M.N Rao, J.:— Under challenge in this writ petition is an order passed by the Commissioner of Income-tax, Visakhapatnam, in Reference No. Head-quarters No. IA/8 of 1990-91, dated February 15, 1991, under section 220(2A) of the Income-tax Act, 1961, by which the claims of the petitioners for waiver of interest charged under section 220, sub-section (2), in respect of the assessment year 1985-86 were rejected. Petitioners Nos. 2 to 5 are the sons of one Perala Govinda Rajulu and all of them are partners of a firm which carried on business in bullion and money-lending. The premises of the firm, Messrs. Perala Govinda Rajulu and Sons as well as the residential premises of the partners, were searched by the income-tax officials in October, 1984, as a result of which several assets of the partnership firm were seized. Within fifteen days from the date of search, the firm voluntarily disclosed a substantial income under the provisions of section 273A in consequence of which assessments were made. The petitioners requested for release of the seized bullion and gold ornaments and an order was passed acceding to their request in March, 1987. The order of assessment was made on December 17, 1986, and the due date for payment of taxes was May 1, 1987. The order of assessment was served on the firm as well as the partners on February 23, 1987. The taxes were paid actually on December 16, 1987. A rectification order under section 154 was issued by the Assistant Commissioner, Circle No. II, in GIR G.201.C2 dated July 28, 1989, calling upon the petitioners to pay interest under section 220, sub-section (2) of the Act. The petitioners made a representation to the Commissioner of Income-tax seeking waiver of the interest but the same was rejected by the impugned order.
2. Under section 220(1) within thirty days of the service of the notice any amount other than advance tax has to be paid. Sub-section (2A) empowers the Commissioner of Income-tax to reduce or waive the amount of interest paid or payable by an assessee if he is satisfied that:
“(i) payment of such amount has caused or would cause genuine hardship to the assessee;
(ii) default in the payment of the amount on which interest has been paid or was payable under the said sub-section was due to circumstances beyond the control of the assessee; and
(iii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.”
3. In the impugned order, the Commissioner of Income-tax found that the delay in the payment of amounts was “due to circumstances beyond the control of the petitioners”. A finding also was recorded that the assessee co-operated in the enquiry relating to the assessment proceedings. Having held that conditions (ii) and (iii) were satisfied, the Commissioner negatived the request for waiver of the interest on the ground that “the primary condition relating to genuine hardship on account of actual payment of interest under section 220(2) has not at all been fulfilled in the case of any of the petitioners-partners”. The Commissioner observed that the seizure of jewellery and bullion in the course of the search conducted by the income-tax officials could not be considered to be a reason causing genuine hardship to the assessees because “the extra liabilities on account of interest under section 220(2) is more than compensated by appreciation in the value of the seized jewellery”.
4. Adverting to the contention that the petitioners could not realise the debts secured by pawned articles, the Commissioner observed that it did not result in any hardship “since interest on such debts would also increase with delayed realisation”. The Commissioner also held that no concrete facts were placed to indicate that any debts became bad or their non-realisation led to financial constraints. Pointing out that during the period the petitioners had taken LIC policies, acquired National Savings Certificates and Bonds and so they were capable of saving adequately every year from 1985-86 to 1988-89, it was observed by the Commissioner that “none of the petitioners had ever approached the Assessing Officer with the request for stay of collection of income-tax liabilities”.
5. Although in the impugned order a finding was recorded by the Commissioner that due to circumstances beyond the control of the petitioners they could not pay the tax within time, in the counter-affidavit filed by Shrimati Rama Devi, Assistant Commissioner, “on the basis of the information and record available” with her, she has stated in paragraph 5 that “non-payment of taxes cannot be said to be due to circumstances beyond the control of the petitioners. The assessees had resources to pay the taxes due to the Union”. The details of the financial position of the petitioners are stated in paragraph 5 of the counter-affidavit.
6. Apart from this clear inconsistency between what was mentioned in the impugned order and the averment in the counter-affidavit, there is one other factor which goes to show that all the facts relevant for the determination of the issue were not before the Commissioner of Income-tax when the impugned order was passed: one of the reasons for negativing the request for waiver of interest is that none of the petitioners had ever approached the Assessing Officer requesting for stay of collection of tax liabilities which is clearly contrary to the record, but the petitioners in fact applied on April 24, 1987, to the, Income-tax Officer, Special Investigation Circle, seeking time to make payment of the taxes for the assessment years 1984-85 and 1985-86.
7. In view of these inconsistencies, we are of the considered view that the matter should be remanded for fresh disposal in accordance with law. We, therefore, set aside the impugned order and remit the case to the Commissioner to dispose of the matter afresh in accordance with law after notice to the petitioners. We make it clear that it is open to the petitioners to raise all the grounds available to them under law before respondent No. 2 including the grounds raised in this writ petition. As the matter is an old one, the second respondent shall dispose of the said matter as expeditiously as possible, preferably within four months from the date of receipt of a copy of this order.
8. The writ petition is accordingly allowed. No order as to costs.