IT– A busy film playback singer working 16 hours a day fails to file IT Returns - 'unavoidable circumstances'? - Waiver of interest – matter remanded to Chief Commissioner: Madras HC
By TIOL News Service
CHENNAI, MAY 27, 2009: THE petitioner MANO is a popular playback singer both in Tamil and Telugu films. Though he is a resident of Chennai, he spends most of his time in Hyderabad, where the bulk of his work lies. According to the petitioner, in the cinema industry the career span being very short and uncertain, the artists usually exert themselves to the full whenever there is demand, leaving no time for anything else.
The petitioner has a very humble beginning in the industry. His peak period has been from 1992 to 1998, during which, he spent most of his time in Hyderabad and normally worked 16 hours a day and because of his commitment, he could not comply with certain obligations, especially those pertaining to payment of Income Tax. It is the plea of the petitioner that the non-compliance of payment of Income Tax returns is neither wilful nor wanton, but only due to the aforesaid bona fide reasons.
The petitioner filed his returns of income voluntarily for the assessment years, 1993-94, 1994-95, 1995-96 and 1996-97 and the Assessing Officer accepted the returns filed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 and also levied interest under Sections 234A, 234B and 234C. According to the petitioner, the said assessments and demand notice suffered from several arithmetical errors and hence, he filed petitions under Section 154 to the Assessing Officer in respect of assessment years 1994-95, 1995-96 and 1996-97 and appeal in respect of the assessment year 1993-1994.
Aggrieved by the said order, the petitioner filed a Waiver Petition before the Chief Commissioner of Income Tax and contended that he was unable to file returns due to circumstances beyond his control, because he was engaged in Hyderabad, concentrating in his profession. Thereafter, he immediately filed returns voluntarily and also co-operated with the Income Tax Department in completing the assessment and paid the tax due and also made part payment of the interest levied under Sections 234A, 234B and 234C of the Act. The Chief Commissioner vide his order dated 29.03.2004 granted waiver of interest of Rs.43,051/- against the amount of Rs.3,00,832/- under Section 234A and in respect of Section 234B, he granted only a sum of Rs.77,729/- as relief as against Rs.6,06,504/- and confirmed the levy of interest of Rs.23,898/- under Section 234C of the I.T. Act. Challenging the said order of the Chief Commissioner, the petitioner is before the High Court praying to quash the same and to direct the Chief Commissioner to waive interest levied under Sections 234A, 234B and 234C of the Act for the Assessment years 1993-94, 1994-95, 1995-96 and 1996-97.
The question that arises for consideration is whether the petitioner is entitled to complete waiver of interest on the returns of income under Sections 234A, 234B and 234C of the I.T. Act.
The High Court observed that it it is clear that the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, the assessee shall be liable to pay simple interest at the rate of one per cent for every month. It is also clear that when an assessee, who is liable to pay advance tax under Section 208 has failed to pay such tax or the advance tax paid by such assessee is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period. It is further made clear that when the advance tax paid by the assessee on his current income is less than the tax due on the returned income, then the assessee shall be liable to pay simple interest at the rate of one per cent on the amount of the shortfall from the tax due on the returned income.
A circumspection of the facts of the case would reveal that the petitioner has voluntarily filed the returns and due to unavoidable circumstances, he could not file the returns in time. The counsel for the petitioner has consistently pleaded that the petitioner, being a playback singer in the cinema industry and engaged in work continuously for 16 hours a day, could not file the Income Tax returns within the prescribed time limit. While so, it is the case of the respondents that the petitioner filed the returns beyond the time limit prescribed under Sections 139(1) and 139(4) of the I.T. Act. The petitioner's avocation as a playback singer in the cinema industry and his commitment in the industry to work for hours together is not in dispute by the respondents. However, the delay attributable by the petitioner that due to 'busy schedule', he had failed to file the returns in time is the cause of action. It is seen that though there is a delay in filing the returns, the petitioner had filed the returns voluntarily. Naturally, a person in cinema industry is continuously committed to work. Likewise, in the case on hand, the petitioner had been committed to his work and due to some unavoidable circumstances, he could not file the returns within the prescribed time limit. However, he had filed applications separately for condoning the delay in filing the returns for each of the said assessment years. The issue that has to be looked into is whether the reason assigned by the petitioner that due to 'busy schedule' he could not file the returns in time can be construed as 'unavoidable circumstances'.
From the facts of the case, it is clear that the petitioner is not a habitual defaulter in filing Income Tax returns. The reasons assigned by him are that 'due to circumstances beyond his control' can be construed as "unavoidable circumstances". Therefore, the petitioner's claim for waiver of interest can be considered in terms of the fulfilment of the conditions mentioned as per clause 2(e) of the Notification dated 23.05.1996, wherein, it is stated that where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the Assessing Officer, reduction or waiver of interest under Section 234A or Section 234B or under Section 234C can be considered.
In view of the above, the order passed by the 1st respondent dated 29.03.2004 is quashed in so far as the non-granting of waiver of interest in respect of Section 234C and partial consideration of the waiver of interest in respect of Sections 234A and 234B of the I.T. Act and the matter is remitted to the first respondent – Chief Commissioner for fresh consideration, taking into account the unavoidable circumstances explained by the petitioner. The 1st respondent is directed to pass appropriate orders in accordance with law granting waiver of interest to the petitioner within a period of four (4) weeks from the date of receipt of a copy of this order.