High Court Of Punjab & Haryana
Leader Engineering Works vs. ITO & Anr.
Sections 139(8), Rule 117A
Asst. Year 1974-75
S.S. Nijjar, J.
Civil Writ Petn. No. 4207 of 1986
14th May, 2003
Counsel Appeared
S.C. Nagpal, for the Petitioner : N.L. Sharma, for the Respondent
ORDER
S.S. NIJJAR, J. :
In this writ petition under Arts. 226 and 227 of the Constitution of India, the prayer is made for the issuance of a writ in the nature of certiorari quashing the order dt. 6th March, 1981 (Annexure P2), passed by respondent No. 1 and the order dt. 25th Feb., 1996, of respondent No. 2 upholding the order of respondent No. 1 passed under r. 117A of the IT Rules, 1962, r/w s. 139(8) of the IT Act, 1961 (hereinafter referred to as “the Act”).
The petitioner is a registered firm under the Partnership Act as well as under the IT Act, 1961. Shri K. K. Sehgal through whom the present writ petition has been filed, is one of the partners of the firm. The dispute relates to the asst. yr. 1974-75 and the previous year relevant to this assessment year is 31st Dec., 1973. According to s. 139 of the Act, the return was to be filed on or before 30th June, 1974. It as actually filed on 30th Oct., 1974. The assessing authority imposed a penalty under s. 271(1)(a) and interest under s. 139(8) of the Act amounting to Rs. 29,915. On 28th Feb., 1977, the petitioner moved an application under s. 139(8) of the Act for waiver of the interest. It was mentioned in the application that the accounts for the relevant period were received on or after
19th Oct., 1974. Earlier there had been a strike in the establishment, which had commenced on 29th April, 1974, and continued for about four months. Consequently, the audit work was held up. The ITO, respondent No. 1, did not accept the application. The default was held to be without any reasonable cause. The petitioner filed a revision petition under s. 264(1) of the Act against the order of respondent No. 1. The revision petition was also dismissed on 25th Feb., 1986. A written statement has been filed on behalf of the respondent through respondent No. 2. In para 3, it is categorically stated that penalty proceedings initiated under s. 271(1)(a) for late filing of the return were dropped by the ITO vide his order dt. 13th Nov., 1980.
Mr. Nagpal, learned counsel for the petitioner, has submitted that the period of delay in filing the return is the same for the purposes of interest as well as penalty. The ITO had the power under r. 117A(5) of the Act to waive the interest payable under s. 139 of the Act. The explanation of the petitioner having been accepted for the purposes of imposition of penalty under s. 271(l)(a) could not have been disregarded while deciding the question of waiver of interest with regard to late filing of the return.
On the other hand, learned counsel for the respondents, has submitted that the impugned orders are speaking orders. The petitioner had failed to prove any evidence in spite of ample opportunities having been granted to the petitioner to justify the delay. Dropping of the penalty proceedings initiated under s. 271(1)(a) is not a relevant factor for the purposes of waiver of interest.
I have considered the submissions made by learned counsel for the parties and have perused the paper book. Rule
117A(3) of the IT Rules, 1962, is as under : “The ITO may reduce or waive the interest payable under s. 139 in the cases and in the circumstances mentioned below, namely : …………… (v) any cases in which the assessee produces evidence to the satisfaction of the ITO that he was prevented by sufficient cause from furnishing the return within time.”
A perusal of the aforesaid rule shows that the ITO has the power to reduce or waive the interest on the assessee provided he produces evidence to the satisfaction of the ITO that he was prevented by sufficient cause from furnishing the return in time. The explanation given by the petitioner with regard to the delay in filing of the return was accepted by the ITO for dropping the penalty proceedings. However, the same reasoning was not accepted for granting the relief to the petitioner of waiver of interest. It is not disputed that the ITO as well as the CIT exercise quasi-judicial functions. Therefore, the decision to drop the penalty proceedings has to be supported by valid reasons. Similarly, while exercising the discretion under rule 117A(5) of the IT Rules, 1962, the ITO cannot act arbitrarily. I, therefore, find that the respondents could not have rejected the explanation for delay in filing the return for the purpose of waiver of interest when the same had been accepted for the purpose of dropping the penalty proceedings. Accepting such a notice would negative the equality clause enshrined in Art. 14 of the Constitution of India. In view of the above, I am of the considered opinion that the impugned orders, annexures P2 and P8 suffer from the vice of arbitrariness.
Consequently, the writ petition is allowed. The impugned orders annexures P2 and P8 passed by respondent No. 1 on 6th March, 1981, and passed by respondent No. 2 on 25th Feb., 1986, respectively, are hereby quashed. No costs.
[Citation : 264 ITR 65]
