2000 PLP 2731 (PTD)

The respondents have not filed any counter. However, learned senior counsel for the respondents supported the order of the first respondent on the basis of materials available. By communication T. R. No. 128 of 1978-79, dated January 8, 1987, the Tax Recovery Officer-I, demanded a sum of Rs.9,493 as the interest due under rule 5 of the Act. The letter has given the details as to how the amount was arrived at. The petitioner filed an application under section 220(2-A) of the Act before the Central Board of Direct Taxes, New Delhi, for waiver of interest. He has given the reasons which would entitle him to have waiver of interest. The delay in the payment of the amount of tax was due to circumstances beyond his control and there was prolonged litigation which commenced in the year 1974 and came to a close only after ten years. He had cooperated with the Department in all enquiries relating to the assessments as well as recovery proceedings to complete the assessments and to pay the income-tax as early as possible and he was always interested in settling the matter by completing the assessments and appeals and to prove his bona fides he had paid all the taxes. The power under section 220(2-A) by the time the matter was taken up, had come to be exercised by the first respondent and the first respondent, by his Order No.1325-B(8) of 1986-87, dated August 3, 1987, rejected the claim of the petitioner for waiver of interest. In the order, the first respondent had stated that the petitioner did not cooperate with the Department in the matter of payment of tax demands as finally determined by the Income-tax Appellate Tribunal by its order, dated April 17, 1984. That waiver of interest sought for related to a demand of Rs.9,

493. However, there was a further notice of demand under section 156 of the Act bearing date August 30, 1987, calling upon the petitioner to pay a sum of Rs.49,

778. This communication was received by the petitioner on October 30, 1987. The notice also did not mention as to how the figure was arrived at. It merely stated as follows: "This is to give you notice that for the assessment year 1971-72, a sum of Rs.49,778/220(2) details of which, are given on the reverse has been determined to be payable by you. " The reverse of the said demand notice did not contain any details. Thereafter, the petitioner made an application once again to the first respondent for waiver of interest under section 220(2-A) setting out in detail how he was entitled to waiver. This was on December 15, 1987. This was followed by another revised petition for waiver of interest under the Act on June 27, 1988, the first respondent received a communication from the second respondent stating that the revised petition could not be entertained as the matter had already been decided. It is really surprising as to how the second respondent could purport to pass an order under section 220(2-A) of the Act. From the records, it is seen that the first respondent has not passed any order on the petition for waiver, dated December 15, 1987, and the revised petition for waiver, dated June 27, 1988. On this short ground alone., the order, dated July 27, 1988, has to be quashed. The order has been signed by the second respondent for the first respondent. It is also not stated in the order as to why the petition, dated June 27, 1988, is rejected. It is also not mentioned in the order as to when the matter was already decided. Disposal given to the revised petition for waiver is not,proper. It can also bee looked at from another angle. There is no reference in the order, dated July 27, 1988 to the petition made by the petitioner on December 15, 1987. It is contended by learned senior counsel for the Department that what the order, dated July 27, 1988, means is that the earlier petition, dated January 31, 1987, for waiver of interest of Rs.9,493 was rejected by the first respondent on August 3, 1987, and the same reasoning should apply to the revised application filed by the petitioner for waiver of interest in respect of the demand for Rs.49,

779. Admittedly, there is no disposal of the petition, dated December 15, 1987. It is argued by learned senior counsel that the power under section 220(2-A) is a discretionary power and it has been exercised properly by the first respondent and the same cannot be called in question under Article 226 of the Constitution of India. I had an occasion to deal with a matter relating to waiver of interest in W. P. No.4232 of 1988 (R. Seshammal Chidambaram v. CBDT (1998) 234 ITR 585 (Mad.). I held that while exercising discretionary power, the authorities were duty-bound to indicate in their order that they had applied their mind in that regard: In Smt. Harbans Kaur v. CWT (1997) 224 ITR 418 (SC), dealing with a case arising under section 18-B of the Wealth Tax Act, 1957, the Supreme Court stated as follows (headnote): "In exercise of that discretion, the Commissioner can either reduce the amount of penalty or he may waive the entire penalty. It is for the Commissioner to decide on the facts of a particular case whether a waiver in entirety or a reduction alone is warranted. Of course, when the Commissioner, instead of giving a complete waiver, chooses to give only a reduction of the penalty amount, he must indicate in his order that he has applied his mind in that regard. " Again, in Apex Finance and Leasing Ltd. v. CIT (1994) 207 ITR 781, the Supreme Court observed as follows (headnote): "The question whether the Commissioner was justified on the facts and in the circumstances of the case, in refusing to exercise his power under section 273-A of the Income Tax Act, 1961, to waive interest and penalty where the assessee has disclosed income voluntarily in a revised return, is a question to be examined on the merits and the High Court, on a writ petition challenging such a refusal ought not to dismiss the petition on the ground that the order was not liable to interference in exercise of its extraordinary jurisdiction. " In that case, the Supreme Court set aside the order of the High Court and remanded the case. In the instant case, the grievance of the writ petitioner is that the first respondent has not given any reason in the order for rejecting the claim for waiver. I have already adverted to the fact that the impugned order has been signed by the second respondent on behalf of the first respondent. It is also necessary to refer to one other aspect of the matter. In the earlier order passed by the first respondent in the application filed by the petitioner for waiver of interest of Rs.9,493, the first respondent relied on Mahalakshmi Rice Mills v. CIT (1981) 129 ITR 53 (Kar.) and held that the petitioner did not cooperate in the matter of payment of tax demand as finally determined by the Income-tax Appellate Tribunal by its order, dated April 17, 1984. No doubt, the Karnataka High Court has held that by cooperation, it could mean that the assessee did not resort to any litigation, obstruction or evasive taxies in concluding the assessment and no more. In this case, I do not find any material to show that the writ petitioner had not cooperated with the Department in the matter of assessment. In fact, it is a matter of record that the original assessment was reduced considerably. in the appeal filed by the petitioner. Pursuit of remedies available to the assessee cannot be construed as non-cooperation with the Department unless the pursuit had been of a cantankerous nature, obstructive or evasive. For all the reasons stated above, I am of the view that the impugned order cannot stand. The order of the first respondent, dated July 27, 1988, is quashed and the first respondent is directed to take on file both this petitions, dated December 15, 1987, and the revised petition, dated June 27, 1988, and pass a considered order after affording an opportunity to the writ petitioner to state his case and substantiate his claim for waiver of interest. The writ petition is allowed. The matter is remitted to the first respondent. No costs. In view of the disposal of the main writ petition, W. M. P. No. 15933 of 1988 is dismissed. M.B.A./6/FC Order accordingly.