W.P.Nos.5199 to 5203 of 2010 IN HIGH COURT OF JUDICATURE AT MADRAS Reserved On 04.12.2019 Pronounced On 16.12.2019 CORAM HONOURABLE MR.JUSTICE C.SARAVANAN W.P.Nos.5199 to 5203 of 2010 and M.P.Nos.1, 1, 1, 2, 1 & 1 of 2010 E.K.Hajee Mohamed Meera Sahib & Sons, Periya Agraharam, Erode 638 005. Rep. by its partner, Mr.H.A.Md.Hasanali. ... Petitioner in All W.Ps. vs 1.Chief Commissioner of Income Tax, 63, Race Course Road, Coimbatore 641 018. 2.Joint Commissioner of Income Tax, Special Range, Income Tax Building, Gandhi Road, Salem 7, now transferred to Income Tax Officer, Ward I (4), No.15, Gandhiji Road, Erode 638 001. ... Respondents in All W.Ps. http://www.judis.nic.in Page No 1 of 14 W.P.Nos.5199 to 5203 of 2010 Common Prayer: Writ Petitions filed under Article 226 of Constitution of India, to issue writ of certiorarified mandamus calling for records in C.No.1433(345)/06-07, C.S.No.1433(239)/ 02-03, C.No.1433(345)/06-07, C.No.1433(296)/04-05 and C.No.1433(2) /07-08 dated 30.10.2009 relating to Assessment Years 1992-93 to 1944-95, 2002-03 and 2004-05 on file of 1st respondent and quash same and direct 1 st respondent to waive interest in dispute. For Petitioner : Mr.M.P.Senthil Kumar in All W.Ps. For Respondents : Mr.A.N.R.Jaya Prathap Senior Counsel in All W.Ps. COMMON ORDER By this common order, all above writ petitions are being disposed. 2.In these writ petitions, petitioner has challenged impugned orders dated 13.10.2009 passed by 1st respondent Chief Commissioner of Income Tax under Section 119 (2) (a) read with Section 234 B of Income Tax Act, 1961. http://www.judis.nic.in Page No 2 of 14 W.P.Nos.5199 to 5203 of 2010 3.The petitioner had filed petitions under Section 119 (2) (b) of Income Tax Act, 1961 read with Circular F-No. 400/129/2002-IT (B) dated 26.06.2006 for waiver of interest before 1st respondent Chief Commissioner of Income Tax for assessment years 1992-93 to 1994-95 and assessment years 2002- 03 and 2004-2005. 4.By impugned orders, 1st respondent chief Commissioner of Income Tax has rejected prayer for waiver of interest with following observations in respective impugned order for assessment year 2004-05 reads as under:- * 9.0 Waiver of interest is to be seen as per conditions laid down in Circular in F No.400/129/2002-IT(B) dated 26/6/2006. From file it is noted that there was no voluntary compliance either in filing of revised return. Neither did firm comply in payment of tax. glance at file indicates very little by way of advance tax has been paid. On contrary, firm has been quick to place petitions seeking stay on payment of taxes. * 10.0 This petition is not case of financial hardship where tax could not be paid due to certain financial constrains. Rather tax was not paid in mistaken belief or as guided by Auditing or legal counsels that advance tax need not be paid. Interest u/s 234B for failure to pay _____________ http://www.judis.nic.in Page No 3 of 14 W.P.Nos.5199 to 5203 of 2010 tax is compensatory since it is charged on amount of tax that should have been paid by due period. * 11.0 Accordingly firm does not quality for waiver of interest. * 12.0 In view of above petitions of assessee is rejected. (* Paragraph numbers vary in each of impugned order) 5.The petitioner exporter of leather products had assumed that it was not liable to pay income tax and therefore had failed to pay advance tax on such export turnover. petitioner had later claimed exemption under Section 80HHC of Income Tax Act, 1961. For assessment years 1992-93 to 1994-95, returns filed by petitioner were accepted after processing under Section 143 (1) of Act. Thereafter, assessments were reopened under Section 148 of Income Tax Act, 1961 orders came to be passed under Section 147 of said Act. 6.For assessment years 2002-03 and 2004-05, returns were processed and assessments were completed under Section 143 (3) by re-computing relief under Section 80 HHC by partially granting refund of total income. _____________ http://www.judis.nic.in Page No 4 of 14 W.P.Nos.5199 to 5203 of 2010 7.Since there was delay in payment of advance Income Tax, petitioner was called upon to pay interest under section 234 B of Income Tax Act, 1961. Details of interest demanded are detailed below:- Admitted Assessed Interests A.Y income in income after U/s. U/s. 234B U/s. 234C return reworking 234A under 80HCC 1992-93 Nil 5,85,700 7,880 1,61,540 - 1993-94 4,04,790 5,53,220 34,692 1,02,584 7,344 1994-95 2,40,110 4,14,150 5,800 1,23,480 2,540 2002-03 Nil - - 59,235 - 2004-05 Nil 17,19,498 - 2,03,544 - 8.It is contention of petitioner that between assessment years 1992-93 and 1994-95, there were several decisions of original and appellate authority wherein it was concluded that exporter was not required to pay income tax on export turnover and since petitioner was exporter, it was entitled to claim deduction under Section 80 HHC of Income Tax Act, 1961. learned counsel for petitioner submits that petitioner entertained bona fide view that it was entitled to claim benefit of deduction under Section 80 HHC of Income Tax Act, 1961. _____________ http://www.judis.nic.in Page No 5 of 14 W.P.Nos.5199 to 5203 of 2010 9.It is submitted that decision of Bombay High Court in CIT vs Shrike Constructions Equipments Ltd., (2000) 246 ITR 429 and decision of this court in CIT vs Nameel Leather and Uppers, (2005) 23 ITR 350, had also concluded that petitioner was entitled to deduction under Section 80 HHC of Income Tax Act, 1961. above decision was subsequently reversed by Honourable Supreme Court only on 11th March, 2004 in IPCA laboratories Ltd., vs Deputy Commissioner of Income Tax, (2004) 266 ITR 0521 and therefore petitioner paid tax and prayed for waiver of Income Tax. 10.It is submitted that Chief Commissioner of Income Tax ought to have granted waiver of interest in favour of petitioner in exercise of power conferred under Income Tax Act, 1961 read with aforesaid circular dated 26.06.2006. learned counsel for petitioner further relies on decision of court in R.Mani vs Chief Inspector of Income Tax, 2017 SCC OnLine 15884 and decision of court in N.Haridas and Co. vs Chief Commissioner of Income Tax and another, 2007 SCC OnLine 1061. _____________ http://www.judis.nic.in Page No 6 of 14 W.P.Nos.5199 to 5203 of 2010 11.Per contra, learned standing counsel for income tax department Mr.A.N.R.Jayaprathap submits that impugned orders passed by Chief Commissioner of Income Tax were well reasoned and require no interference under Article 226 of Income Tax Act, 1961. 12.He submits that waiver can be granted only where any income was not chargeable to income tax in case of assessee on basis of order passed by High Court within whose jurisdiction assesee was assessable to income tax and as result of which, he did not pay income tax in relation to such income in previous years and subsequently, in consequence of any retrospective amendment of law or decision of Supreme Court of India or as case may be decision of larger bench of jurisdictional High Court (which was not challenged before Supreme Court and has become final), in any assessment or reassessment proceeding advance tax paid by assessee during such financial year is found to be less then amount of advance tax payable on his current income, and assessee is chargeable to Interest under Section 234 A, B or C as case may be, Chief Commissioner/Director General as case may be on _____________ http://www.judis.nic.in Page No 7 of 14 W.P.Nos.5199 to 5203 of 2010 satisfaction that assessee's case was fit for reduction or waiver of interest grant such waiver of interest. 13.Learned counsel for income tax Department further submits that there were no decisions of this court so as to claim benefit of waiver of interest in terms of above circular and therefore submits that Chief Commissioner of Income Tax has correctly denied waiver of interest under Section 234 B Of Income Tax Act, 1961. 14.I have considered arguments advanced by learned counsel for petitioner and for income tax department. Central Board of Direct Taxes has issued circular in exercise of powers vested under Section 119 (2) (a) of Income Tax Act, 1961. circular has to be read strictly. Normally, these cannot be any addition or substitution by authority concerned while entertaining application for waiver of interest under Section 234 A, B or C of Income Tax Act, 1961. Since, during Assessment Years 1992-93 to 1994-95 there were no decisions of this court, respondent was justified in not granting waiver of interest as per above circular. _____________ http://www.judis.nic.in Page No 8 of 14 W.P.Nos.5199 to 5203 of 2010 15.However, it is noticed that decision of Bombay High Court in CIT vs Shirke Construction Equipments Ltd cited supra was pronounced on 24.07.2000. said decision appears to have emanated from order passed by Income Tax Appellate Tribunal, Mumbai where assessee had succeeded. 16.The Bombay High Court upheld order of Income Tax Appellate Tribunal and held that condition for claiming deduction under Section 80P, 80HH or 80M (as it stood) was not there in Section 80HHC and therefore dismissed appeal filed by Commissioner of Income Tax. This view was reversed by Honourable Supreme Court on 11.03.2004 in IPCA laboratories Ltd., vs Deputy Commissioner of Income Tax, (2004) 266 ITR 0521. 17.Income Tax Act, 1961 is Central enactment. decisions of Tribunal and High Court rendered under said enactment are widely reported and followed by assessee and tax practitioners. _____________ http://www.judis.nic.in Page No 9 of 14 W.P.Nos.5199 to 5203 of 2010 18.They have both persuasive and precedential value. authorities in hierarchy under Income Tax Act, 1961 are bound by decisions rendered by such higher forums. 19.Therefore, petitioner can legitimately state that it was entitled to take bonafide view that it was eligible for exemption from payment of tax and/or claim deductions under Section 80HHC of Income Tax Act, 1961 provided there were decisions of Tribunal though not of jurisdictional Tribunal or High Court as case may be to entertain such view. 20.The Central Board of Direct Taxes perhaps could to have considered these factors and such eventualities while issuing said circular. However, it has restricted to specified instances for grant of waiver. Since, respondent is bound by circular, I find no fault in impugned orders of respondent in refusing to grant waiver to petitioner in terms of said circular. 21.At same time, circular being beneficial circular, it can be construed liberally in appropriate case as intention of circular was to grant waiver where ever there were orders of _____________ http://www.judis.nic.in Page No 10 of 14 W.P.Nos.5199 to 5203 of 2010 Courts/Tribunal which allowed assessee to entertain bonafide view to not to pay tax or claim deduction as Income tax is to be administered uniformly all over Country. 22.If indeed there were decisions of Tribunals and/or of High Court though not necessarily of jurisdictional Tribunal/High Court, petitioner can be stated to have entertained bonafide view to not to pay tax on such turnover. petitioner has not shown any decision of Tribunal or High Court at time of filing return. 23.If however petitioner's view was concurrently or later accepted though another instance to infer bonafide, it would not entitle petitioner to claim waiver/exemption, such instance of non payment of tax or claim for deduction cannot be construed liberally. 24.Therefore, waiver of interest under Section 234B of Income Tax Act, 1962 for assessment years 1992-93, 1993-94, 1994-95, 2002-03 and 2004-05 can be directed to be given to petitioner if there were decisions of Tribunal or High Court _____________ http://www.judis.nic.in Page No 11 of 14 W.P.Nos.5199 to 5203 of 2010 though not of jurisdictional Tribunal/High Court which would have allowed petitioner to entertain such belief. 25.In light of above observations, I am of view that impugned orders are liable to be set aside and cases be remitted back to respondent to re-examine issue afresh. 26.In case petitioner is able to show existence of any judgment of Tribunal/High Court though not necessarily of jurisdictional Tribunal/High Court at time of filing of return, respondent can grant waiver/exemption to petitioner by liberally construing Circular. 27.Accordingly, impugned orders are set aside and cases are remitted back to respondent to pass fresh order. All Writ Petitions are allowed by way of remand. Consequently, connected Miscellaneous Petitions are closed. 16.12.2019 Index :Yes/No Internet :Yes/No jen _____________ http://www.judis.nic.in Page No 12 of 14 W.P.Nos.5199 to 5203 of 2010 To 1.Chief Commissioner of Income Tax, 63, Race Course Road, Coimbatore 641 018. 2.Joint Commissioner of Income Tax, Special Range, Income Tax Officer, Ward I (4), No.15, Gandhiji Road, Erode 638 001. 3.The Section Officer, V.R.Section. High Court, Madras. _____________ http://www.judis.nic.in Page No 13 of 14 W.P.Nos.5199 to 5203 of 2010 C.SARAVANAN, J. Jen Pre-Delivery Common Order in W.P.Nos.5199 to 5203 of 2010 and M.P.Nos.1, 1, 1, 2, 1 & 1 of 2010 16.12.2019 _____________ http://www.judis.nic.in Page No 14 of 14 E.K. Hajee Mohamed Meera Sahib & Sons v. Chief Commissioner of Income-tax, Coimbatore / Joint Commissioner of Income-tax, Special Range, now transferred to Income-tax Officer, Ward-I(4), Erode