An order discussing Section 220(2A) providing discretionary powers to the Chief Commissioner or Commissioner to waive or reduce the interest levied on delayed payment of tax

 

Section 220(2A) provides discretionary powers to the Chief Commissioner or Commissioner to waive or reduce the interest levied on delayed payment of tax. Here is a judgement discussing the same.

Let us have a Short Overview of the case:

This judgment pertains to the rejection of a waiver application under Section 220(2A) of the Income Tax Act by the Bombay High Court in the case of Jitendra M. Doshi (Deceased) & Others v. Chief Commissioner of Income Tax & Others (Writ Petition No. 1363 of 2021).

1. Provisions of Section 220(2A)
Section 220(2A) provides discretionary powers to the Chief Commissioner or Commissioner to waive or reduce the interest levied on delayed payment of tax. The section requires the following three conditions to be satisfied cumulatively:
• Genuine hardship: Payment of such interest has caused or will cause genuine hardship to the assessee.
• Circumstances beyond control: The default in payment of tax and interest was due to circumstances beyond the control of the assessee.
• Cooperation: The assessee has cooperated during the inquiry or recovery proceedings.

The Supreme Court in B.M. Malani v. CIT (2008) 10 SCC 617 clarified that all these conditions must coexist for granting a waiver.

2. Court’s Observations
Genuine Hardship
The Court agreed with the Chief Commissioner’s findings that the Petitioner failed to establish genuine financial hardship:
• Despite being requested to produce a balance sheet or disclose details of assets and liabilities, the Petitioner declined, arguing they were not required to maintain such records.
• The burden of proving hardship was on the Petitioner, but no satisfactory material evidence was submitted.

Circumstances Beyond Control
The Court noted that:
• The Petitioner claimed that the default was due to the seizure of investments, gold, and diamonds in 2007. However, these claims lacked substance, and the investments were not significant compared to the tax and interest demand.
• The Petitioner provided inconsistent explanations regarding the sources of funds used to pay Rs. 91.83 lakhs in tax, failing to show that the default was caused by factors outside their control.

Cooperation
The Court observed that the Petitioner adopted inconsistent positions throughout the proceedings. For example, claims about diamond jewelry being part of Streedhan contradicted CBDT guidelines.
The Petitioner’s conduct, including changing stands on the sale of bullion and non-filing of wealth tax returns until AY 2015-16, demonstrated a lack of cooperation and candor.

3. Judicial Review Scope
The Court emphasized that its jurisdiction in such cases is limited to examining the reasonableness of the administrative decision.
The Chief Commissioner’s decision was supported by relevant material and not perverse.
Procedural fairness was observed as the Petitioner was given an opportunity to present their case.
The impugned order was well-reasoned and aligned with the conditions under Section 220(2A).

4. Conclusion
The Court concluded that the Petitioner failed to satisfy the three mandatory conditions under Section 220(2A). The rejection of the waiver application by the Chief Commissioner was deemed reasonable and lawful.

The copy of the order is as under:
WRIT PETITION NO.1363 OF 2021