High Court Of Madras
S. Subash vs. CIT & Anr.
Sections 220(2), 220(2A)
Asst. years 1956-57, 1968-69, 1969-70
R. Jayasimha Babu, J.
Writ Petn. No. 7160 & WMP No. 11700 of 1997
27th November, 1998
R. Janakiraman, for the Petitioner : Mrs. Kala Ramesh, for the Respondents
R. JAYASIMHA BABU, J. :
The petitioner is aggrieved by the order of the CIT declining to waive the interest for the period to 1984 and limited the waiver for the subsequent period only to an extent of 50 per cent. Interest had been levied in respect of the arrears of tax due from the petitionerâs father for the asst. yrs. 1956-57, 1968-69 and 1969-70. The properties of the petitionerâs father, who died in the year, 1981, had been attached in the year 1975, and the father had been called upon to pay the tax together with the interest due, but he had failed to pay the same during his life time. The default continued even after his demise, the petitioner-son, who had inherited the properties also not having paid the tax, and the other amounts due. Ultimately, in the year 1996, the properties were sought to be sold, at which point of time, the assessee paid the tax, and also applied to the CIT for wavier of the interest. The CIT, by his order dt. 25th March, 1997, held that he had no power to waive the interest for any period subsequent to 1st Oct., 1984, and that, for the period subsequent thereto, the facts of the case did not warrant waiver in excess of 50 per cent. He noticed that there had not been total co-operation from the assesseeâs side, that the assessee had inherited substantial properties, and that it could not be said that the rejection of his claim for full waiver, and granting it only in part, would cause genuine hardship.
Learned counsel for the assessee submitted that the CITâs understanding of s. 220(2A) of the IT Act is erroneous. According to counsel, the word “paid” found in that provision would indicate that the power of waiver extended to all amounts paid by the assessee irrespective of the period, for which, it was payable, and further, that the word “payable” referred to all amounts outstanding irrespective of the period for which the outstanding relates. Sec. 220(2A) of the Act was inserted by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1st Oct., 1984. Prior to the introduction of the provision, there was no power to waive the interest. The substantive power to waive was thus given to the authority only on and after 1st Oct., 1984. Interest for the period prior to 1st Oct., 1984, whether paid or payable was not meant to be covered by this provision, as the section in its terms has not been given retrospective effect. The section is not merely a procedural one, but is a substantive provision dealing with the vesting of the substantive power by which the authority could waive the recovery of monies otherwise due and payable by the assessee. That power was not available for being exercised in respect of a period during which the authority did not have the power to waive the interest.
5. The word “paid was introduced in s. 220(2A) of the Act by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, w.e.f. 1st April, 1987. The object of introducing that term was only to make it clear that the authority is empowered to grant relief not only to those who had withheld the payment of interest in respect of the period covered by the section, but also those who had promptly paid that interest despite their eligibility to claim relief, and thereafter, had sought relief in accordance with that provision. The addition of the word “paid” was meant to prevent the likelihood of an honest assessee being denied relief, while a person who had failed to comply with the law would still be eligible for relief. It was not an amendment which was intended to extend the power to grant relief in respect of a period during which the authority did not have the power to waive recovery of interest. It is, therefore, not possible to agree with the submission of counsel that the provision is retroactive.
6. The normal rule of construction of any statutory provision is that its operation is prospective. It is only in case of procedural provisions that in the absence of any intention to the contrary whether explicit or implicit, such procedural provisions are regarded as being applicable to pending proceedings, even though such proceedings may have commenced at a point of time anterior to the introduction of the relevant statutory provisions. Where the statute confers a substantive power for the first time, it cannot be held on any known principle of construction of statute that such power is meant to be exercise in respect of past periods as well, so as to undo what had been properly done, and confer a benefit which the plain words of the statute did not intend. It has always been the normal legislative practice to make explicit the intention to make a provision retrospective in operation wherever a substantive alteration in made in the law. It is only in cases where the amendment is to be regarded as clarificatory or declaratory that such provision is even in the absence of express language to that effect in the relevantprovision, applied even in respect of matters relating to periods prior to the date of introduction of the provision.
7. Sec. 220(2A) of the Act cannot be regarded as a clarificatory or declaratory provision. Prior to the introduction of the provision, there was no power in the authority named therein to waive interest. The question of clarifying a non-existent power, or to declare the existence of something which did not exist, therefore, does not arise for consideration. The CIT, therefore, was right in holding that his power under s. 220(2A) of the Act did not extend to the period prior to 1st Oct.,1984. If any other interpretation were to be effected, it would only open the floodgates for claims by innumerable assessees who had been charged, and who had paid interest prior to 1st Oct., 1984. No such consequence was provided for when this provision was introduced.
8. Counsel for the Revenue invited the attention of the Court to a decision by a Division Bench of the Andhra Pradesh High Court in the case of Ashok Enterprises vs. CIT (1981) 127 ITR 577 (AP) : TC 49R.1072. In that case, the Court was concerned with the extent of operation of s. 273A of the Act. The Court held that the power to waive penal interest conferred by that provision could only be exercised in respect of levies made after the section came into force, and it did not apply to periods prior to the introduction of that section. Counsel for the Revenue also referred to the decision of a learned single Judge of the Calcutta High Court in the case of Saurastra Agencies (P) Ltd. vs. Union of India (1990) 186 ITR 634 (Cal) : TC 43R.732, wherein in relation to this very statutory provisions, s. 220(2A) of the Act the view taken by the learned judge was similar to the one taken by me in this petition.
9. So far as the second aspect of the CITâs order, viz., limiting the waiver to 50 per cent is concerned, it was the submission of counsel for the assessee that in the light of the recent decision of the apex Court in the case of Jaswant Rai vs. CBDT (1998) 147 CTR (SC) 110 : (1998) 231 ITR 745 (SC) : TC S49.3942, the CIT had a duty to grant full waiver in cases where the assessee had fulfilled all the conditions of the provisions. That decision, however, cannot be of any assistance to the petitioner, as it is not the finding of the CIT that all the conditions of the provision have been in fact fulfilled. As already noticed the CITâs finding is that there was lack of total co- operation, and that there was no undue hardship to the assessee. The CIT has exercised his jurisdiction within the ambit of the law in limiting the relief to 50 per cent. That discretion cannot be interfered with by treating this petition as an appeal against his order. Counsel for the Revenue in this context relied on a decision of the apex Court in the case of Smt. Harbans Kaur vs. CWT (1997) 138 CTR (SC) 211 : (1997) 224 ITR 418 (SC) : TC 66R.963, wherein it has been held that the discretionary order of the CIT is not to be interfered with by treating the writ petition as an appeal. In the circumstances, therefore, no relief can be granted to the petitioner, and the writ petition is dismissed. No costs. Consequently WMP No. 11700 of 1997 is also dismissed.
[Citation : 248 ITR 512]