Sections 133A, 119(2)(a), 234A, 234B and 234C – Waiver of interest u/s. 234A, 234B and 234C – Delay in furnishing return and in paying advance tax – Discretion of Chief Commissioner to waive interest – Return submitted voluntarily – Assessee genuinely believing that he had no taxable income – Interest to be waived

20. R. Mani vs. CCIT; 406 ITR
450 (Mad):

Date of order: 4^th
December, 2017

A. Ys. 1997-98 and 1998-99

Sections 133A, 119(2)(a), 234A, 234B and 234C – Waiver of interest u/s. 234A,
234B and 234C – Delay in furnishing return and in paying advance tax –
Discretion of Chief Commissioner to waive interest – Return submitted
voluntarily – Assessee genuinely believing that he had no taxable income –
Interest to be waived

The assessee’s income was mainly
from property, sago commission income and income from a trust. For the A.Ys. 1997-98 and 1998-99, the assessee filed his returns of income on
20/12/2000 which was processed and the assessee was assessed to tax and
interest was levied u/s. 234A, 234B and 234C of the Act. The assessee
approached the Chief Commissioner u/s. 119(2)(a) of the Act for waiver of
interest u/ss. 234A, 234B and 234C so levied. The Chief Commissioner rejected
the application on the ground that the assessee failed to voluntarily file his
returns and that the returns were filed consequent upon a survey conducted on
23/01/1999 u/s. 133A and issuance of notice u/s. 148 of the Act.

The Madras High Court allowed the
writ petition filed by the assessee and held as under:

“i)    An
income tax survey does not amount to detection of undisclosed income.

iii)    The Circular issued by the CBDT empowering the Chief Commissioner
to consider petitions for waiver of interest u/s. 234A as well as section 234B
would show that even in cases covered by section 234B, even though these
provisions are compensatory in nature, special orders for grant of relaxation
could be passed.

iv)   A
survey was conducted in the premises of the assessee on 22/01/1999. However,
the survey did not lead to any immediate issuance of notice u/s. 148. In the
interregnum, the assessee filed his return of income. Thereafter the Assessing
Officer had taken up the matter and completed the assessment u/s. 143 of the
Act and passed an order dated 30/03/2001 accepting the return filed by the
assessee with no further additions.

v)    The
assessee’s case was that he had no taxable income. This plea has not been
controverted by the Revenue and this was evident from the conduct of the
assessee in not filing returns for the earlier three years, i.e., A. Ys.
1994-95 to 1996-97. That apart, the assessee had been able to establish that
the property still remained undivided and no definite share in the property had
been allotted to any coparcener and the suit for partition was pending.

vi)   Apart
from that, the returns filed by the assessee had been accepted and assessment
had been completed with no further additions. The dispute with regard to the
division of property was a bonafide dispute which directly related to the
assessability of the assessee to tax. Therefore, if assessee were entitled to
waiver of interest u/s. 234A the question of payment of advance tax or a
portion thereof would not arise and therefore, the assessee was entitled to
waiver of interest u/s. 234B and 234C of the Act.

vii)   Accordingly, the writ petition is allowed, the impugned order is
set aside and it is held that the petitioner is entitled for waiver of interest
u/s. 234A, 234B and 234C of the Act.”