central Act No. 43 of 1961) ('the Act'). For the assessment years 1964-65 and 1965-66, the Inspecting Assistant Commissioner of Income-tax, Hubli exercising powers conferred on him by section 271(1)(c) of the Act, by separate but identical orders made on March 14, 1972, levied a sum of Rs. 6,000 as penalty for each year on the petitioner. Aggrieved by the said orders made by the Inspecting Assistant Commissioner, the petitioner filed appeals before the Income-tax Appellate Tribunal, Bangalore ('the Tribunal'), under section 250 of the Act which by its order dated March 7, 1973, allowed them and cancelled the penalties levied against him. But, on references made at the instance of the Revenue on that question, this court by its order made on April 21, 1978, in I.T.R.C. Nos. 70 and 71 of 1974 answered the same in its favour and against the petitioner. Agreeing with the said order of this court, the Tribunal then disposed of the appeals filed by the petitioner holding that the levy of penalty by the Inspecting Assistant Commissioner was correct and legal. In compliance with the said order of the Tribunal, the IVth Income-tax Officer, Hubli, has passed two consequential orders on February 15, 1979 (annexures 'A' and 'B'), calling upon the petitioner to pay the balance of penalty and the interest accrued thereon under section 220(2) of the Act. In these petitions under article 226 of the Constitution, the petitioner has challenged the said orders made by the Income-tax Officer in so far as they demand interest on penalty levied by the Inspecting Assistant Commissioner.

2. Sri S. G. Shivaram, learned advocate, appeared for the petitioner. Sri G. Sarangan, learned special standing counsel for the Income-tax Department, appeared for the respondents.

3. Sri Shivaram contends that notwithstanding the orders made by this court and the Tribunal on the appeals filed by the petitioner, the Income-tax Officer without issuing fresh notices of demand for penalty and interest cannot recover the amounts under the Act.

4. Sri Sarangan contends that on a true construction of section 220 of the Act and the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964 ('the 1964 Act'), fresh notices of demand were wholly unnecessary as ruled by the Supreme Court in Union of India v. Jardine Henderson Ltd. : [1979]118ITR112(SC) .

5. When the Inspecting Assistant Commissioner levied penalties for the two assessment years in conformity with section 156 of the Act, the Income-tax Officer had issued notices of demand to the petitioner and that is not rightly disputed by Sri Shivaram.

6. On the appeals filed by the petitioner, the Tribunal cancelled the penalties which necessarily meant the cancellation of demands issued by the Income-tax Officer also. But that success was a short lived one as the Tribunal itself later in conformity with the orders of this court in I.T.R.C. Nos. 70 and 71 of 1974 dismissed them and confirmed the penalties and notices of demand issued by the Income-tax Officer. The legal effect of the latter order made by the Tribunal was that the earlier notices of demand stood revived and became valid, legal and enforceable against the petitioner. In this view itself, the question of issuing fresh notices of demand does not arise. Even otherwise, the 1964 Act, the true scope of which has been explained by the Supreme Court in Jardine Henderson's case : [1979]118ITR112(SC) , undoubtedly comes to the rescue of the Revenue to hold that the original notices of demand issued by the Income-tax Officer continue to be valid and operative against the petitioner. For these reasons also, there is no merit in the contention of Sri Shivaram and I reject the same.

7. Sri Shivaram next contends that in any event for the period from March 7, 1973, to February 15, 1979, as the Tribunal first cancelled the penalties and then made consequential order, there were no enforceable liabilities of penalties to justify recovery of interest under section 220(2) of the Act.

8. Sri Sarangan contends that on the earlier finding recorded, interest continues to accrue under section 220(2) of the Act from the date of default in payment.

9. Earlier, I have found that the original notices of demand issued by the Income-tax Officer were valid and legal and that in compliance with them, the petitioner had not paid penalties at any rate till February 15, 1979. If that is so, it also follows from a combined reading of sections 156 and 220(2) of the Act, the petitioner cannot escape his liability for payment of interest for the aforesaid period also which is also the legal position achieved by the 1964 Act. For these reasons, I see no merit in this contention of Sri Shivaram either.

10. On this very aspect, Sri Sarangan also placed before me Circular No. 334 dated April 3, 1982 [1982] 135 ITR 10 issued by the Central Board of Direct Taxes and paragraph 2 of the same which is relevant for our purpose reads thus :

'(ii) Where the assessment made originally by the Income-tax Officer is either varied or even set aside by one appellate authority but, on further appeal, the original order of the Income-tax Officer is restored either in part or wholly, the interest payable under section 220(2) will be computed with reference to the due date reckoned from the original demand notice and with reference to the tax finally determined. The fact that during an intervening period, there was no tax payable by the assessee under any operative order would make no difference to this position.'

11. Without any doubt, this circular correctly expounds the legal position which I have independently reached.

12. Sri Shivaram lastly contends that under section 220(2A) of the Act introduced by the Taxation Laws (Amendment) Act, 1984, with effect from October 1, 1984, this court must grant relief to the petitioner.

13. Sri Sarangan opposes this new claim of the petitioner.

14. Section 220(2A) incorporated from October 1, 1984, reads thus :

'2A. Notwithstanding anything contained in sub-section (2), the Board may reduce or waive the amount of interest payable by an assessee under the said sub-section if, on the recommendation made by the Commissioner in this behalf, it is satisfied that -

(i) payment of such amount would cause genuine hardship to the assessee;

(ii) default in the payment of the amount on which interest was payable under the said sub-section was due to circumstances beyond the control of the assessee; and

(iii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.'

15. At the highest, this section only confers a discretion on the Board which has to be exercised by it on a recommendation made by the Commissioner and the fact situation. On the very terms of this section, the petitioner has to approach the Board through the Commissioner for relief. At any rate, this section does not alter the earlier legal position to justify me to examine the same for the very first time and grant relief.

16. Whether the legal representatives of the petitioner should avail of the beneficial provision made in section 220(2A) of the Act or not is a matter for them to decide. But, as and when any application is made by them, I have no doubt that the Commissioner will examine the same in its proper perspective and submit his recommendation to the Board which I have no doubt will deal with the same on merits.

17. In the light of my above discussion, I hold that these writ petitions are liable to be dismissed. I, therefore, dismiss these writ petitions and discharge the rule issued in the cases. But, in the circumstances of the cases, I direct the parties to bear their own costs.


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