HIGH COURT OF KERALA
Chief Commissioner of Income-tax, Cochin
WP (C) NO. 26339 OF 2005(I)
DECEMBER 3, 2012
1. Heard the learned counsel for the petitioner and the learned standing counsel appearing for the respondents.
2. The petitioner is a partnership firm. For the assessment years 1995-1996 and 1996-1997, they filed returns under the Income Tax Act showing taxable income of Rs. 2,67,230/- and Rs. 4,35,230/- respectively. These returns were filed claiming the status of a firm and were processed under Section 143 of the Income Tax Act.
3. Subsequently, based on the Full Bench judgment of this Court in Narayanan & Co. v. CIT  223 ITR 209 , the assessment was re-opened under Section 147 of the Income Tax Act and taxable income was determined at Rs.7,40,790/- and Rs.11,11,360/- for the assessment years 1995-1996 and 1996-1997 respectively, treating the assessee as an Association Of Persons instead of a partnership firm. The Assessing Officer also levied interest under Section 234B and C of the Act. Seeking waiver of the interest thus levied on the petitioner, they filed Ext.P1 application to the first respondent, under Rule 119(2) of the Income Tax Rules where benefit of the Boards notification dated 23.05.1996, authorising the first respondent to waive or reduce the interest was claimed. That application of the petitioner was finally rejected by Ext.P2 order. It is challenging Ext.P2, this writ petition is filed.
4. Among the various provisions of the notification dated 23.5.1995, the benefit claimed was that provided in paragraph 2 clause (d) thereof which reads thus:-
“Where any income which was not chargeable to income tax on the basis of any order passed in the case of an assessee by the High Court within whose jurisdiction he is assessable to income-tax and as a result, he did not pay income tax in relation to such income in any previous year and subsequently in consequence of any retrospective amendment of law or as the case may be, the decision of the Supreme Court in his own case, which event has taken place after the end of any such previous year, in any assessment or reassessment proceedings the advance tax paid by the assessee during the financial year immediately preceding the relevant assessment year is found to be less than the amount of advance tax payable on his current income, the assessee is chargeable to interest under section 234B or section 234C and the Chief Commissioner or Director General is satisfied that this is a fit case for reduction or waiver of such interest.”
5. This claim was considered and has been rejected thus:-
“The primary condition for invoking clause (d) is that there should be an income which was not chargeable to tax on the basis of a decision of the jurisdictional High Court which becomes taxable as a result of any retrospective amendment of law or a later decision of the Supreme Court. There is no such income in this case and hence clause (d) has no application.”
It is the correctness of this reasoning adopted by the 1st respondent which arise for consideration in this case.
6. If the provisions of clause (d) are perused, it can be seen that the income must not have been chargeable to tax on the basis of any order passed by the jurisdictional High Court and it should become taxable as a consequence of any retrospective amendment of law or on a decision of the Supreme Court. Insofar as the case in question is concerned, it can be seen that the petitioner was assessed with the status as a Firm and that subsequently, following the judgment of this Court in Narayanan & Co.’s case (supra), assessment was re-opened and the tax was re-assessed treating the petitioner as an Association Of Persons. Therefore, situation as contemplated in paragraph 2 clause (d) was not available to the petitioner to claim the benefit thereof.
7. As held by the Apex Court in CIT v. Anjum M.H. Ghaswala  252 ITR 1 interest under Section 234A, B & C is mandatory. It is also settled that unless the claim for waiver or reduction come within the four corners of the conditions specified by the Central Government, interest levied under the aforesaid provisions cannot be waived (see in this connection – [Universal Trades Corpn. v. Chief CIT  249 ITR 291. In this case, on facts I have already concluded that the claim of the petitioner did not come within clause 2(d) of the notification relied on. If that be so, the assessee could not have claimed waiver of interest. Therefore, its rejection by Ext.P2 order cannot be said to be illegal warranting interference in this writ petition.
Writ petition fails and is dismissed.