K. SAMPATH J.

The prayer in the writ petition is for the issue of a writ of certiorarified mandamus to call for the records relating to the petitioner in C. No. 2031(64)/1988-89-TN-V on the file of the first respondent and quash the impugned order dated November 7, 1988, and consequently direct the first respondent to waive interest of Rs. 4, 29, 670 levied under section 220(2) of the Income-tax Act, 1961.

The petitioner-company was in a tight financial position due to the following reasons.

(1) It was in the process of implementing expansion and setting up a new unit which are not yet over. Additional finance was required to be invested to complete and implement the projects.

(2) Due to the recent change in the policy of the Government, it was not being supplied wheat from the FCI and had to resort to buying wheat from the open market, Since no wheat was available in the South, it had to be purchased from North India where huge amount of money was blocked due to delay in receiving the wheat and also bulk buying and storing the same.

(3) In the earlier years it had made borrowings and invested in new units which were still not remunerative. Further, the interest and instalments had become payable which had to be met from existing resources. In the circumstances, any further huge payments would only over-burden the company and worsen the day-to-day workingsThe petitioner-company had at all times co-operated with the Department and had paid all taxes due to the Government promptly and the prayer before the first respondent was for waiver of interest levied under section 220(2) of the Act. The first respondent by order in proceeding C. No. 2031(64)/1988-89/TN-V, dated November 7, 1988, rejected the application on the ground that the reduction or waiver of the interest was not warranted because of the absence of the factors mentioned in section 220(2A) of the Act. Aggrieved, the present writ petition has been filed.

It is submitted by learned counsel for the petitioner-company as follows:

The order of the first respondent is not a speaking order. It is very cursory and has side-tracked the whole issue. He also refers to another order by another Commissioner in identical circumstances where waiver was granted. He also produced the balance-sheet of the petitioner-company for the year 1979 to show that the petitioner-company was in difficulties. He also cited a number of decisions in support of his stand. I will be referring to the decisions in the course of the order.

Learned senior counsel for the Department submitted that the petitioner-company had the benefit of the money from March 17, 1981, to February 27, 1986. It had taken all steps not to pay the amount by indulging in litigation. The balance-sheet of the year 1979 cannot be looked into. The demand is made in the year 1988 and the latest balance-sheet has not been produced. The first two conditions set out in section 220(2A) of the Act have not been satisfied. He prays for dismissal of the writ petition.

The question is whether the writ petitioner-company is entitled to any relief in the present writ petition or in any event it is at least entitled to a remission to the first respondent for a fresh appraisal of the caseAs observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. CIT.

"Interest is levied under section 139(8) or section 215 of the Income-tax Act, 1961, because by reason of the omission or default mentioned in the respective provision, the Revenue is deprived of the benefit of the tax for the period during which it has remained unpaid.

The levy of interest is a part of the process of assessing the tax liability of the assessee and, therefore, it is open to the assessee to dispute the levy in appeal provided he limits himself to the ground that he is not liable to the levy at all."

Then we go to the waiver part of it. Section 220(2A) of the Act runs as follows:

"Notwithstanding anything contained in sub-section (2), the Chief Commissioner or Co