K. C. Agarwal, J. - This is a writ petition under Article 226 of the Constitution for quashing the order of the Income Tax Officer dated 27-4-1976 and that of the Commissioner of Income Tax dated 12-7-76. The facts briefly stated are these :-
2. The petitioner is a public limited company having its registered office at Kamla Tower, Kanpur. It carried on the business of manufacturing jute and goods and maintains its account on calendar year basis. The petitioner received a notice of demand from the Income Tax Officer concerned on 31-7-1971 demanding an advance tax of Rs. 4,18,120/-. This amount had to be deposited by the petitioner in two instalments. The advance notice was given on the estimated income of the previous year. The petitioner deposited the first instalment of Rs. 20,9000/-within time. It, however, subsequently found that the current income (year 1972-73) was likely to be greater than estimated by the Income-tax Officer under S. 210 of the Income Tax Act. The Company accordingly submitted its own estimate at a higher figure as required by S. 212. According to its estimate the income likely to be was Rs. 16,60,338/- and the advance tax was also paid thereon on 10-12-1971. The petitioner thereafter submitted the return of the aforesaid year viz. 1972-73 declaring an income of Rs. 24,56,160/- and accordingly paid the balance amount of Rs. 4,43,008/- under S. 140A. Thereafter on 18-2-1976 the assessment was completed by the Income-tax Officer computing the total income at Rs. 42,73,960/-. He determined the tax liability at Rs. 25,77,235/-. After giving credit for the tax deducted at source and taxes paid by way of advance, held that a sum of Rs. 12,00,411/-was payable by the petitioner by way of tax. He also levied interest amounting to Rs. 4,35,183/- under S. 215 of the Act.
3. The petitioner thereafter filed an application for the waiver or reduction of the said amount under sub-S. (4) of S. 215 read with Rule 40 of the Income-tax Rules. The application was rejected by the Income Tax Officer on 12-11-1975. The petitioner thereafter went in revision to the Commissioner of Income-tax, Kanpur against the said order. In the revision the Commissioner, however, refused to waive the interest but reduced the same to Rs. 83,176/-. Against this order, the present writ petition has been filed.
4. The main contention raised by the learned counsel for the petitioner was that the conditions justifying waiver of interest having existed in the case, the authorities committed an error in not waiving the interest charges under S. 215 of the Act. It was also urged on behalf of the petitioner that delay of more than 2 years 1 1/2 months out of the total period of 2 years 6, 1/2 months was taken by the Income-tax Officer himself in completing the assessment, hence the levy of interest for the period of 12 months was illegal and arbitrary.
5. S. 215 permits for the charging of the interest at the time of regular assessment from persons paying advance tax on their own estimate on an amount which falls short of the assessed tax by more then 25%. An interest under S. 215 is chargeable from the 1st day of April, next following the financial year wherein the advance tax was paid upto the date of regular assessment. Sub-S. (4) of S. 215, however confers power on the Income-tax Officer to reduce or waive the interest payable by the assessee under such circumstances as may be prescribed. Rule 40 is the relevant rule enumerating the circumstances. The relevant circumstances relied upon by the petitioners learned counsel was that since without any laches or delay on the part of the assessee the assessment order was made more than one year after the submission of the return, the liability of payment of interest could not be imposed even to a period of 12 months. The submission made cannot be accepted. Even under Rule 40, relied upon by the learned counsel the discretion has been given to the authority concerned to waive or reduce the interest. But since it was the matter of discretion it is not possible for us in the writ petition to interfere. The alternative submission of the learned counsel for the petitioner that the amount of interest of the petitioner should have been restricted to five months only inasmuch as the remaining period was taken by the Income-tax Officer himself in making the assessment also cannot be accepted. Under clause (1) of Rule 40 the power conferred on the authority was to restrict the interest to 12 months even if the assessment was completed more than one year after the submission of the return. Under this clause the reason of the delay being due to the Department was immaterial. Hence under this clause the Commissioner was fully justified in restricting it to 12 months. Since the Commissioner exercised the discretion entrusted to it bona fide, not influenced by extraneous or irrelevant considerations, and not arbitrarily or illegally, this Court cannot interfere.
6. In the result, the writ petition fails and is dismissed with costs.