B. M. Malani vs. CIT (Supreme Court)

DATE: (Date of pronouncement)
DATE: October 2, 2008 (Date of publication)

Where pursuant to action u/s 132, the assessee made a declaration of income u/s 132 (4) and opted to pay taxes from out of the seized shares and securities and requested that the shares be expeditiously disposed of and the sale proceeds there from be appropriated towards taxes and the revenue did not act on this request and thereafter the assessee applied for waiver of interest under section 220(2A) on the ground that the failure of the department to sell the shares had caused “genuine hardship”, HELD:

(i) Levy of interest is for compensating the revenue from loss suffered by non-deposit of tax by the assessee within the time specified therefor. This principle should also be applied for determining whether any hardship had been caused or not. A genuine hardship means a genuine difficulty. It cannot be concluded that a person having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied.

(ii) A person cannot take advantage of his own wrong. A statutory authority on receipt of a request from the assessee top sell the shares could not have kept mum and should have taken action and responded to the prayer of the assessee. It would have been in the interests of the revenue to do so;

(iii) U/s 220 (2A), the CIT has the discretion not to waive interest but that discretion must be judiciously exercised. He has to arrive at a satisfaction that the three conditions laid down therein have been fulfilled before passing an order waiving interest.

(iv) As the issue had not been considered by the CIT in the proper perspective, matter remanded.