(a) Income-tax---

----Return---Delay in furnishing return---Interest---Waiver of interest-- Assessee not establishing that he had financial difficulties and he would experience genuine hardship in paying interest under S.139(8)---Interest could not be waived---Indian Income Tax Act, 1961, Ss. 139 & 220.

Held, that three conditions are to be satisfied cumulatively for an order under section 220(2-A) of the Income Tax Act, 1961. Therefore, inasmuch as the petitioner had not satisfied the first condition, namely that the petitioner was in financial difficulties or that payment by way of interest would cause genuine hardship to it, the interest payable under section 139(8) could not be waived.

(b) Income-tax---

----Advance tax---Failure to file estimate of advance tax---Interest---Waiver of interest---Assessment not completed within one year---Delay not attributable to assessee---Assessee entitled to waiver of interest---Indian Income Tax Act, 1961, S.217.

The petitioner had filed the return on July 27, 1981. The assessment was completed only by order, dated -March 15, 1988. By virtue of rule 40 of the Income-tax Rules, 1962, the assessment had not been completed within the period of one year and the delay being not attributable to the assessee it was right in claiming waiver of interest under section 217.

P. G. K. Wariyar for Petitioner.

N.R.K. Nair, P.K. Ravindranatha Menon and George K. George for Respondents.

JUDGMENT

P. SHANMUGAM, J.---The petitioner is a registered. partnership firm. The challenge is against Exh&P-7 and P-4 orders passed under section 220(2-A) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

As against Exh. P-1 assessment order determining the tax of Rs.14,445, the petitioner has preferred an application, Exh. P-2, dated April 11, 1983, under section 154 of the Act for rectification. In that it is stated that a sum of Rs.9,763 is levied as interest under section 139(8) of the Act and in computing the interest, it appears that an amount of Rs.6,088 paid as advance tax has not been given credit for. By Exh. P-4 proceedings the Income-tax Officer found that the tax paid on June 15, 1979, qualified as advance tax for the year 1980-81, and therefore, the petitioner for rectification was considered on the merits and the modified order was passed. In this under section 220(21 of the Act the interest of Rs.10,337 for the period from May 1, 1983 to August 31, 1993, was demanded. As against this the petitioner preferred a revision before the Commissioner of Income tax was dismissed by Exh. P-7 order. Hence, this O.P.

In support of the application for waiver the petitioner has simply stated that they were not doing any business and hence there was considerable difficulty in paying the amount. The Commissioner in Exh.P-7 order found that there is nothing to show that the petitioner was in financial difficulties or that further payment by way of interest would cause genuine hardship to him. I do not find any illegality in the said finding since the petitioner has not established. his genuine hardship as required under subsection (2-A) of section 220 of the Act. Three conditions are to be satisfied cumulatively for an order under section 220(2-A). Therefore, inasmuch as the petitioner has not satisfied the first condition to the satisfaction of the Commissioner the petitioner is not eligible for waiver of interest. From the records it could be seen that as per Exh. P-4 interest is claimed only for the tax payable, viz., Rs.2,139 from 1983 to 1993.

In the application for waiver, Exh.P-2, it is specifically stated that they have filed the return on July 27, 1981. The assessment was completed only by order, dated March 15, 1988. By virtue of rule 40 of the Income-tax Rules, the assessment had not been completed within the period of one year and the delay being not attributable to the assessee they are right in claiming for waiver of interest under section 217 of the Act. As this was not conceded in the memorandum of his revision application also the relief was claimed. It is now submitted that as against the order refusing to grant the relief under section 217 of the Act an appeal has to be preferred. It is too hard to drive the petitioner to an appeal at this stage. In the above circumstances the claim in so far as section 217 waiver of interest is concerned is sustained. The Income-tax Officer is directed to pass fresh orders only in so far as the request to the petitioner relating to section 217 of the Act is concerned. In all other respects Exhs.P-4 and P-7 orders are confirmed. The original petition is allowed in part.

M.B.A./4175/FCPetition allowed.