Unavoidable circumstances for waiver of interest us 234A also qualify for reduction/waiver of 234BC interest as well-Madras High Court

Unavoidable circumstances for waiver of interest us 234A also qualify for reduction/waiver of 234B 234C interest as well-Madras High Court.

ABCAUS Case Law Citation:
1021 (2016) (09) HC

Brief Facts of the Case:
The petitioner assessee filed the present writ petitioner challenges the order passed by the Commissioner of Income Tax (CIT) in so far as it denied the waiver of interest chargeable under sections 234B and 234C of the Income Tax Act, 1961.

The application applied to the CIT for the waiver of interest u/s 234A for the assessment year 1989-90. The petitioner submitted that till 1990, he was a student and he actively involved himself in the business activities of the firms, in which he was a partner only after finishing his studies and then only he came to know of the fact that due to the delay in getting the share income particulars from the firms, there was a delay in filing his individual return of income for the assessment year 1988-89 to 1991-92. Further, it was stated that as soon as he received share income particulars, he filed return of income voluntarily.

The above explanation given by the petitioner was found by the CIT as acceptable and reasonable cause for delay in filing the Return of Income. However, CIT waived the interest charged under section 234A but declined to waive the interest under sections 234B and 234C.

Observations made by the High Court:
The High Court noted that the order of the CIT did not mention his objections for waiver, but, merely stated that the circumstances mentioned in the Notification dated 23.05.1996, were not satisfied, for the petitioner being entitled for the waiver of interest u/s 234B and 234C.

The Court noted that one identical case was considered by the Division Bench of Gujarat High Court in the case of VINODCHANDRAC.PATEL v. CIT[(1994) 121 CTR(Guj) 160:(1995) 211 ITR 232 (Guj)], wherein it was pointed out that when circumstances resulting into late payment of taxes and when the same set of circumstances are considered to be unavoidable circumstances responsible for the delay in filing the return of income, ordinarily, such circumstances would also qualify to be considered to be unavoidable circumstances responsible for the delay in the late payment of taxes. Referring to the Notification dated 23.05.1996, it was pointed out that the powers conferred on the Chief Commissioner of Income Tax/ Director General of Income Tax to waive interest charged under sections 234A, 234 B or 234C and the classes of cases of classes of income specified in para 2 of the said order.

It was pointed out that condition precedent is that reduction or waiver of such interest can be ordered only after the assessee has filed the return of income for the relevant assessment year and paid the entire tax due on the income as assessed except the amount of interest for which reduction or waiver has been requested for.

In the said case, the Gujarat High Court pointed out that if the circumstances have been considered to be unavoidable circumstances for the purpose of waiver of interest under section 234A, in the facts of the case, the same would have to be considered as unavoidable circumstances for the purpose of reduction/waiver of interest under sections 234B and 234C as well. Accordingly, whatever waiver granted under section 234A, shall also be extended with regard to waiver of interest under sections 234B and 234C.

Held:
Waiver of interest u/s 234B and 234C was allowed on the same reasoning as considered unavoidable for the claim of waiver of interest under sections 234A.