Remember | Register | Forgot Password?
Bookmark This Page   RSS Feeds  Follow On Twitter

 

Search for Lawyers          
    

Home > Judiciary > Taxation > WHEN WAIVER OF INTEREST UNDER SECTIONS 234A, 234B, 234C OF I



Please Wait ..


WHEN WAIVER OF INTEREST UNDER SECTIONS 234A, 234B, 234C OF I

Posted on 03 June 2009 by Nirav Pankaj Shah

Court



Brief



Citation



Judgement

WHEN WAIVER OF INTEREST UNDER SECTIONS 234A, 234B, 234C OF IT ACT, 1961 CAN BE CONSIDERED

Where the assessee, a playback singer, could not file his returns in time due to circumstances beyond his control but, belatedly filed the same voluntarily, the assessee’s claim for waiver of -interest could be considered in terms of the fulfillment of the conditions mentioned as per clause 2(e) of the Notification No. 400/234/95/IT (B) dated 23-5-1996 issued by the CBDT.



HIGH COURT OF MADRAS

S. Nagoor Babu @ Mano

v.

CCIT

WP Nos.: 379 to 382 of 2005

April 20, 2009



RELEVANT EXTRACTS:

** ** ** ** ** ** ** ** ** ** ** **

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 :

Provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate

(a) the amount of capital gains : or

(b) income of the nature referred to in sub- clause (ix) of clause (24) of section 2, 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.





Tags :- when waiver interest sections 234a234b234c




You need to be logged in to post comment

0 Comments for this Judiciary













Quick Links




Browse By Category



Subscribe to Judiciary Feed
Enter your email to receive Judiciary Updates: