These two petitions involve almost same/similar facts and hence a common order is passed.
2. Facts in W. P. No. 35343/03 are as under:
The petitioner, M/s. Padmapriya Oil Mills carries on the business in edible oils. The petitioner for the assessment year 1997-98 ought to have filed return of income u/s. 139 (1) of the Act on or before 31.8.1997. He filed return of income on 31.3.1998 declaring an income of Rs. 8,530/-. It was beyond the statutory period in terms of the provisions of the Income Tax Act. The said return was filed on 31.31998 and is a voluntary return according to the petitioner and it was filed before issuance of any notice in terms of Secs. 142 or 148 of the Act. He paid the taxes payable in terms of the Return Income u/s. 140-A of the Act.
3. On 15.10.1998, the Income Tax Officer conducted a survey u/s. 133-A of the Act in the petitioner's business premises. According to the petition averments, no materials were found either suppressing or omitting any of the purchases. The petitioner was advised to offer a sum of Rs. 3/- lakhs under the said account on the ground that the petitioner need not produce any of the creditors at the time of survey proceedings. The petitioner in the light of these facts a greed to file returns on 21.10.1998 disclosing the income of Rs. 3,08,530/- which includes a sum of Rs. 3 lakhs that was agreed to offer as income. It was furnished on 20.10.1999. Notice was issued and the assessment was concluded on 30.3.2000. No appeal was filed by the petitioner. The petitioner however made an application on 7.2.2000 seeking for waiver of interest that was levied u/s. 234-A, 234-B and 234-C of the Act. The Chief Commissioner of Income-tax rejected the application of the petitioner seeking waiver of interest in terms of Annexure 'B'. Aggrieved by the same, the petitioner filed a Writ Petition in this Court. The said petition was disposed of by this Court. This Court, however, remanded the matter in so far as rejection of waiver of interest is concerned. Order is produced at Annexure 'C'. after hearing, an adverse order has been now passed in terms of annexure 'E'. Annexure 'E' is challenged.
4. Respondents have filed a detailed statement of objection. They say that in terms of Secs. 234-A, 234-B and 234-C, there is a mandate to levy interest in terms of the provisions. In so far as the voluntary nature of transactions is concerned, the same is disputed. According to the respondent, it is not voluntary in nature. Respondent says that the Chief Commissioner is right in passing the order.
5. Writ Petition No. 35344/2003 is filed by one Sri. Prasad of Bangalore. He is a partner in the firm of M/s. Padmapriya Enterprises. His share income is exempt u/s. 10(2-A) of the Income Tax Act (for short 'the Act'). He, out of savings, gifts and presentations received on various occasions including his marriage has purchased a site on 28.8.1993 and the total cost of the site inclusive of stamp paper and registration fee works out to Rs. 2,25,000/-. The business premises of M/s. Padmapriya Enterprises was surveyed and during survey, no discrepancies were noticed. The petitioner's investment in the site was noticed by the respondent. He explained his source and the presentations received on various occasions. Thereafter, he voluntarily filed a return u/s. 139(1) of the Act. The petitioner agreed to file a return of income disclosing the investment made in the site under 'Other Sources'. Notice was issued u/s. 148 of the Act. A return filed in response to notice was considered. An intimation accepting the return of income was sent to the petitioner. The petitioner did not file any appeal against the intimation and accepted the return of income. However, he made an application seeking waiver of interest levied u/s. 234A, 234B and 234C of the Act. The Chief Commissioner rejected the application. He filed a Writ petition in this Court. This Court remanded the matter. After remand, an order has been passed in terms of Annexure 'E'. Annexure 'E' is challenged. Statement of Objection has been filed in this case as well. Same/similar contentions were taken by the respondents.
6. Heard Sri. Rama Murthy, learned Counsel appearing for the petitioner and Sri. Seshachala, learned Standing Counsel appearing for the respondent.
7. Sri. Rama Murthy, learned Counsel says that a case is made out in the case on hand. According to him the material facts would reveal of a voluntary return of income and that has not been properly appreciated or considered by the respondent for the purpose of waiver of interest. According to him injustice has been done to his client. He wants the waiver of interest to be considered in his favour. He relies on certain Judgments to which I would be adverting to in the subsequent paragraphs.
8. Per contra, Sri. Seshachala, learned standing Counsel says that the respondent has strictly acted in accordance with law. His further submission is that no waiver is possible in the case of a return filed after search proceedings. He equally relies on some Judgments of this Court.
9. After hearing the learned Counsel, I have carefully perused the material on record. It is unnecessary for me to refer to all the material particulars. The material facts would reveal that certain search proceedings were carried out in these two cases. It is only thereafter, a retune was filed and the tax was paid and it was accepted. However, interest was levied by the respondent and applications were filed u/s. 119 seeking for waiver of interest in terms of Secs. 234A, 234B and 234C of the Act. The said application was rejected by the Commissioner of Income Tax and thereafter, the matter was taken up before the chief Commissioner of Income tax. He has noticed the facts and thereafter in paras 6 and 7 he has ruled as under:
"6. The interest charged u/s. 234A can be considered for waiver by the CCIT only within the parameters referred to in the Board's order u/s. 119(2) (a) in F. No. 400/234/95-IT(B) dated 23.5.1996. In the instant case, waiver of interest levied u/s. 234A can be considered only under clause (e) of para 2 of the order referred to supra, which runs as under:
"e) Where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the assessing officer."
7) A plain reading of the above would indicate that, to qualify for waiver of interest, the return of income should be filed not only voluntarily but also before detection by the Department. Further the delay in filing of return should be due to unavoidable circumstances. In the instant case, during the course of a survey u/s. 133A conducted on 15.10.1998 in the premises the firm M/s. Padmapriya Enterprises in which the petitioner was a partner, it was noticed that the petitioner had invested in acquisition of immovable properties in Gavipuram Extension, Bangalore on 28.8.1993 and the source of investment was not explained convincingly. It is clear from the above that the return of income for Asst. year 1994-95 was filed only after detection by the Department during the course of survey, and that too only after issue of a notice u/s. 148. In view of these, both the basis pre conditions about filing of return voluntarily and before any detection by the Department stands not met with."
10. This finding, according to the petitioner is unsustainable and according to the respondent, it is sustainable. The Chief Commissioner rules in the case on hand that it cannot be said that the interest can be waived since according to him, the return is not voluntary. It was after search proceedings. In fact, the Board's order which is culled out in para 6 would show that the waiver of interest can be considered only if the return of income is filed voluntarily without detection by the assessing officer. This issue is noticed by Courts of law in several cases. This Court in an elaborate judgment has noticed this very question in the Judgment reported in 239 ITR 386 (K. L. Swamy Vs. Commissioner of Income tax and another). This Court has ruled as under:
"In the absence of any definition for the expressions there is no option but to depend upon the literal and the dictionary meaning thereof. So viewed the term "voluntary" has to be understood as anything done intentionally and without coercion, compulsion or constraint. Coercion may in turn be direct or positive as in cases where physical force is used to compel an act against one's will or it may be implied legal or constructive as is the position where one party is constrained by subjugation to another to do what his free will would refuse. Coercion that vitiates confession can in terms of Black's Law Dictionary be mental as well as physical. In other words, an action can be "involuntary' not merely because it has been taken by the use of actual direct or positive physical force but also where such action is taken on account of mental and other constraints. That would not however mean that a mere legal obligation to do something should constitute a constraint of the kind which would render any such action involuntary. For if that be so, there would hardly be any disclosure made under the income-tax act which can be treated as "voluntary", in the light of section 139 which creates a legal obligation for all those having a taxable income, to disclose the same in the prescribed form. It follows that the circumstances, conditions or constraints that make a disclosure under the Act "involuntary" must be constraints other than obligations that arise under the act, requiring the assessee to take a particular action."
This Court further ruled as under:
"There was indeed no physical coercion used on the petitioners forcing them to file their returns, there may also have been no formal notice issued to the petitioners asking them to file such returns or threatening action against them in the event of their failure to do so. Yet, the compulsion of the circumstances that unfolded themselves consequent upon the search and seizure operations would itself constitute a constraint effective enough to render the filing of returns by them "involuntary".
11. This Judgment is confirmed in W.A. No. 3764/1998. In the light of the binding decision of this Court and in the light of an admitted position of having filed the return after search proceedings, it cannot be said that the Chief Commissioner has committed any error, what so ever, in rejecting the waiver of interest. I do not find that nay case as such is made out by the petitioner in the case on hand.
12. However, I must notice the contention of the petitioner. The petitioner strongly relies on a judgment of the Andhra Pradesh High Court in 252 I
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TR 269. The facts of that case would show that it stands on a totally different footing. That was also a case in which search was conducted not in the premises of the firm but the premises of ACC Ltd. In the given set of facts, the Court considered the voluntary nature in that case. After all, the voluntary nature of transaction has to be gathered from the facts of each case and there cannot be any uniform law in such cases. This Court has ruled in unmistakable terms that after search proceedings if any return is filed, that it cannot be termed as voluntary. Hence, it is not possible for me to close my eyes and hold in favour of the petitioner. In these circumstances, I am unable to accept the argument of the petitioner. I do not find any legal errors in the order warranting my interference. However, I deem it proper to observe that the board has the necessary powers in appropriate cases to grant waiver of interest. Therefore, liberty is reserved to the petitioner to move the Board in accordance with law notwithstanding this order. If any such application is filed before the Board, then the Board is to consider the same on its merits notwithstanding this order. 13. Ordered accordingly. No costs.