Main challenge in this writ petition is against Ext.P17 order passed by the 1st respondent rejecting an application submitted by the petitioner under Section 220 (2A) of the Income Tax Act,1961, claiming waiver of interest on the tax amount leviable on the 'additional conveyance allowance' paid to the petitioner by the 4th respondent, with respect to the assessment years 1994- 1995 to 1999-2000.
2. There existed a dispute as to whether the 'additional conveyance allowance' paid by the 4th respondent is part of the salary and it is taxable income or not. An association representing the Development Officers of LIC had approached this court challenging the levy of tax on the above said additional allowance. Through Ext.P1 interim order this court directed the LIC of India to deduct the tax at source and to keep the same in a suspense account. Ultimately the said writ petition was dismissed holding that the allowance in question forms part of the salary with respect to which tax can be levied. Based on the said decision the amount of tax kept by the 4th respondent in relation to the petitioner was transferred to the Income Tax Department, on 14/08/2003. But the department claimed interest on the said amount of tax, calculated from the respective due dates onwards. Exts.P3 to P5 are the demand notices issued in this regard. By virtue of Ext.P6 notice the 3rd respondent intimated that recovery steps will be initiated on the event of failure to pay the amounts demanded. At the instance of the petitioner certain clarifications were issued regarding the payments made and also with respect to crediting of the amounts deducted. Ultimately the petitioner submitted Ext.P10 request before the 1st respondent seeking waiver of the interest demanded, under Section 220(2). The said application was considered by the 1st respondent pursuant to a direction issued by this court in Ext.P11 judgment. Ext.P17 is the order passed. The 1st respondent found that the total amount sought to be waived is Rs.1,90,900/-, and that he is not satisfied about the nature of hardships which will be caused to the petitioner. It was found that the petitioner had shown a fairly good income of Rs.20,65,000/- for the assessment year 2008-2009, which is indicative of the fact that payment of Rs.1,90,900/- would not cause any hardships to the petitioner. Finding that there exists no prima facie reason for waiver of the interest, in exercise of power vested under Section 220(2A) the application was rejected. The petitioner had also submitted Exts.P12, P13 before the 1st respondent and P14 before the 5th respondent seeking rectification of the demand on the basis that the tax deducted and kept under the suspense account was not given proper credit and also claiming adjustment of refundable amounts. Therefore the petitioner is challenging Exts.P17 and also seeking direction to the 1st respondent to consider his requests under Ext.P13 and P14, in this writ petition.
3. With respect to the waiver of interest by exercising powers vested under Section 220(2A), it is contended by the petitioner that, the reasoning mentioned in Ext.P17 is not legal and sustainable. Mere fact that the petitioner had returned an income of Rs.20,65,000/- for any previous year cannot be taken as a ground to hold that there is no genuine hardships to the petitioner if he is compelled to pay the interest claimed. Learned counsel for the petitioner argued that, the discretionary power vested on the 1st respondent with respect to allowing waiver cannot be exercised based on the assets of the assessee. Learned counsel had placed heavy reliance in this regard on a decision of the Honourable Supreme Court in B.M.Malani V. Commissioner of Income-Tax and Another [(2008) 306 ITR 196 (SC)]. The Honourable Apex Court observed that, a genuine hardship inter alia means a genuine difficulty. Conclusion that a person having large assets would never be in difficulty as he can sell those assets and pay the amount, cannot be accepted. The ingredients of genuine hardships must be determined keeping in view of meaning of the word 'genuine' contained in the dictionary and under the legal conspectus attending thereto. There, the well known principle namely, a person cannot take advantage of his own wrong, may have to be borne in mind. It is held that compulsion to pay any unjust dues per se would cause hardship. But question to be considered is as to whether the default in payment of the amount was due to circumstances beyond the control of the assessee.
4. Learned counsel had also placed reliance on a decision of the Madras High Court in J.Jaylalitha V.Commissioner of Income-Tax And Others [2000 (244) ITR 74]. In page 88 it is held therein that, the Commissioner exercising jurisdiction under Section 220 (2A) has to consider whether the assets were in the form of cash or they were realisable assets. It is found that the assessee is a wealth tax payer is not a relevant circumstance to establish that the payment of interest would not cause genuine hardships to the petitioner.
5. It is pertinent to consider that the provisions contained under Section 220 (2A) enumerate the reasons to be satisfied for waiver of interest, which are as follows;
(i) payment of such amount has caused or would cause genuine hardship to the assessee;
(ii) default in the payment of the amount on which interest has been paid or 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.
6. Standing Counsel appearing for the Department contended that, all the three reasons mentioned in Section 220(2A) are cumulative in nature and all of them has to be satisfied to consider a case of waiver of interest. It is contended that, in Malani's case (cited supra) the factual circumstances was entirely different. There the assessee does not have any realizable assets, but on the other hand requested the Department to liquidate the securities recovered, for the purpose of payment of the tax dues. But the Department had failed to act on such request. Under such circumstances the Apex Court found that, mere ownership of assets is not a sufficient reason to reject the request for waiver of interest.
7. In the case at hand, there is evidence that the tax was deducted at source and kept in a suspense account based on the interim directions issued by this court. It is further evident that on the dismissal of the writ petition the tax amount deducted and kept separately was remitted to the Department. But the fact remains that there occurred delay in realising the amount of tax for a considerable period, not due to any laches or dereliction on the part of the Department in taking any prompt action. On the other hand, the petitioner, through the Association, was unsuccessfully challenged the levy and had consequently delayed the payment of the tax due. It is contended that the Department had suffered loss in not realising the tax amount within its due time. While considering the question of waiver all the three grounds under Section 220(2A) have to be taken note of cumulatively. Even though it can be contended that the delay occurred because of pendency of the writ petition, it cannot be contended that the default occurred due to any circumstances beyond control of the assessee. This is because of the fact that, challenge against levy of the tax was raised only at the instance of the assessee and the assessee had failed in such challenge. Therefore it cannot be said that genuine hardship was caused because of the payment of the interest on amounts defaulted, on the basis that it was due to circumstances beyond the control of the assessee. Further, it is to be noticed that, in Ext.P17 the rejection of consideration for waiver is made not only on the basis of the assets of the petitioner, as in the case of the factual situation prevailing in Malani's case (supra). On the other hand, the 1st respondent had clearly found that the income conceded with respect to the last assessment year is fairly good, which can be taken as a justifiable reason to hold that no genuine hardships will be caused to the petitioner if he is compelled to pay the interest to the tune of Rs.1,90,900/-. Under such circumstances, this court do not find any illegality or impropriety in the order passed by the 1st respondent in Ext.P17.
8. In Exts.P13 and P14 the petitioner had represented before the 1st and 5th respondents that the demand need to be rectified based on the contention that all payments were not given proper credit and that the demand of interest was not calculated on the basis of proper credits. So also he has contended that the adjustments of refundable amount was made without following procedure contemplated in the relevant statute. These are matters which need to be considered by the 1st respondent and an appropriate decision need to be taken based on such requests. This court is of the opinion that interest of justice can be achieved by directing the 1st and 5th respondents to consider Exts.P13 and P14 and to take an appropriate decision thereon.
9. Under the above mentioned circumstances, this writ petition is disposed of on the following terms:
(i) Challenge against Ext.P17 fails and the same is hereby repelled.
(ii) The respondents 1 and 5 are directed to consider Exts. P13 and P14 representations and to take an appropriate decision with respect to the requests made therein, after affording an opportunity to the petitioner for personal hearing, at the earliest possible, at any rate, within a period of three months from the date of receipt of copy of the judgment.
10. Interim order of stay granted by this court against recovery of the amounts due will continue till a decision is taken by the respondents 1 and 5 as directed above.
Sd/- C.K. ABDUL REHIM JUDGE MJL