JUDGMENT R.K. Agrawal, J.
1. By means of the present Writ Petition filed under Art. 226 of the Constitution of India the petitioner seeks a writ, order or direction in the nature of certiorari quashing the order dt. 22nd Jan., 2004, passed by the Chief CIT, Meerut, respondent No. 1, filed as Annex. 10 to the Writ Petition and other consequential reliefs.
2. Briefly stated, the facts giving rise to the present petition are as follows :
The petitioner claims himself to be a resident of the Punjab. He owned land in Fazilka, District Firozpur, in the State of Punjab which have been acquired by the Government of Punjab under the provisions of Land Acquisition Act, 1894. The petitioner got compensation pursuant to the orders passed by the Punjab & Haryana High Court on 12th Sept., 1990 and 19th May, 1993. Even though he had received the compensation, the State Government did not pay interest thereon forcing the petitioner to approach the Punjab & Haryana High Court once again. The Punjab & Haryana High Court awarded interest also. Thereafter, the petitioner had been paid the interest on the amount of compensation from the date of taking over the possession. He received the amount on 21st Aug., 2001. In the meantime, he had shifted to Noida, District Gautam Buddh Nagar, within the State of Uttar Pradesh. After the receipt of the interest, he filed revised return for the asst. yrs. 1995-96 to 2001-02 and deposited the amount of income-tax due thereon.
3. According to the petitioner, he extended his full co-operation before the ITO and the return filed by him had been accepted in toto by the assessing authority on 9th Oct., 2002. Interest under Sections 234A, 234B and 234C of the IT Act, 1961, hereinafter referred to as the Act, had also been charged. The petitioner filed an application under Section 119 read with Section 273 of the Act for waiver of penalty and interest. The Chief CIT, Meerut, vide order dt. 23rd July, 2003, had rejected the petition for waiver filed by the petitioner as premature. The order dt. 23rd July, 2003, was challenged by the petitioner before this Court in Civil Misc. Writ Petn. No. 1001 of 2003 which was finally disposed of vide judgment and order dt. 29th Oct., 2003, with a direction that the petitioner's application dt. 4th Sept., 2003, which has been filed subsequently be treated as a fresh waiver application and should be decided within two months on the production of the certified copy of the order passed by this Court. Pursuant to the direction given by this Court, the Chief CIT, Meerut, vide order dt. 22nd Jan., 2004, had once again rejected the application of waiver. It is alleged by the petitioner that pursuant to the show-cause notice issued on 2nd Dec, 2003, he had appeared on 8th Dec, 2003, before the Addl. CIT who was busy in his official work and asked him to come again. He appeared on 17th Dec, 2003, before the Addl. CIT who asked the petitioner to, approach the ITO. The petitioner approached the ITO and asked for personal hearing in the matter and no personal hearing had been given by the Addl. CIT, Meerut.
4. The Chief CIT, Meerut, had rejected the application for waiver on the round that he has no intention to pay the tax due from him on the amount of the compensation/interest income received by him and, therefore, the question of waiver of interest under Sections 234A, 234B and 234C of the Act does not arise and he is not suffering any financial hardship. According to the Chief CIT, Meerut, the application was not satisfying any of the conditions laid down in the Board circular for waiver. He has taken into consideration the fact that the petitioner had received interest income amounting to Rs. 1,63,22,540 and had not paid the tax on the above interest income. He had filed the return only for the asst. yr. 1995-96, onwards while he bifurcated the interest income into the period from 1973 to 2001 and had chosen to ignore the provision of Section 150(1) of the Act. According to the Chief CIT, Meerut, if for some reason it was difficult for the assessee to file the return for the period prior to 1995-96, the assessee should have disclosed the entire interest income on receipt basis, i.e., in the year of receipt and should have paid the tax. Thus, the entire tax due on the enhanced compensation is not paid by the assessee.
5. We have heard Shri Rakesh Ranjan Agrawal, learned counsel for the petitioner, and Shri Dhanjai Awasthy, the learned standing counsel appearing for the respondent.
6. The learned counsel for the petitioner submitted that the petitioner had filed the return of income for the asst. yrs. 1995-96 to 2001-02 disclosing the interest income as it was received only on 21st Aug., 2001. The interest income is taxable on accrual basis every year. The petitioner was claiming waiver of interest and penalty for the asst. yrs. 1995-96 to 2001-02 only and had paid the entire amount of tax. Thus, the order passed by the Chief CIT, Meerut, which is based on extraneous and irrelevant consideration is liable to be set aside. He relied upon the following decisions :
(i) Bhairav Lal Verma v. Union of India (1998) 230 ITR 855 (All)(FB)
(ii) Commr. of Customs v. Indian Oil Corporation Ltd. (2004) 3 SCC 488.
7. Shri Awasthi, learned counsel for the Revenue, however, submitted that the petitioner had not paid the taxes on the entire interest income. He had only paid the tax for the asst. yrs. 1995-96 to 2001-02, whereas the entire interest income is taxable. He thus submitted that the Chief CIT had rightly rejected the application for grant of waiver. He submitted that the Chief CIT had recorded adequate reasons while rejecting the application for waiver and, therefore, it should not be interfered with. In support thereof he has relied upon . the following decisions :
(i) Seimens Engineering & Manufacturing Co. India Ltd. v. Union of India AIR 1976 SC 1785.
(ii) Kishan Lal v. Union of India (1998) 230 ITR 85 (SC).
(iii) Anand Liquors v. TRO (1999) 235 ITR 674 (Ker).
(iv) Auro Food Ltd. v. CIT (1999) 239 ITR 548 (Mad).
(v) G.T.N. Textiles Ltd. v. Dy. CIT (1996) 217 ITR 653 (Ker).
(vi) A.K. Azad v. CIT (1996) 220 ITR 349 (Ker).
8. Having heard the learned counsel for the parties, we find that the Chief CIT has been empowered by the CBDT under Clause (a) of Sub-section (2) of Section 119 of the Act to reduce or waive interest charged under Sections 234A, 234B or 234C vide Notification No: F. No. 400/234/95-IT(B), dt. 23rd May, 1996. In the aforesaid notification under Clause (b), the condition is that where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the AO, the interest under Sections 234A, 234B and 234C can be waived or reduced. The Chief CIT had proceeded on the assumption that the interest income ought to have been declared on receipt basis and as the petitioner had not disclosed the full amount of interest income and had only disclosed the part of the said income by filing the return for the asst. yrs. 1995-96 to 2001-02 when it could have filed the return for the earlier assessment years also is wholly misconceived. It is well-settled that the amount of interest paid on the enhanced amount of compensation accrues every year and is taxable in the year in which it has accrued as held by the Hon'ble Supreme Court in the case of CIT v. T.N.K. Govindarajulu Chetty (1987) 165 ITR 231 (SC); Smt. Rama Bai, etc. v. CIT (1990) 181 TTR 400 (SC); and K.S. Krishna Rao v. CIT (1990) 181 ITR 408 (SC). The petitioner has filed the petition for waiver of the interest and penalty for the asst. yrs. 1995-96 to 2001-02 and, therefore, the Chief CIT, Meerut, ought to have confined the consideration as to whether the conditions mentioned in the notification dt. 23rd May, 1996, have been fulfilled or not. No adverse inference should have been drawn from the fact that the returns of the income for the earlier assessment years have not been filed.
9. In the case of Lala Hridaya Narain v. CIT AIR 1971 SC 33, the apex Court has held that if a statute invests a public officer with authority to do an act in a specified set of circumstances, it is imperative upon him to exercise his authority in a manner appropriate to the case, when a party interested and having a right to apply moves in that behalf and circumstances for exercise of authority are shown to exist. Even if the words used in the statute are prima facie enabling, the Courts will readily infer a duty to exercise power which is invested in aid of enforcement of a right-public or private-of a citizen.
10. In the case of Seimens Engineering & Mfg. Co. (P) Ltd. (supra), the apex Court has held that where an authority makes an order in exercise of quasi-judicial function, it must record its reason in support of the order it makes. Similar view has been taken by the apex Court in the case of Kishan Lal (supra). In the case of Anand Liquors (supra), the Kerala High Court has held that the CIT also should have considered the question as to whether the petitioner had complied with the conditions provided for waiver or reduction of the interest levied under Section 220(2) of the Act as specified in Sub-section (2A) of Section 220. In the case of Auro Food Ltd. (supra), the Madras High Court has held that power vested under Section 220(2A) of the Act is a discretionary power and it is coupled with the duty to be exercised judicially and reasonably based on relevant facts. The authority concerned should not act as a mere tax gatherer but as a quasi-judicial authority vested with the power of mitigating hardship to the petitioner. In the case of G.T.N. Textiles Ltd. (supra), the Kerala High Court has held that the 3 conditions mentioned in Section 220(2A) of the Act are to be satisfied for the operation of the said section for waiver or reduction of interest. In the case of A.K. Azad (supra), the Kerala High Court has held that a perusal of the Sub-section (2A) of the Section 220 of the Act shows that interest can be waived only if the conditions laid down in the section are satisfied and obtaining stay of recovery proceedings will not be a ground under Sub-section (2A) of Section 220 of the IT Act to waive the interest. In the case of Bhairav Lal Verma (supra), a Full Bench of this Court has held that the full and true disclosure of income particulars made voluntarily and in good faith by the assessee is a condition precedent for waiver of penalty under Section 273A of the Act. The Full Bench has further held that as a principle of law it cannot be held that the disclosure of the concealed income after the raid or search cannot be voluntary. It is a question which has to be decided by the Department in each case on the basis of the material available on the record. The criteria for deciding this question is to find out as to whether the Department has any incriminating material with regard to the disclosed income. If the answer is in the affirmative, the disclosure cannot be said to be voluntary. But, if the Department has no incriminating material with regard to the income disclosed, the disclosure is liable to be treated as voluntary even if it was made after raid/search.
11. Applying the principles laid down in the aforesaid cases to the facts of the present case, we find that the petitioner had filed the revised return of income for the asst. yrs. 1995-96 to 2001-02 voluntarily and had also paid the taxes due thereon. He was claiming waiver of interest and penalty for these assessment years only. The Chief CIT, Meerut, had taken into consideration irrelevant materials regarding non-disclosure of the entire interest income even though according to settled principles by the apex Court, it could not be subjected to tax in the assessment year in question. Moreover, the question of financial hardship and difficulty in paying the amount of interest under Sections 234A, 234B and 234C and the amount of penalty, which has been taken as one of the grounds for rejecting the waiver application is misconceived as it do not find mention in CBDT's notification empowering the Chief CIT to exercise such a power. He has to confine himself within the four corners of the conditions specified therein and cannot travel beyond it.
12. In this view of the foregoing discussions, we are of the considered view that the order dt. 22nd Jan., 2004, passed by the Chief CIT, Meerut, cannot be sustained and is hereby set aside. The Chief CIT, Meerut, is directed to decide the matter afresh in accordance with law after giving an opportunity of hearing to the petitioner.
13. In the result, the petition succeeds and is allowed. However, there will be no order as to costs.