IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 17TH DECEMBER 2009 / 26TH AGRAHAYANA 1931 WA.No. 2470 of 2009() --------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.30038/2006 Dated 10/07/2009 .................... APPELLANT(S): -------------- 1. THE CHIEF COMMISSIONER OF INCOME TAX, KOCHI. 2. THE INCOME TAX OFFICER, WARD-I, THODUPUZHA. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- M/S CHOLA HUTS, C/O. K.V. JOSE, KAKKANATTU HOUSE, MUVATTUPUZHA, REP BYITS MANAGING PARTNER, K.V. JOSE. BY ADV. SRI. S. VIJAYAN NAIR. THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 17/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & V.K. MOHANAN, JJ. -------------------------------------------- W. A. No. 2470 OF 2009 -------------------------------------------- Dated this the 17th day of December, 2009 JUDGMENT Ramachandran Nair, J. Appeal is filed against the judgment of the learned single Judge holding that respondent-assessee who was granted waiver of interest under Section 234A of the I.T. Act by the Chief Commissioner of Income-tax is entitled to waiver of interest payable under Section 234B and 234C as well on the same ground that is clause (e) in Notification No. 400/234/95/IT dated 23.5.1996. We have heard standing counsel appearing for the department and Sri. S. Vijayan Nair, counsel appearing for the respondent-assessee. After hearing both sides, we are unable to uphold the finding of the learned single Judge with regard to entitlement of the respondent-assessee for waiver of interest payable under Section 234B and 234C of the Act, merely because assessee has voluntarily filed returns and paid tax. In our view, clauses (a) and (e) of the Notification deals with the same subject, that is circumstances for waiver of interest under Section 234A. However, for considering waiver of interest under Sections 234B and 234C, application has to be considered with specific reference to clauses (b),(c) and (d) of the 2 Notification. While clause (a) refers to disability of an assessee from filing a return on account of search and seizure and retention of books of accounts, clause (e) deals with other cases where parties were disabled from filing of returns for unavoidable reasons, may be party happens to be out of India, happens to be sick and laid up, etc. However, the finding of the learned single Judge that clause (e) is a condition, satisfaction of which, entitles the assessee to claim waiver of interest under Sections 234B and 234C of the Act, in our view, is not tenable, because it only lays down a condition for waiver of interest under Section 234A of the Act. We therefore allow the appeal by reversing the judgment of the learned single Judge and by holding that satisfaction of the condition under clause (e) does not entitle the assessee for waiver of interest under Section 234B and Section 234C of the Act. 2. Sri. Vijayan Nair, counsel appearing for the respondent- assessee, pointed out the peculiar features of this case wherein after raid, assessments on capital gains were made at the hands of the partners for the transfer of a running bar hotel. However, when the assessees approached the Settlement Commission, Commission directed assessment in the hands of the firm which is accepted by the 3 department. It is seen that as against tax assessed at Rs. 2 lakhs and odd, the total interest demanded is over Rs. 4.25 lakhs out of which the Chief Commissioner waived around Rs. 1.5 lakhs towards interest payable under Section 234A. Considering the peculiar features of this case, and considering the nature of controversy, that is ultimately settled by the Settlement Commission, we feel leniency is called for. We therefore limit the liability under Section 234B and 234C to Rs. 75,000/-. Balance if any paid will be refunded and if not paid or recovery under Sections 234B and 234C will be limited to Rs. 75,000/-. The relief granted by us is in addition to the waiver of interest granted by the Chief Commissioner under Section 234A of the Act. Writ Appeal is allowed by cancelling the impugned judgment and and WPC is disposed of by granting above relief to the assessee. (C.N.RAMACHANDRAN NAIR) Judge. (V.K. MOHANAN) Judge. kk 4