Kalyan Jyoti Sengupta, J. - (1.) By this application the petitioner has challenged an order dated December 4, 1989, passed by the Deputy Commissioner of Income-tax, Special Range-I (respondent No. 1 herein), whereby and whereunder the petitioner's applications for waiver and/or reduction of interest under Rules 40(1) and 40(5) charged under Section 215 of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"), for 23 months instead of 35 months has practically been rejected, granting for the period from March 1, 1986 to July 31, 1986. This application was made by the petitioner-assessee in relation to the assessment year 1984-85.
(2.) It appears from the records that the first application was made under the provision of Rule 40(1) of the Income-tax Rules (hereinafter referred to as "the said Rules"). Subsequently, another application was made on behalf of the petitioner under the provision of Rule 40, Sub-rule (5). Both these applications were heard out and disposed of by respondent No. 1 by the impugned order, of course, with reasons. It appears from the impugned order that while rejecting the prayer of the petitioner, respondent No. 1 observed that the assessee maintains the accounts in such a way that unless the previous year's assessment is completed the next year's cannot be taken up for consideration. The first hearing for the assessment year of 1984-85 could be fixed on August 1, 1986, though the return was filed on July 26, 1984, and the assessment thereof was completed on March 24, 1987. The case could not be taken up for consideration until the previous year's assessment of 1983-84 was completed on February 24, 1986. Hence, the delay in taking up the case for hearing from March 1, 1986, to July 31, 1986, is held not attributable to the assessee and the provisions of Rule 40(1) are applicable for this period. The officer concerned further reasoned that the company manages the accounts in such a way that it is difficult to find the actual income, rather it helps suppress income. Consequently, a deep scrutiny and examination of accounts and enquiries were necessary which is evident from the fact that in each year huge additions of income were made over and above the returned income. The authorised representatives of the assessee could not produce before him any evidence that the circumstances of the company were such that a reduction or waiver of interest was called for. As such, respondent No. 1 refused to exercise discretion under Rule 40(5) in favour of the petitioner-assessee.
(3.) Factually, in this case the petitioner admittedly filed the return for the aforesaid assessment year on July 26, 1984, followed by filing of revised computation in November, 1986. The assessment was taken up for the first time on August 1,1986, by issuing notices under Sections 143(2) and 142(1) of the Act. Consequently, the assessment was completed on March 24, 1987. Respondent No. 1 reduced the interest under Section 215 for five months commencing from March 1, 1986 to July 31, 1986. The petitioner's grievance is that excepting for the period as permissible under the rules, the interest should have been waived till July 25, 1985, for twelve months.;