P.K.BALASUBRAMANYAN, J. - (1.) THE petitioner 'is an assessee under the IT Act. While completing the assessment for the asst. yr. 1985 -86, the AO issued a notice to the assessee to show cause why a penalty should not be imposed on it under Sec.271(1)(c) of the Act. The assessee submitted its objections. After considering the objections, the AO passed an order dt. 14th March, 1988, marked Annex -1 in the writ petition, imposing, a penalty of Rs. 2,20,000 on the assessee under Section 271(1)(c) of the Act. The assessee filed an appeal before the CIT(A), Ranchi. The CIT(A) accepted the belated explanation to be offered by the assessee and held by his order, Annex -2 dt. 17th Nov., 1988, that the assessee could not be held liable under Sec.271(l)(c) of the Act. The penalty imposed was deleted. The Department filed an appeal before the Tribunal, Patna, challenging the decision of the CIT(A) deleting the penalty. The Tribunal by order dt. 25th Oct., 1995 marked Annex. -3 reversed the order of the CIT(A) and restored the order of the AO imposing a penalty on the assessee. The assessee got the question as to "whether, on the facts and in the circumstances of the case, the imposition of penalty under Sec.271(1)(c) of the Act amounting to Rs. 2,20,000 was legal and valid" referred to the High Court under Sec.256(1) of the IT Act.
(2.) MEANWHILE , the assessee filed an application under Sec.220(2A) of the Act praying for waiver of interest on the penalty imposed. Complaining that the said petition remained undisposed of, the assessee filed CWJC No. 447 of 1999(R) before this Court. This Court, by judgment dt. 22nd Feb., 1999, directed the CIT to dispose of the petition for waiver of interest filed by the assessee within the period fixed by that order. The CIT was also directed to ensure that the restraint proceedings were confined to the amount necessary to be secured. Thereafter, the CIT, Dhanbad, considered the petition for waiver of interest filed by the assessee and passed the order dt. 23rd March, 1999, marked Annex. -16, rejecting the prayer for waiver of interest on the finding that the conditions of Sec.220(2A) of the Act which enable such waiver were not satisfied in the case. The present writ petition is filed challenging the order on the petition for waiver of interest filed by the assessee. This writ petition was directed to be listed along with the reference made under Sec.256(1) of the IT Act relating to the sustainability of the imposition of penalty, since necessarily, the question of interest on penalty would depend on the validity of the very imposition of the penalty itself. But at the hearing, it was found that it will be more convenient to dispose of the tax reference first, since, even if the answers therein were to be against the assessee, the question of waiver of interest on penalty claimed by the assessee in terms of Sec.220A of the Act, would require independent consideration and hence even while reserving orders in Tax Reference Case No. 36 of 1998, the present writ petition was directed to be posted separately for hearing. On 29th Jan., 2004, the Reference in Tax Case No. 36 of 1998, was answered against the assessee and in favour of the Revenue. Thus, the imposition of penalty against the assessee was found legal. Hence, what is involved in this writ petition is the question whether the order of the CIT refusing to waive the interest on penalty sought by the assessee, calls for interference in exercise of our jurisdiction under Article 226 of the Constitution of India. This question was again heard in detail on 27th Feb., 2004.
(3.) IN the order, Annex. -16, refusing to waive interest on the penalty imposed, the CIT has held that the conditions which enabled waiver under Sec.220{2A) of the Act were not satisfied in this case. He has noticed that three cumulative conditions have to be satisfied before the waiver could be allowed. He has noticed that it was necessary to show that the payment of the amount would have caused genuine hardships to the assessee; that the default in payment of the amount on which interest was payable was due to circumstances beyond the control of the assessee and that the assessee has co -operated with the . inquiry relating to the assessment, or in the proceedings for recovery of any amount due from the assessee. In Annex. -16, after referring to the facts of the case, the CIT has found that none of the conditions referred to above has been satisfied by the assessee and in that view, there was no justification in waiving the interest on penalty as sought for by the assessee.;