SANDEEP M SHAH Vs. V D WAKHARKAR

JUDGEMENT

(1.) THE brief point involved in these matters is whether the Commissioner of Income-tax was justified in refusing waiver of interest under Section 139(8) and Section 217 of the Income-tax Act, while for the same reasons the penalty was waived.

(2.) TO state in brief, Writ Petition No.888 of 1994 is filed by M/s. Sun & Deep Jewellers, which is a partnership firm and other two petitions are filed by the partners thereof. Admittedly, the partnership firm and the partners filed their respective Income-tax returns for the assessment years 1987-88 and 1988-89 on 7.2.1990. Therefore, it is clear that the income tax returns were submitted long after the due date. The assessees filed the returns making their own assessment of income and deposited the income tax accordingly. The Assessing Officer reported that the assessments were completed under Section 143(1) accepting the income returned by the assessees for both the years. Interest under Section 139(8) and under Section 217 was charged for both the assessment years. Similarly, the penalty as also levied under Section 271(1)(a) and under Section 273 for both the years. According to the firm, firstly, it was preoccupied with matters relating to past assessments, appeals, prosecution, notices and various other issues were raised by the Income tax Department. Secondly, the petitioners did not have all the material relevant to file returns of income to properly estimate liability of advance tax as the books of accounts were seized by the Income tax Department on 31.1.1983 and were not yet returned and thirdly, one Mr.Jitubhai who was looking after the accounts had left this firm and therefore finalization of books was delayed. According to the petitioners, who are partners of the firm, they had no income except the income from the firm and as the accounts of the firm ere not finalized they could not estimate their income and file returns in time. These reasons for not filing the returns were accepted by the Central Board of Direct Taxes and it was communicated to the Income-tax Commissioner by their letter dated 12.2.1993 and, therefore, the penalty levied for both the years was waived. However, the Commissioner of Income-tax refused to waive the interest charged for both the assessment years. It appears that the application for review by the firm was also rejected on the same grounds. According to the Commissioner of Income-tax, the petitioners were expected to deposit the income tax within time and because of the delay on their part, the Government has been deprived of those taxes within time and, therefore interest has ben charged under Sections 139(8) and 217 of the I.T. Act.

(3.) IN Sushila INdubhai Patel vs. Union of INdia and Bom) another (2008) 303 ITR 308 (Bom),the assessee was out of the country for a period of 9-1/2 years and, therefore, there was delay in submission of the income tax returns for the assessment years 1979-80 to 1988-89. IN that case also the Assessing Officer had levied interest and also penalty. The Commissioner (Appeals) deleted the penalty, but the application for waiver of interest was rejected. This Court allowed the writ petition and held that when the penalty was waived, the Commissioner of INcome-tax was not justified in rejecting the application for waiver of interest on the same grounds. IN view of the legal provisions as interpreted by the Gujarat High Court as well as this Court, we find that if the reasons given by the petitioners for delay in filing the income tax returns were sufficient for waiver of penalty, the said reasons should also be sufficient for waiver of interest under Sections 217 and 139(8) of the I.T.Act. Therefore, we hold that the INcome-tax Commissioner was not justified in refusing the waiver of interest.