Madras H.C : The assessee is aggrieved by the order of the CIT by which the assessee’s request for waiver of interest, under s. 220(2A) of the IT Act, 1961, for the asst. yrs. 1979-80, 1980-81 and 1981-82 was rejected. The order of the CIT is a very elaborate order.

Counsel Appeared

M. Uthama Reddy, for the Petitioner : O. Anand Ram, for the Respondents

JUDGMENT

R. JAYASIMHA BABU, J. :

The assessee is aggrieved by the order of the CIT by which the assessee’s request for waiver of interest, under s. 220(2A) of the IT Act, 1961, for the asst. yrs. 1979-80, 1980-81 and 1981-82 was rejected. The order of the CIT is a very elaborate order.

2. Counsel for the assessee contended that for the assessment years in question, it was necessary to compute the extent of relief available under s. 80J and as that section has been amended with retrospective effect from 1972 and the validity of the amendment had been under challenge before the Supreme Court and the law had remained uncertain till the judgment of the Supreme Court was pronounced in the case of Lohia Machines Ltd. vs. Union of India (1985) 44 CTR (SC) 328 : (1985) 152 ITR 308 (SC) : TC 25R.910, upholding the validity of the Finance (No. 2) Act, 1980, insofar as it amended s. 80J by incorporating the provisions of r. 19A, as sub-s. (1A) in s. 80J, with retrospective effect from 1st April, 1972, the computation took time. The Constitution Bench held that, that amendment was merely clarificatory in nature and was valid. Learned counsel for the assessee invited the attention of this Court to the dissenting judgment in that case, by one of the Judges constituting that Bench wherein it was observed that the assessee would have to face a very grave situation if the relief granted in the earlier years was to be withdrawn with retrospective effect. It was further observed that : “If the relief granted is now permitted to be withdrawn with retrospective operation, the assessee may be found guilty of violation of the provisions of other statutes and may be visited with penal consequences.”

The majority judgment, however, does not direct that by reason of the retrospective operation of the provision, the penal consequences, if any, that the assessee might become exposed to, shall not be given effect to. There was, therefore, no bar on the Revenue raising the demand for interest on the amount of tax payable for the years prior to date of the Supreme Court’s judgment. The fact that the retrospective amendment had been challenged before the Supreme Court does not have the effect of relieving the assessee of the liability for payment of interest on the amount of tax that the assessee had not paid. The assessee always had the option of paying tax under protest and securing refund thereof in the event of success in its challenge to the order of assessment or to the provision of law under which the assessment had been made.

3. The assessee went to the CIT seeking waiver. An objection, for waiver presumes that the liability exists, that it is capable of being enforced and that what is being sought is a relief against the enforcement of that liability. Sec. 220(2A) which had been invoked by the assessee, does not require or permit an enquiry into the validity of the order levying interest. If the levy is considered to be illegal, the assessee has to resort to remedies other than the one provided under s. 220(2A). The submission that r. 118 had not been complied with before the demands were raised for payment of interest for these assessment years cannot, therefore, be gone into in this writ petition. It may, however, be observed that even, according to the assessee, the enforcement of the demand for the payment of tax had been stayed. The CIT, in the course of his order, has observed that interest was demanded, immediately after the tax was paid, for the period of delay. The CIT while rejecting the prayer for waiver has applied the relevant tests. He has found that the assessee would not suffer any genuine hardship by having to make the payment as he has found that the assessee had earned substantial profits, even though for some years it had incurred loss and that there would be no difficulty in paying the amount of interest. He has also found that the default committed by the assessee could not be said to be due to circumstances beyond its control. The conclusions recorded by the CIT are supported by the facts to which he has adverted in the course of his order.

I do not find any merit in the petition and the same is dismissed. Consequently, connected WMP is also dismissed.

[Citation : 250 ITR 761]