Ram Lal Gulati, J. - (1.) The petitioner was assessed to Income Tax for the assessment years 1956 -57, 1957 -58, 1958 -59, 1960 -61 and 1962 -63, by the Income Tax Officer (Central) Circle I, Meerut. Penal interest under Sec. 18A(6) of the Indian Income Tax Act, 1922 (hereinafter referred to as "the Act"), was charged for all the years as the petitioner had failed to pay proper amount of advance tax as required under Sub -sections (1), (2) and (3) of Sec. 18 A. The petitioner applied to the Income Tax Officer for waiver of interest. The applications were made under Sec. 35 read with Rule 48 of the Indian Income Tax Rules, 1922. (The application for the year 1962 -63 was made under Rule 40 of the Income Tax Rules, 1962, which corresponds to Rule 48 of the Indian Income Tax Rules, 1922). These applications were rejected. The petitioner then moved the Commissioner of Income Tax, Delhi (Central), New Delhi, the respondent No. 1, under Sec. 33A(2) of the Act by means of five separate applications. All the five applications were rejected by the Commissioner by a consolidated order dated January 31, 1972/ February 8, 1972, on the ground, (i) that the petitioner's applications were time barred, and (ii) that for the assessment years 1956 -57 and 1958 -59, the question of penal interest had been made the subject -matter of appeal before the Income Tax Appellate Tribunal and as such the revision applications were not maintainable. This order of the Commissioner has been challenged by means of this petition under Article 226 of the Constitution.
(2.) Under Sec. 18A(1) of the Act, the Income Tax Officer may require an assessee to pay quarterly Income Tax and super -tax calculated on the basis of his latest completed assessment. This tax is known as "advance tax" and is adjusted against the regular assessment for the assessment year in which the tax is paid. Under Sub -sections (2) and (3) an assessee upon whom a notice under Sec. 18A(1) has been served, or who has not hitherto been assessed, can, before the 15th day of March of each financial year, file his own estimate of the income of the assessment year and pay tax on the basis thereof. Sub -section (6) of Sec. 18A then provides that where in any year an assessee has paid tax under Sub -section (2) or Sub -section (3) on the basis of his own estimate, and the tax so paid is less than eighty per cent of the tax determined on the basis of the regular assessment, simple interest at the rate of 6 per cent per annum from the 1st day of January in the financial year in which the tax was paid up to the date of the said regular assessment shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty per cent Sub -section (6) of Sec. 18A, as originally enacted, left no discretion with the Income Tax Officer so that if the estimate fell below the prescribed limit, the Income Tax Officer was bound to charge interest. However, by Act No. 25 of 1953, which was enacted with retrospective effect from April 1, 1952, the following proviso was added as the fifth proviso to Sec. 18(6): . "Provided further that in such cases and under such circumstances as may be prescribed, the Income Tax Officer may reduce or waive the interest payable by the assessee."
(3.) In order to give effect to this proviso the Central Government added in December, 1953, Rule 48 to the Indian Income Tax Rules, 1922, which sets out the circumstances which the Income Tax Officer is required to take into consideration while considering the question as to whether penal interest chargeable under Sec. 18A(6) should be waived or reduced. The corresponding rule in the Income Tax Rules, 1962, is Rule 40.;