RAMAPATI SINGHANIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner is a legal heir of the late Sri Gopal Krishna Singhania, who, it is stated, died on January 3, 1980. On the return filed by the petitioner disclosing the net value of the estate at Rs. 74,90,302, the First Assistant Controller of Estate Duty, Bombay, provisionally assessed the demand under the Estate Duty Act, 1953, at Rs. 53,38,373 which the petitioner was required to pay, being the accountable person of the deceased. It is said that in order to liquidate the said demand certain equity shares of the face value of Rs. 1,29,276 which formed part of the estate of the deceased, were sold for a total consideration of Rs. 52,84,710. THE sale of equity shares resulted in a long-term capital gain of Rs. 51,55,434 and after claiming certain statutory deductions a return of net income at Rs. 34,55,150 was filed by the petitioner for the assessment year 1981-82. It is said that a sum of Rs. 17,945 under the self-assessment was also deposited in respect of the returned income aforesaid. In doing so, the petitioner claims that he adjusted an amount of Rs. 20,19,108 from the tax liability on the said returned income, allegedly on the belief that the petitioner was entitled to refund of that amount from the Assistant Controller, Estate Duty, Bombay, under Section 50B of the Estate Duty Act. In due course, the assessment was completed on an income of Rs.34,86,390 on March 27, 1984, and the petitioner was served with notice of demand for Rs. 21,06,876 under Section 156 of the Income-tax Act (hereinafter referred to as "the Act"), requiring him to pay the amount within thirty-five days of the service of notice of demand, failing which, the petitioner would be liable to pay interest under Section 220(2) and penalty under Section 221 of the Income-tax Act. Penalty proceedings were also initiated under Section 140A(3) and it was also proposed to charge interest under Sections 139(8) and 216 of the Income-tax Act. THE petitioner preferred an appeal and challenged the order of the Income-tax Officer on the grounds amongst others that the petitioner was entitled to the adjustment of the amount allegedly due to him under Section 50 B of the Estate Duty Act in the self-assessment tax, which was wrongly denied to him. However, the appeal on this score was dismissed. THE petitioner also took up the matter before the Assistant Controller of Estate Duty to allow the relief under Section 50B of the Estate Duty Act, but no relief was granted on the ground that it was admissible subject to tax on long-term capital gains, first being paid by the petitioner. It was only when the Tax Recovery Officer issued a letter dated July 18, 1986, requiring the petitioner to pay the outstanding demand in respect of the assessment year 1981-82 for which the notice of demand had already been served, that the petitioner paid an amount of Rs.17,32,698 in instalments between September 13 and December 11, 1986.

(2.) THE petitioner thereafter on December 10, 1985, filed an application before the Central Board of Direct Taxes under Sub-section (2A) of Section 220 of the Income-tax Act for waiver of the interest of Rs. 7,24,365 charged from the petitioner under Sub-section (2) of that Section. THE application was rejected by the Board and an intimation was sent to the petitioner vide letter dated September 26/30, 1986 (annexure-A to the writ petition), stating that having considered the application filed by the petitioner and the report of the Commissioner of Income-tax in the matter, the Board was of the view that all the conditions of Section 220(2A) were not satisfied, hence, no interference was called for.

(3.) WE have heard learned counsel for the parties.