Under the circumstances, when the assessee is able to satisfy the Chief CIT that the delay in filing the return of income was due to unavoidable circumstances, it will be absurd to hold that the assessee is not permitted to persuade the Chief CIT/Director General of IT to condone the delay in late payment of taxes when such delay is also due to same unavoidable circumstances or for reasons beyond the control of the assessee. ...
11. In the facts of the present case also, we are of the view that since we have found that the Chief CIT declined to consider the request for reduction/waiver of interest under ss.
234B and
234C of the Act by refusing to exercise the jurisdiction vested in him and also because the Chief CIT has not given reasons for limiting the reduction of interest under s.234A to only 50 per cent, the impugned order would deserve to be quashed and set aside. However, instead of remanding the matter to the Chief CIT for considering the petitioner's request for full waiver of interest at this stage when the dispute pertains to assessment years 1992-93, 1993-94 and 1994-95, we are of the view that this is a fit case for granting waiver under
ss. 234A,234B and
234C of the Act to the extent of 75 per cent."
(ii) a decision of this court reported in (2008) 296 ITR 246 (N.Haridas & Co. vs. Chief Commissioner of Income Tax & another) "7. But, the first respondent in the impugned order has merely observed that the condition prescribed in the Notification dated 23.05.1996 is not satisfied, without going into the unavoidable circumstances of the case. We are of the view that the first respondent should have taken note of the unavoidable circumstance, viz., the sudden demise of the Managing Partner at the time when the tax under the VDIS was demanded. Further, the petitioner filed revised return on receipt of notice under S.148 of the I.T. Act and paid tax accepting the reassessment. We therefore hold that the first respondent is not correct in rejecting the claim of the petitioner for waiver of interest without properly appreciating the facts and circumstances of the case. Accordingly, the impugned order is liable to be set aside. Considering the fact that twelve years have passed, the earliest assessment year being 1994-95 and that the assessee has already paid tax as per the reassessment, we are inclined to direct the first respondent to waive the interest levied in the impugned order, instead of remitting the matter back to the first respondent."
(iii) yet another decision of this court reported in (2009) 308 ITR 216 in the case of T.N.Arumugam vs. Chief Commissioner of Income Tax and another "7. In the light of the above, the petitioner is entitled to succeed. However, this court is not in granting any direction to refund the amount as originally prayed for in the writ petition. It is suffice to say that the first respondent shall consider the circumstances under which the petitioner was unable to pay the tax earlier and also the jurisdiction for his seeking for waiver and refund of the interest amount paid. The petitioner also shall be given an opportunity by the first respondent to put forth any additional points in his favour. The first respondent shall consider the representation of the petitioner and also any additional representation made by him and pass an appropriate order within a period of four weeks from the date of receipt of a copy of this order."
7. On the other hand, learned counsel for the respondents would submit that the petitioner had filed his returns for the assessment year 1993-94 on 13.03.1996 only with a delay of more than 2 = years and therefore, the interest under Section 234-A was levied. According to the respondents, the only reason given by the petitioner for the delay was "busy schedule" and the 1st respondent has considered his plea very sympathetically and had accepted such reason to condone a small delay, but not a delay of 2 = years; he therefore condoned the delay to the extent of 3 months and waived the proportionate interest under Section 234A; likewise, for the assessment years 1994-95 to 1996-97, the returns were filed only after 08.05.1997.
7a. Learned counsel for the respondents would contend that the twin conditions of voluntary filing of returns and delay due to unavoidable circumstances should be satisfied to entitle the assessee for waiver, but the petitioner has not fulfilled the conditions for some years and in none of the years, has the condition regarding "unavoidable circumstances" been fulfilled, as "busy schedule" will not amount to "unavoidable circumstances", which prevented the assessee from filing his returns.
7b. Learned counsel for the respondents has relied on the following judgments in support of his stand :
(i) decision of this court reported in (2002) 256 ITR 490 (P.Velu Chettiar vs. Chief Commissioner of Income Tax) "5. Though, it is true, as submitted by the counsel, that the returns were filed voluntarily and the tax was paid, that by itself does not entitle the assessee to the benefit of waiver. Condition No.5 of the Board's circular further requires that the Commissioner be satisfied about the circumstances which could be regarded as being beyond the control of the taxpayer for not filing the return within the stipulated time-limit. The fact that the assessee had a taxable income from the year 1994-95 is evident from the order of the assessment and the tax paid. No explanation has been given as to why the return was not filed within time for that year. The fact that the assessee had not been assessed to tax earlier, does not by itself constitute a justification. By filing the return belatedly, one cannot claim that fact itself as clothing the person with immunity from the liability of interest."
(ii) a decision of the Delhi High Court reported in (2002) 258 ITR 751 (Sita Holiday Resorts Ltd. vs. Chief Commissioner of Income Tax) "11. It is well-settled that interest contemplated under Section 234-B for deficiency or default in payment of advance tax is mandatory in nature CIT vs. Anjum M.H.Ghaswala (2001) 252 ITR 11 (SC). There is no provision in the Act authorising any authority to reduce or waive it. However, in order to mitigate the hardships in deserving cases, the Board, in exercise of powers conferred under clause (a) of sub-section (2) of
section 119 of the Act, has issued a Circular/Notification No.400/234/95-IT/B dated 23.05.1996, empowering the Chief Commissioner and the Director General, Income Tax, to waive or reduce the interest chargeable under
Section 234B and two other sections in the class of cases or class of incomes, specified in paragraph 2 thereof for the period and to the extent the Chief Commissioner/Director General deem fit, subject to fulfillment of the conditions enumerated therein. Clause (d) of paragraph (2) of the said notification prescribed the following conditions for waiver/reduction of interest under
Section 234B :
"(a) any income was not chargeable to tax on the basis of any order passed in the case of the assessee by the jurisdictional High Court.
(b) in view of such decision, the assessee did not pay income-tax in relation to such income during the previous year.
(c) subsequently, such income became chargeable as per any retrospective amendment of law or a decision of the Supreme Court in assessee's own case after the end of the previous year.
(d) on account of the above, the advance tax paid by the assessee during the previous year was found to be less than the amount of advance tax payable on his current income and therefore, interest under
Section 234B or 234C was found to be chargeable. "
8. I have carefully considered the submissions made by the learned counsel for the petitioner and the learned Junior Standing Counsel appearing for the respondents and perused the decisions relied on by them and relevant material documents.
9. An analysis of the entire facts of the case on hand would reveal that the petitioner, who is a popular playback singer both in Tamil and Telugu films, a resident of Chennai, an Income Tax assessee on the file of the Deputy Commissioner of Income Tax, Film Circle, Chennai had been in the peak period in the cinema industry from 1992 to 1998 and had spent most of his time in Hyderabad. The petitioner claims that he normally worked 16 hours a day and because of his commitment, he could not file his returns in time. However, it is seen that the petitioner had voluntarily filed the returns for the assessment years 1993-94, 1994-95, 1995-96 and 1996-97 and also co-operated with the Income Tax Department in completing the assessment. The Assessing Officer had accepted the returns filed under Section 143(3) read with
Section 147 of the I.T. Act, 1961 and also levied interest under
Sections 234A,234B and
234C. From the records, it is seen that the petitioner had paid the tax due and also made part payment of the interest levied under
Sections 234A,234B and
234C. It is further seen that since the petitioner found that there were several arithmetical errors in the said assessments and demand notice, he filed petitions under
Section 154 before the Assessing Officer in respect of assessment years 1994-95, 1995-96 and 1996-97 and appeal in respect of the assessment year 1993-94.
10. Thereafter, the petitioner had filed a Waiver Petition before the Chief Commissioner of Income Tax, the 1st respondent herein and explained to him the unavoidable circumstances which prevented him to file returns within the prescribed time limit. The 1st respondent passed an order on 29.03.2004, granting waiver of interest of Rs.43,051/- against the amount of Rs.3,00,832/- under
Section 234A and in respect of
Section 234B, he granted only a sum of Rs.77,729/- as relief as against Rs.6,06,504/- and confirmed the levy of interest of Rs.23,898/- under
Section 234C of the I.T. Act. Aggrieved by the said order of the 1st respondent, the petitioner has filed the present writ petition seeking waiver of interest in full, for the assessment years 1993-94, 1994-95, 1995-96 and 1996-97.
11. The question that arises for consideration is whether the petitioner is entitled to complete waiver of interest on the returns of income under
Sections 234A,234B and
234C of the I.T. Act.
12. Before dealing with the above question, it would be useful to refer to the relevant provisions under Sections 234 (A), (B) and (C) of the I.T. Act, as extracted hereunder:
234 A. (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of
section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and -
(a) where the return is furnished after the due date, ending on the date of furnishing of the return; or
(b) where no return has been furnished, ending on the date of completion of the assessment under
section 144, [on the amount of [the tax on the total income as determined under sub-section (1) of section 143 or on regular assessment as reduced by the advance tax, if any, paid and any tax deducted or collected at source] 234 B (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under
section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of
section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year [to the date of determination of total income under sub-section (1) of section 143 [and where a regular assessment is made, to the date of such regular assessment, on an amount] equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax.
234C (1) (b) the assessee, other than a company, who is liable to pay advance tax under
section 208 has failed to pay such tax or, -
(i) the advance tax paid by the assessee on his current income on or before the 15th day of September is less than thirty per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than sixty per cent of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent per month for a period of three months on the amount of the shortfall from thirty per cent or, as the case may be, sixty per cent of the tax due on the returned income;
(ii) the advance tax paid by the assessee on his current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one per cent on the amount of the shortfall from the tax due on the returned income :
and the assessee has paid the whole of the amount of tax payable in respect of income referred to in clause (a) or clause (b), as the case may be, had such income been a part of the total income, as part of the [remaining instalments of advance tax which are due or where no such instalments are due], by the 31st day of March of the financial year:]"
13. From the reading of the above provisions, it is clear that the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of
section 142, is furnished after the due date, the assessee shall be liable to pay simple interest at the rate of one per cent for every month. It is also clear that when an assessee, who is liable to pay advance tax under
Section 208 has failed to pay such tax or the advance tax paid by such assessee is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period. It is further made clear that when the advance tax paid by the assessee on his current income is less than the tax due on the returned income, then the assessee shall be liable to pay simple interest at the rate of one per cent on the amount of the shortfall from the tax due on the returned income.
14. Therefore, it is vivid that the respondents have levied interest on the returns of income of the petitioner based on the above provisions of the I.T. Act. This has been further clarified by the Notification in F.No.400/234/95-IT(B) dated 23.05.1996, wherein as per clause 2(e), reduction or waiver of interest under
Sections 234A or 234B or 234C can be considered. The relevant clause would run thus:
"2(e) 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 Assessing Officer."
15. It is vehemently argued by the learned counsel for the respondents that waiver of interest is not a matter of right and it is subject to the fulfillment of conditions. The question raised in this matter is whether the delay in filing returns was considerable or whether the entire delay was due to unavoidable circumstances. The explanation given by the petitioner that due to busy schedule, he could not file the returns in time is the main issue on hand to consider whether the said delay could be attributed due to "unavoidable circumstances" for waiving interest on the returns, in full or in part.
16. A circumspection of the facts of the case would reveal that the petitioner has voluntarily filed the returns and due to unavoidable circumstances, he could not file the returns in time. Learned counsel for the petitioner has consistently pleaded that the petitioner, being a playback singer in the cinema industry and engaged in work continuously for 16 hours a day, could not file the Income Tax returns within the prescribed time limit. While so, it is the case of the respondents that the petitioner filed the returns beyond the time limit prescribed under Sections 139(1) and 139(4) of the I.T. Act. The petitioner's avocation as a playback singer in the cinema industry and his commitment in the industry to work for hours together is not in dispute by the respondents. However, the delay attributable by the petitioner that due to 'busy schedule', he had failed to file the returns in time is the cause of action. It is seen that though there is a delay in filing the returns, the petitioner had filed the returns voluntarily. Naturally, a person in cinema industry is continuously committed to work. Likewise, in the case on hand, the petitioner had been committed to his work and due to some unavoidable circumstances, he could not file the returns within the prescribed time limit. However, he had filed applications separately for condoning the delay in filing the returns for each of the said assessment years. The issue that has to be looked into is whether the reason assigned by the petitioner that due to 'busy schedule' he could not file the returns in time can be construed as 'unavoidable circumstances'.
17. From the facts of the case, it is clear that the petitioner is not a habitual defaulter in filing Income Tax returns. The reasons assigned by him is that 'due to circumstances beyond his control' can be construed as "unavoidable circumstances". Therefore, the petitioner's claim for waiver of interest can be considered in terms of the fulfillment of the conditions mentioned as per clause 2(e) of the Notification dated 23.05.1996, wherein, it is stated 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 Assessing Officer, reduction or waiver of interest under
Section 234A or
Section 234B or under
Section 234C can be considered.
18. In view of the above, the order passed by the 1st respondent dated 29.03.2004 is quashed in so far as the non-granting of waiver of interest in respect of
Section 234C and partial consideration of the waiver of interest in respect of
Sections 234A and
234B of the I.T. Act and the matter is remitted to the first respondent for fresh consideration, taking into account the unavoidable circumstances explained by the petitioner. The 1st respondent is directed to pass appropriate orders in accordance with law granting waiver of interest to the petitioner within a period of four (4) weeks from the date of receipt of a copy of this order.
The writ petition is allowed with the above direction. No costs. Consequently, connected W.P.M.P.Nos.442, 444, 446 and 448 of 2005 are closed.
Index : Yes/No Internet : Yes/No 20.04.2009 abe To : 1. The Chief Commissioner of Income Tax II, No.121, Nungambakkam High Road, Chennai 600 034. 2. The Tax Recovery Officer X, 121, Nungambakkam High Road, Chennai 600 034. V.DHANAPALAN,J. abe Pre-delivery order in W.P.Nos.379 to 382 of 2005 20.04.2009