Carborundum Universal Ltd. Vs. The Central Board of Direct Taxes, New Delhi.
EmailAppeal: Special Leave Petition Nos.6384 & 6399 of 1987.
(From the Judgment and Order dated 2.3.1987 of the Central Board of Direct Taxes, New Delhi in F. No. 404/504/86-ITCC)
(From the Judgment and Order dated 2.3.1987 of the Central Board of Direct Taxes, New Delhi in F. No. 404/504/86-ITCC)
Petitioner: Carborundum Universal Ltd.
Respondent: The Central Board of Direct Taxes, New Delhi.
Apeal: Special Leave Petition Nos.6384 & 6399 of 1987.
(From the Judgment and Order dated 2.3.1987 of the Central Board of Direct Taxes, New Delhi in F. No. 404/504/86-ITCC)
(From the Judgment and Order dated 2.3.1987 of the Central Board of Direct Taxes, New Delhi in F. No. 404/504/86-ITCC)
Judges: RANGANATH MISRA & G.L. OZA, JJ.
Date of Judgment: Oct 05, 1989
Appearances:
Mr. Harish N Salve and Mr. D.N. Misra, Advocates for M/s. J.B. Dadachanji & Co., for the Petitioner.
Dr. V. Gauri Shankar, Senior Advocate, Mr. M.K. Shashidharan and Ms. A. Subhashini, Advocates with him for the Respondent.
Head Note:
INCOME TAX ACT, 1961:
Section 220(2A) – Application by petitioner by waiver of the interest – Refusal by the Board – Power under sub-section 2A discretionary – Natural justice – Compliance with – Personal hearing not necessary when a right to represent is given and the decision is made on a consideration thereof.
Held:
(i) It is not disputed that the power under sub-s.(2A) is discretionary. The petitioner has not produced a copy of its petition before the Board. There is, however, an averment in the special leave petitions that request had been made to the Board to afford a personal hearing before the petitions under sub-s.(2A) were disposed of. Sub-s.(2A) indicates that the decision of the Board in regard to the three aspects mentioned therein is to be made on the basis of the report of the Commissioner. The order shows that the report of the Commissioner has been taken into consideration. It is not even the petitioner’s assertion that the Commissioner’s recommendations have not been accepted by the Board.There is no procedural statutory requirement of a hearing for the disposal of an application under s.220(2A) of the Act. The legal position is that where a statutory provision does not exclude natural justice the requirement of affording an opportunity of being heard can be assumed, particularly when the proceedings are quasi-judicial. Exclusion, however, can either be by a clear provision or inferred from the scheme, as also the nature of power which is being exercised. We have already noticed that the power of the Board which was invoked was discretionary. It was to be exercised on the basis of the recommendation of the Commissioner and the material provided by the assessee. Personal hearing in every situation is not necessary and there can be compliance of the requirements of natural justice of hearing when a right to represent is given and the decision is made on a consideration thereof. Keeping the nature of the power invoked for exercise, the fact that the petitioner had an opportunity to represent its case in writing and the further fact that the Board had taken into consideration the report of the Commissioner in the background that it is not the allegation of the petitioner that the Commissioner’s recommendations were different, we do not think in the facts of the case it can be held that the petitioner was entitled to a right of being personally heard before its petition under s.220(2A) of the Act was disposed of as aforesaid. The petitioner has claimed that he was entitled to a notice of the Commissioner’s report and an opportunity to canvass that the contents thereof, to the extent they went against it, were incorrect. We do not think there is scope to contend that the assessee is entitled to such a procedural safeguard. Our conclusion is, however, confined to the facts of the case and as and when the question arises in a different situation, the matter may be open to examination. (Paras 5 and 6)
Cases Reffered:
1. P.N. Kumar & Anr. v. Municipal Corporation of Delhi, JT 1987 (4) SC 232.
JUDGEMENT:
O R D E R
1. These two applications under Art. 136 of the Constitution are directed against two separate orders made by the Central Board of Direct Taxes and communicated on 2nd March, 1987, declining to waive the demand of interest made by the Income Tax Officer, Central Circle XVI, Madras, under s.220(2) of the Income Tax Act, 1961 (hereinafter ‘Act’) in exercise of powers under s.220(2A) of the Act. The claim related to assessment years 1979-80 and 1982-83.
2. The assessee-petitioner applied for waiver on 5.11.1986 when the Income Tax Officer by his separate orders dated 9.9.1986 claimed in respect of assessment year 1979-80 interest of Rs.2,06,547/- and for the other a sum of Rs.1,63,080/-. The Income Tax Officer raised the demand for interest as provided under the law taking into account the finally sustained demands for the two years and interest was calculated from the date when the payment covered by assessments was due and the date when the demand of interest was made.
3. Notice was issued in the special leave petitions confined to the question as to whether the petitioner was entitled to a hearing before the Board declined to exercise its power.
4. Section 220 of the Act deals with collection and recovery of income-tax. The Income Tax Officer’s orders were in exercise of powers under s.220(2) read with rules 118 and 119A of the Act and the Rules made thereunder. The assessee-petitioner had invoked the power under sub-s.(2A), a provision which was inserted into the Act with effect from 1.10.1984. It provides:
“Notwithstanding anything contained in sub-s.(2), the Board may reduce or waive the amount of interest payable by an assessee under the said sub-section if, on the recommendation made by the Commissioner in this behalf, it is satisfied that :-
(i) payment of such amount would cause genuine hardship to the assessee;
(ii) default in the payment of the amount on which interest was payable under the said sub-section was due to the circumstances beyond the control of the assessee; and
(iii) the assessee has cooperated in any enquiry relating to the assessment or any proceeding for the recovery of any amount due from him.”
5. It is not disputed that the power under sub-s.(2A) is discretionary. The petitioner has not produced a copy of its petition before the Board. There is, however, an averment in the special leave petitions that request had been made to the Board to afford a personal hearing before the petitions under sub-s.(2A) were disposed of. Sub-s.(2A) indicates that the decision of the Board in regard to the three aspects mentioned therein is to be made on the basis of the report of the Commissioner. The order shows that the report of the Commissioner has been taken into consideration. It is not even the petitioner’s assertion that the Commissioner’s recommendations have not been accepted by the Board.
6. There is no procedural statutory requirement of a hearing for the disposal of an application under s.220(2A) of the Act. The legal position is that where a statutory provision does not exclude natural justice the requirement of affording an opportunity of being heard can be assumed, particularly when the proceedings are quasi-judicial. Exclusion, however, can either be by a clear provision or inferred from the scheme, as also the nature of power which is being exercised. We have already noticed that the power of the Board which was invoked was discretionary. It was to be exercised on the basis of the recommendation of the Commissioner and the material provided by the assessee. Personal hearing in every situation is not necessary and there can be compliance of the requirements of natural justice of hearing when a right to represent is given and the decision is made on a consideration thereof. Keeping the nature of the power invoked for exercise, the fact that the petitioner had an opportunity to represent its case in writing and the further fact that the Board had taken into consideration the report of the Commissioner in the background that it is not the allegation of the petitioner that the Commissioner’s recommendations were different, we do not think in the facts of the case it can be held that the petitioner was entitled to a right of being personally heard before its petition under s.220(2A) of the Act was disposed of as aforesaid. The petitioner has claimed that he was entitled to a notice of the Commissioner’s report and an opportunity to canvass that the contents thereof, to the extent they went against it, were incorrect. We do not think there is scope to contend that the assessee is entitled to such a procedural safeguard. Our conclusion is, however, confined to the facts of the case and as and when the question arises in a different situation, the matter may be open to examination.
7. An objection has been taken by the Revenue to the maintainability of the petitions under Art. 136 of the Constitution as the petitioner instead of going before the High Court has directly come. Reliance was placed by Dr. Gauri Shankar for the Department on the observations of this Court in P.N. Kumar & Anr. v. Municipal Corporation of Delhi JT (1987) 4 SC 292. We do not propose to examine that aspect in this case taking into consideration the fact that notice has already been issued on the special leave petitions and the matter have been pending for more than two years in this Court. We are satisfied that the petitioner would be prejudiced if at this stage it was required to move the High court.
8. Both the special leave petitions are for the reasons indicated above, dismissed. There would be no order as to costs.
1. These two applications under Art. 136 of the Constitution are directed against two separate orders made by the Central Board of Direct Taxes and communicated on 2nd March, 1987, declining to waive the demand of interest made by the Income Tax Officer, Central Circle XVI, Madras, under s.220(2) of the Income Tax Act, 1961 (hereinafter ‘Act’) in exercise of powers under s.220(2A) of the Act. The claim related to assessment years 1979-80 and 1982-83.
2. The assessee-petitioner applied for waiver on 5.11.1986 when the Income Tax Officer by his separate orders dated 9.9.1986 claimed in respect of assessment year 1979-80 interest of Rs.2,06,547/- and for the other a sum of Rs.1,63,080/-. The Income Tax Officer raised the demand for interest as provided under the law taking into account the finally sustained demands for the two years and interest was calculated from the date when the payment covered by assessments was due and the date when the demand of interest was made.
3. Notice was issued in the special leave petitions confined to the question as to whether the petitioner was entitled to a hearing before the Board declined to exercise its power.
4. Section 220 of the Act deals with collection and recovery of income-tax. The Income Tax Officer’s orders were in exercise of powers under s.220(2) read with rules 118 and 119A of the Act and the Rules made thereunder. The assessee-petitioner had invoked the power under sub-s.(2A), a provision which was inserted into the Act with effect from 1.10.1984. It provides:
“Notwithstanding anything contained in sub-s.(2), the Board may reduce or waive the amount of interest payable by an assessee under the said sub-section if, on the recommendation made by the Commissioner in this behalf, it is satisfied that :-
(i) payment of such amount would cause genuine hardship to the assessee;
(ii) default in the payment of the amount on which interest was payable under the said sub-section was due to the circumstances beyond the control of the assessee; and
(iii) the assessee has cooperated in any enquiry relating to the assessment or any proceeding for the recovery of any amount due from him.”
5. It is not disputed that the power under sub-s.(2A) is discretionary. The petitioner has not produced a copy of its petition before the Board. There is, however, an averment in the special leave petitions that request had been made to the Board to afford a personal hearing before the petitions under sub-s.(2A) were disposed of. Sub-s.(2A) indicates that the decision of the Board in regard to the three aspects mentioned therein is to be made on the basis of the report of the Commissioner. The order shows that the report of the Commissioner has been taken into consideration. It is not even the petitioner’s assertion that the Commissioner’s recommendations have not been accepted by the Board.
6. There is no procedural statutory requirement of a hearing for the disposal of an application under s.220(2A) of the Act. The legal position is that where a statutory provision does not exclude natural justice the requirement of affording an opportunity of being heard can be assumed, particularly when the proceedings are quasi-judicial. Exclusion, however, can either be by a clear provision or inferred from the scheme, as also the nature of power which is being exercised. We have already noticed that the power of the Board which was invoked was discretionary. It was to be exercised on the basis of the recommendation of the Commissioner and the material provided by the assessee. Personal hearing in every situation is not necessary and there can be compliance of the requirements of natural justice of hearing when a right to represent is given and the decision is made on a consideration thereof. Keeping the nature of the power invoked for exercise, the fact that the petitioner had an opportunity to represent its case in writing and the further fact that the Board had taken into consideration the report of the Commissioner in the background that it is not the allegation of the petitioner that the Commissioner’s recommendations were different, we do not think in the facts of the case it can be held that the petitioner was entitled to a right of being personally heard before its petition under s.220(2A) of the Act was disposed of as aforesaid. The petitioner has claimed that he was entitled to a notice of the Commissioner’s report and an opportunity to canvass that the contents thereof, to the extent they went against it, were incorrect. We do not think there is scope to contend that the assessee is entitled to such a procedural safeguard. Our conclusion is, however, confined to the facts of the case and as and when the question arises in a different situation, the matter may be open to examination.
7. An objection has been taken by the Revenue to the maintainability of the petitions under Art. 136 of the Constitution as the petitioner instead of going before the High Court has directly come. Reliance was placed by Dr. Gauri Shankar for the Department on the observations of this Court in P.N. Kumar & Anr. v. Municipal Corporation of Delhi JT (1987) 4 SC 292. We do not propose to examine that aspect in this case taking into consideration the fact that notice has already been issued on the special leave petitions and the matter have been pending for more than two years in this Court. We are satisfied that the petitioner would be prejudiced if at this stage it was required to move the High court.
8. Both the special leave petitions are for the reasons indicated above, dismissed. There would be no order as to costs.
