ARUN SUNNY Vs. CHIEF CIT

JUDGEMENT

(1.) The petitioner is an assessee under the Income Tax Act. By Ext. P1 order, tax was assessed on him. The petitioner challenged the assessment in an appeal and a second appeal. Both were dismissed. During the pendency of the appeals, the petitioner had obtained conditional stay against recovery proceedings. Subsequently, the petitioner paid the entire amount due by Ext. P2. The petitioner was directed to pay interest on the defaulted tax and interest till the date of payment. The petitioner invoked the jurisdiction of the 1st respondent under Section 220(2A) of the Income Tax Act seeking waiver or reduction of the interest payable. That petition was rejected by Ext. P4 order holding that the petitioner has not satisfied the conditions in Section 220 (2A) for becoming eligible for waiver of interest. That is under challenge in this writ petition. The petitioner also raises a contention that in Ext. P2 interest has been calculated on interest also, which is not permissible. The petitioner contends that the 1st respondent has not properly applied his mind to the facts and law applicable. He submits that in the appeals, the petitioner applied for and obtained conditional stay. The petitioner promptly complied with the conditions of stay. So until dismissal of the appeal by the Tribunal, there was a stay of payment of balance tax. As such, the petitioner was not at default at any time. He points out that, as is evident from Ext. P4, the petitioner paid the entire balance amount within a span of three months. He submits that the same has been considered as non-co-operation in the proceedings for collection of tax, which is totally arbitrary and against various decisions on the point. According to the petitioner, filing appeals and obtaining stay cannot be considered as non-co-operation with the proceedings for collection of tax.

(2.) The learned Standing Counsel for the Income Tax Department opposes the contentions of the petitioner. According to him, merely because an assessee obtains a stay from the appellate authorities, that does not ipso facto operate as a stay of accrual of interest on the defaulted tax as well. Once the appeal is ultimately dismissed, the entire assessed amount would be payable with full interest. He submits that the three conditions mentioned in Section 220 (2A) have to be satisfied cumulatively for an assessee to claim benefit of Section 220(2A). He points out that as is evident from Exts. P3 and P4, the petitioner did not succeed in proving that payment of the tax would have caused hardship to him and that the non-payment was on account of circumstances beyond his control. On the other hand, his contention was that all his money was locked up in deposits in banks and financial institutions and if he withdraws the deposits prematurely, he would lose interest. According to the learned counsel for the Income Tax Department, that cannot operate as a circumstance beyond the control of the assessee and genuine hardship to the assessee. He had money with him and in order to make money with that money, he did not pay the tax due, which cannot be accepted as a genuine hardship or circumstance beyond the control of the assessee, is the contention.

(3.) As regards the second contention, he would point out that Ext. P2 demand for interest was dt. 17-6-2009. The petitioner never raised any objection to the same even in Ext. P3. The petitioner does not dispute the correctness of the computation of that amount. According to him, Section 220 (2A) can be invoked only when the assessee accepts the interest payable as demanded and seeks waiver or reduction thereof. After having invoked Section 220(2A), the petitioner cannot now dispute the correctness of the interest demanded is the contention raised. He also points out that against Ext. P2 demand for interest, the petitioner could have very well filed a revision under Section 264 before the Commissioner, which has not been done in this case.