A.M. MOOSA vs. THE COMMISSIONER OF INCOME TAX

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WP(C)/21824/2012HC KeralaKLHC01063900201227 September 2012Author: HONOURABLE MR.JUSTICE ANTONY DOMINIC5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the writ petition, upholding the Commissioner's order rejecting the waiver of interest. The Court found that the petitioner had not proven genuine hardship, which is a mandatory condition precedent for claiming the benefit of Section 220(2A) of the Income Tax Act. The Court noted that the petitioner possessed significant financial resources, including cash balance, amounts due from debtors, export incentives receivable, and substantial assets as of March 31, 2006. While acknowledging the principle that having assets does not automatically negate hardship, the Court found that in this specific case, even excluding assets, the petitioner had other resources that disproved the claim of genuine hardship. Therefore, the Court was not persuaded to interfere with the Commissioner's view.

What were the facts?

The petitioner, A.M. Moosa, challenged an order (Ext.P7) passed by the Commissioner of Income Tax rejecting his application for waiver of interest levied under Section 220(2) of the Income Tax Act. The interest was levied following a High Court judgment (Ext.P3) that upheld the revenue's claim for assessment year 1992-93, leading to a consequential order by the Tribunal (Ext.P4) and the Assessing Officer (Ext.P5). The petitioner sought waiver of interest under Section 220(2A) of the Act, citing genuine hardship. The Commissioner, in Ext.P7, noted the Assessing Officer's report which indicated the petitioner had substantial cash balance, debtors, export incentives receivable, and other assets as of March 31, 2006, suggesting no genuine financial hardship.

What were the issues?

1. Whether the Commissioner of Income Tax was justified in rejecting the petitioner's application for waiver of interest under Section 220(2A) of the Income Tax Act, 1961, on the grounds that the petitioner failed to establish genuine hardship? (Question of law and fact, turning on Section 220(2A) of the IT Act). Assessee's Contention: The petitioner argued that the mere existence of assets does not preclude genuine hardship, relying on the Supreme Court judgment in B.M. Malani v. CIT (306 ITR 196). Revenue's Contention: The revenue, through the Commissioner's order, contended that the petitioner did not meet the conditions for waiver under Section 220(2A), specifically the condition of genuine hardship, as evidenced by the petitioner's financial position including cash balance, debtors, and other assets.

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 220(2),Section 220(2A),Section 260(1)

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

WP(C).No. 21824 of 2012
ITA 498/COCH/95

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC THURSDAY, THE 27TH DAY OF SEPTEMBER 2012/5TH ASWINA 1934 WP(C).No. 21824 of 2012 (C) --------------------------- PETITIONER(S): ------------- A.M. MOOSA, AGED 78 YEARS BHARAT SEA FOODS CHANDIROOR ALAPPUZHA 688547 BY ADV. SRI.S.ARUN RAJ RESPONDENT(S): -------------- 1. THE COMMISSIONER OF INCOME TAX PUBLIC LIBRARY BUILDING KOTTAYAM 686 001 2. DY.COMMISSIONER OF INCOME TAX CIRECLE 1 ALAPPUZHA 688 001 3. THE TAX RECOVERY OFFICER PUBLIC LIBRARY BUILDINGS KOTTAYAM 686001 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27-09-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC NO.21824/12 APPENDIX PETITIONER'S EXHIBITS EXT.P1 TRUE COPY OF THE ASSESSMENT ORDER U/S 143(3) DATED 19-1-1995 PASSED BY THE ASSESSING OFFICER EXT.P2 TRUE COPY OF THE ORDER OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN I.T.A 498(COCH)/1995 DATED 15-09-1995 EXT.P3 TRUE COPY OF THE ORDER IN ITR NO 112 OF 1998 DATED 2ND AUGUST 2004 PASSED BY THE HON'BLE HIGH COURT OF KERALA ERNAKULAM EXT.P4 TRUE COPY OF THE ORDER OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL/COCHIN BRANCH COCHIN UNDER SECTION 260(1) I.T ACT 1961 IN ITA 498/COCH/95 DATED 23-06-2006 EXT.P5 TRUE COPY OF THE PROCEEDINGS OF THE ASSESSING OFFICER DATED 18-10-2006 EXT.P6 TRUE COPY OF THE PETITION FILED BY THE PETITIONER BEFORE THE HON'BLE COMMISSIONER OF INCOME TAX KOTTAYAM DATED 13TH NOVEMBER 2006 EXT.P7 TRUE COPY OF THE PETITION FILED BY THE PETITIONER BEFORE THE HON'BLE COMMISSIONER OF INCOME TAX KOTTAYAM DATED 13TH NOVEMBER 2006 EXT.P7 TRUE COPY OF THE ORDER OF THE HON'BLE COMMISSIONER OF INCOME TAX KOTTAYAM IN FILE NO 309(13)/WAIV/220(2)/CI/2006-07 DATED 05-08-2011 REJECTING THE WAIVER PETITION U/S. 220(2A) //True Copy// PA to Judge Rp ANTONY DOMINIC, J. ================ W.P.(C) NO. 21824 OF 2012 =================== Dated this the 27th day of September, 2012

J U D G M E N T Petitioner challenges Ext.P7 order. For the assessment year 92-93, the claim of the petitioner for deduction under Section 80HHC of the Income Tax Act was finally held against the petitioner by Ext.P3 judgment of this Court. Thereafter the Tribunal passed Ext.P4 consequential order and the assessing officer passed Ext.P5. In Ext.P5 order, the assessing officer also levied interest as provided under Section 220(2) of the Income Tax Act. Petitioner thereupon filed Ext.P6 application under Section 220(2A) of the Act seeking waiver of the interest levied. On that application, petitioner was heard and finally the Commissioner passed Ext.P7 order rejecting the application. It is this order which is challenged in the writ petition.

2.

I heard the learned counsel for the petitioner and also the learned standing counsel appearing for the respondents. The relevant portion of Ext.P7 order as contained in para 4 thereof reads as under; “On receipt of the waiver petition from the assessee on 20/11/2006, a report was called for from the :2 : assessing officer. The AO in his report dated 11.4.2007 stated the assessee had filed his return of income for the AY 2006-07 and as per the Balance Sheet as on 31/3/2006, the assessee had cash balance of Rs.23,04,809, Debtors of Rs.30,07,500 as against creditors of Rs.3,16,469/-, export incentives receivable of Rs.14,30,904/- and assets worth Rs.52,97,037/-. The assessee has to satisfy all the three conditions stipulated under section 220(2A) of the IT Act for getting the interest reduced or waived. It is seen from the report of the Assessing Officer that as on 31/3/2006, the assessee did not have genuine financial hardship and was in a position to remit the interest portion of the demand. Instead, the assessee chose to file a waiver petition.”

3.

Section 220(2A) lays down three conditions for an assessee to claim the benefit thereof and these conditions are; (i)payment of such amount [has caused or would cause genuine hardship] to the assessee; (ii)default in the payment of the amount on which [interest has been paid or was payable] under the said sub-section was due to circumstances beyond the control of the assessee; and (iii)the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.”

4.

In so far as this case is concerned, in my view, the first condition of genuine hardship has not been proved by the petitioner. The findings in Ext.P7 extracted above shows that the assessee had cash balance, amounts due from the debtors, amount due towards export incentives and also substantial assets. Therefore, it cannot be said that the assessee has proved genuine :3 : hardship which is a condition precedent for claiming the benefit of Section 220(2A) of the Act. Therefore the view taken by the Commissioner in Ext.P7 cannot be said to be illegal.

5.

True, leaned counsel for the petitioner relied on the Apex Court judgment in B.M.Malani v. CIT (306 ITR 196) and contended that the fact that the assessee has assets does not mean that he has no difficulties. As a matter of principle, I am willing to agree with the counsel. In so far as this case is concerned, even if the assets are eschewed, the assessee are seen to possess other resources which disproves his claim of genuine hardship. In such circumstances, I am not persuaded to interfere. Writ petition is dismissed. ANTONY DOMINIC, JUDGE Rp

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