Alleged threat by an assessee cannot justify denial of the benefit for waiver or reduction of interest: Kerala High Court [Read Judgment]

Kerala High Court-Tax Exemption-taxscan

The single bench of the Kerala High Court, in a recent decision held that an application under section 220(2A) should be considered in a judicious manner and the allegation that there is a threat by assssee is not valid justification for denying the benefit for waiver or reduction of interest.

The petitioner, submitted an application under s.220(2A) of the Income Tax Act stating that he is entitled for the benefit of waiver or reduction of interest since he has fulfilled all the conditions specified in the said section.According to the petitioner, he had all along co-operated with all the proceedings of the Department and he is having genuine hardship to pay the amount due to the Department. It was also stated that the Department has attached the only property belong to the petitioner and therefore, he is not in a position to pay the principal amount unless the property attachedis sold.However, the petition has been rejected by the Commissioner alleging that the petitioner has not fulfilled the conditions prescribed in the said section.Being aggrieved, the petitioner challenged the notice issued to him on ground that the Commissioner has omitted to judiciously consider the reasons stated by the petitioner in the application.

It was submitted on behalf of the petitioner that the Commissioner has not considered the matter in accordance with law. The decision f the Apex Court in B.M.Malani vs. Commissioner of Income Tax and Another, was cited in support of their contentions.

While accepting the contentions of the petitioner, the single bench observed that “Having heard the learned counsel on either sides, I am of the view that, when the statutory authority has been given the discretion to consider whether any of the conditions specified under Section 220 (2A) has been complied with, it is for the said authority to take into consideration all the necessary materialswhich had been placed before it in the form of a representation aswell as documents and either to allow the same or to reject the same. On the basis of the facts made available, it has to be verified whether the imposition of interest causes genuine hardship to the assessee. It has also to be verified whether the default in payment of the amount was due to the circumstances beyond the control of the assessee and the assessee has cooperated with the enquiry. In Ext.P6, the Commissioner has observed that the petitioner had not complied with any of those conditions but apparently no reasons have been stated. As rightly contended by the learned counsel on behalf of the petitioner, the Hon’ble Supreme Court had clearly indicated that when an application is considered under Section 220(2A) it has to be considered in a judicious manner. The Commissioner in Ext.P6 stated that there is a threat by the assessee and waiver of interest cannot be done by threat. I do not think that the said reason alone would justify denial of the benefit of waiver or reduction of interest. The denial of reduction or waiver of interest has to be considered in the light of the statutory provisions as enumerated in Section 220(2A).”

In view of the above findings, the Court remanded the matter to the Commissioner with a direction to reconsider the matter afresh by complying with the provisions of the said section.

Read the full text of the Judgment below.

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