PARDEEP AGGARWALA vs. COMMISSIONER OF INCOME TAX

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No.3789 of 2011 Date of decision: 3.3.2011 Pardeep Aggarwala. -----Petitioner. Vs. Commissioner of Income Tax. -----Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Binderjit Singh, Advocate for the petitioner. --- ADARSH KUMAR GOEL, J. 1. This petition seeks quashing of order dated 6.5.2010, Annexure P-12, passed by the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961 (for short, “the Act”). 2. Case of the petitioner is that during pendency of assessment proceedings for the assessment year 1983-84 under Section 143(3) of the Act, the petitioner vide letter dated 5.3.1986 surrendered a sum of `55,000/- by way of additional income stating that the surrender was being made to buy peace and subject to no penal action. The petitioner relied upon circular dated 17.2.1986 stating that if a voluntary surrender was made, penalty and prosecution will be waived. In view of the said surrender vide order dated 14.3.1986, the surrendered amount

C.W.P. No.3789 of 2011 was added to the income of the assessee and demand notice was issued for recovering the amount with interest due under Sections 139(8) and 215/217 of the Act. The petitioner disputed liability to pay part of the amount and sought waiver relying upon the amnesty scheme as per circular dated 17.2.1986. The application was rejected by the Assessing Officer vide order dated 12.9.1986. The petitioner, thereafter, applied to the Commissioner for waiver of interest which was followed by a statutory revision under Section 264 of the Act, which was rejected on 12.11.1987. However, the said order was set aside by this Court vide order dated 17.9.2009 in C.W.P. No.1202 of 1988 M/s Jay Bee Industries v. CIT on the ground that the Commissioner had not passed a speaking order and a fresh order was directed to be passed. In compliance of the said order, impugned order dated 6.5.2010 has been passed holding that there was no ground for waiver. Though the petitioner filed an appeal before the Tribunal, the same was withdrawn, as the appeal was not maintainable. In the writ petition, ground for challenging the impugned order is that as per circular, penalty and prosecution were to be waived in case of a voluntary surrender and thus, there was a valid ground for waiving interest. 3. We are unable to accept the submission. Penalty and prosecution stand on different footing from interest. The interest is a statutory liability and is compensatory in nature. Under the Income Tax Rules, 1962 (for short, “the Rules”), there are 2

C.W.P. No.3789 of 2011 provisions for waiver of interest in certain situations. Under Rule 40 of the Rules, grounds for waiver of interest are: delay in assessment within the stipulated period for reasons not attributable to the assessee, if the assessee is an agent of any other person and is assessed upon the income of the principal, where the assessee has income from unregistered firm assessed under Section 183(b), where assessment is on large profits covered under proviso to Section 211 and any other case where circumstances may justify. There is also provision for reduction or waiver of interest under Rule 117A of the Rules for the reasons mentioned therein. Neither of the said rules apply to the petitioner. In the impugned order, it has been mentioned that case of the petitioner was not covered by circular dated 17.2.1986 relied upon by the petitioner. Even if the said circular applied, waiver could be either from penalty or prosecution and not from interest unless case for waiver was made out as per any provision or circular. 4. In absence of any violation of right of the petitioner, we do not find any ground to interfere with the impugned order.

The petition is dismissed. (ADARSH KUMAR GOEL) JUDGE March 03, 2011 ( AJAY KUMAR MITTAL ) ashwani JUDGE 3