The petitioner firm is a dealer in hill produce. The income tax assessments for the years 1989-90, 1991-92, 1995-96, 1996-97 and 1997-98 were completed against the petitioner by rejecting the stand of the petitioner that the interest amounts made on short term deposits made by the petitioner would be assessable as business income and not under the head of income from other sources. In the assessment orders passed against the petitioner, the Assessing authority under the Income Tax Act found that the interest income would be treated as income from other sources. The assessment proceedings attained finality in the year 2003, consequent to the decision of the High Court on the said issue, in the case of the petitioner. In the present writ petition, the petitioner is aggrieved by Exts.P8 and P10 orders, both dated 11.2.2010, whereby his claim for waiver of interest levied under Section 234A, B and C, and Section 220(2) of the IT Act, were rejected by the 1st respondent through separate orders. Exts.P8 and P10 are impugned in the writ petition inter alia on the ground that the 1st respondent, while considering the application for waiver, had not considered facts that were germane to a consideration of the issue and had not exercised his discretion judiciously while rejecting the claim of the petitioner. 2. A statement has been filed on behalf of the respondents wherein the orders impugned in the writ petition are sought to be justified for the reasons contained therein. It is pointed out that in the exercise of the discretion vested in the 1st respondent, in terms of the IT Act, the 1st respondent is not to be fettered by the guidelines issued in the matter of exercise of discretion, by the Central Board of Direct Taxes. It is stated that even if an assessee in any particular case shows the conditions prescribed in the guidelines to exist, it is not necessary for the 1st respondent to automatically grant a waiver of the interest which is statutorily levied.
3. I have heard Sri.Mayankutty Mather, the learned counsel appearing on behalf of the petitioner as also Sri.Jose Joseph, the learned Standing counsel appearing on behalf of the respondents.
4. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I note that in Ext.P8 order which was passed by the 1st respondent rejecting the application for waiver of interest levied under Section 234A, B and C, the 1st respondent has considered the claim of the petitioner in the backdrop of the clarifications issued through the Board Circular dated 26.6.2006. In Ext.P8 order, the 1st respondent considers the contentions of the petitioner, against each of the four categories of situations that are prescribed in the aforementioned circular for grant of waiver of the interest levied under Section 234A, B and C. The 1st respondent has come to the definite conclusion that the case of the petitioner does not fall within the purview of the Board's Circular and therefore there was no scope for granting any waiver of interest under Sections 234A, B and C in the instant case. On a perusal of the said order of the 1st respondent Commissioner, I am convinced that the exercise of discretion by the Commissioner has been validly done and I see no scope for interference with the said order in the present writ petition.
5. In the case of Ext.P10 order passed by the 1st respondent rejecting the application for waiver of interest levied under Section 220(2) of the IT Act, however, I find that although the 1st respondent has considered the claim of the petitioner with regard to the three conditions expressly mentioned in Section 220(2A) of the IT Act, namely, (i) whether the payment of the amount has caused genuine hardship to the assessee; (ii) whether the default in payment of the amount on which interest has been paid or was payable was due to circumstances beyond the control of the assessee and (iii) whether the assessee had co-operated with the enquiry relating to the assessment or any proceedings due to the recovery of any amount due from him, he did not have the occasion to consider certain aspects which are now brought to my notice by the learned counsel for the petitioner. The financial condition of the petitioner is stated to be precarious, and, further, it is stated that of the two brothers who formed the partnership in the petitioner firm, one has since expired and the other is presently convalescing in a hospital after undergoing a surgery to treat a brain hemorrhage. It is also pointed out that there are several financial claims raised against the petitioner firm from various quarters, which are also in various stages of adjudication before the authorities concerned. In that view of the matter, I feel that it would be necessary for the 1st respondent to reconsider the matter regarding levy of interest under Section 220(2) of the IT Act in the case of the petitioner, taking into account the peculiar circumstances in this case. No doubt, the 1st respondent would be exercising his discretion in accordance with the provisions of Section 220(2A) of the IT Act but, it must be borne in mind that it is a discretion that has to be exercised judicially and keeping in mind the aspect of genuine hardship to an assessee who is called upon to make payments of exorbitant amounts towards interest liability. In that view of the matter, and treating this as a special case warranting an interference by this Court, I quash Ext.P10 order of the 1st respondent and direct the 1st respondent to reconsider the issue, with regard to waiver of interest levied under Section 220(2) of the IT Act, in the light of the documents produced by the petitioner before him, and after hearing the petitioner, within a period of three months from the date of receipt of a copy of this judgment.
The writ petition is disposed as above.
prp A.K.JAYASANKARAN NAMBIAR JUDGE