MANUEL P M Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) BOTH the original petitions raise the same issue and hence they were heard together. The petitioners in both the original petitions are partners of a number of firms (to be exact of six firms). The income from the firms is the substantial income of the petitioners. They filed returns and paid advance tax under the Income-tax Act (hereinafter called "the Act"), as per the accounts of the firm. The assessment years in question are 1983-84, 1984-85 and 1985-86. The assessment orders for the three years were passed on March 25, 1987, March 7, 1988 and March 28, 1988. The firms were also assessed for the above years and it was found that the income returned filed by the firms was not correct. Consequently, the income returned by the petitioners as income from the firms had to be changed. It was further found that the advance tax paid was less than 75 per cent. of the assessed tax and so the Assessing Officer levied interest under Section 215 of the Act for all the three assessment years. The petitioners filed separate petitions for waiver of interest under Section 215(4) of the Act for the above assessment years. The petitioners highlighted the fact that they could not anticipate the increase in the income at the time of filing the advance tax and that they were guided by the income statement given to them by the firms. These applications were considered by the Deputy Commissioner of Income-tax (Central Range), Ernakulam. The orders passed by the Deputy Commissioner is exhibit P-7 in both the cases. In O. P. No. 11187 of 1991, the relevant portion of exhibit P-7 is as follows :

(2.) IN O. P. No. 11190 of 1991, the relevant portion of exhibit P-7 is as follows :

(3.) COUNSEL for the Revenue contended that in passing exhibits P-7 and P-11 orders, the authorities have exercised their discretion properly and the court may not interfere under Article 226 of the Constitution of India. He further contended that interest was levied as compensation for loss of realisation of the correct amount of advance tax in time. He even contended that the assessees were not entitled to the 50 per cent. reduction given. Section 215(4) of the Act reads as follows :