Law:

Section:

Section 220 of the Income-tax Act, 1961 - Collection and recovery of tax - When tax payable and when assessee deemed in default - Assessment years 1998-99 and 1999-2000 - Whether all three conditions enshrined in section 220(2A) are cumulative and unless all of them are satisfied, waiver of interest cannot be allowed under section 220(2A) - Held, yes - Whether for evaluating question whether condition No. (1) enshrined in section 220(2A), viz., payment of such amount has caused or would cause genuine hardship to assessee, has been satisfied or not, what is to be taken note of is income of assessee for period concerned and fact, that assessee is having liabilities as per balance sheet, is not a criteria to assess his capacity for payment - Held, yes FACTS The assessee filed the return of income for the relevant assessment year declaring certain income. The Assessing Officer completed the assessment at much higher income and raised certain demand. The Assessing Officer also levied interest under section 220(2A). The assessee filed petition seeking to waive such interest. The Commissioner observed that the assessee had cooperated during the assessment proceedings satisfying condition No. (3) of section 220(2A). However, for condition No. (1), the Commissioner noted that the assessee had sufficient income and payment of impugned interest would not cause genuine hardship to the assessee. He, therefore, rejected the petition. The assessee contended that there was a clear failure on the part of the Deputy Commissioner in not considering that the assessee had huge liabilities for the relevant assessment year as was evident from the balance sheet and, therefore, his findings that the assessee had sufficient income during the subsequent year was not correct. [ HELD For evaluating the question whether condition No. (1) of section 220(2A) has been satisfied or not, what is to be taken note of is the income of the assessee for the periods concerned. The fact that the assessee is having liabilities as per the balance sheet, is not a criteria to assess his capacity for payment. Hence, there was no illegality or error in the findings of the Commissioner in that respect. [Para…

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