The court established that old age and illiteracy are significant factors for considering waiver of interest under the Income Tax Act, emphasizing the need for fair assessment in tax matters.

JUDGMENT

Sanjeev Prakash Sharma, J. (Oral)

The petitioners before us are legal heirs of late Megh Raj who have come in second round of litigation before this Court after the earlier writ petition filed by them resulted in the same position as it stood prior to the passing of High Court's order.

2. In the first round, the brief facts which need to be noticed are that the petitioners had preferred civil writ petition No.3537 of 2003 before this Court praying for allowing waiver of the interest amount as assessed already and charged under section 234A, 234B and 234C of the Income Tax Act, 1961 for non submission of assessment of income tax returns for the period from 1991 upto 2000. Land of Late Megh Raj, predecessor-in-interest of the petitioners measuring 33 acres and 10 marlas was acquired by Government of Haryana, vide notifications dated 07.02.1986 and 18.02.1987 and an award was passed on 27.08.1987. Compensation so awarded was enhanced by Addl. District Judge, Kurukshetra from Rs. 70,000/- to Rs. 1 lakh per acre and total compensation in the sum of Rs. 53,76,900/- was received by him, which he deposited in the banks. Megh Raj filed returns on 15.11.2000 for the assessment years 1990-91 to 1995-96 and for 1996-97 to 1999-2000. He thereafter was served with notice under Section 148 of the Act of 1961 for the assessment years and a liability to the tune of Rs. 1,04,01,430/- was created in the form of interest accruing on the FDRs and interest payable under Sections 234A, 234B and 234C of the Act of 1961. Megh Raj expired on 21.08.2001 and the petitioners filed an application under Section 119(2) of the Act of 1961 for seeking waiver of interest in terms of circular of Central Board of Direct Taxes (for short 'CBDT') dated 23.05.1996. The respondents rejected the application and the petitioners, therefore, preferred the writ petition (supra). This Court after having considered the submissions observed as under:-

"We have heard learned counsel for the parties and carefully perused the record. The main ground on which respondent No. 1 declined the petitioners prayer for waiver of Interest is that last Shri. Megh Raj had furnished incorrect particulars in Form 15-H in order to avoid the payment of taxes. However, while taking that view, respondent No. 1 over looked the fact that in his reply dated 8.2.2000 sent to Income-tax Officer, Ward-1, Kurukshetra, Shri. Megh Raj had clearly stated that he was an illiterate person of 70 years age and had signed Form 15H as asked by the Bank Manager without knowing what its contents were. Similar reply was sent by his Chartered Accountant on 3.10.2000. Respondent No. 1 also over looked the fact that the Assessing Officer had strongly recommended for waiver of interest. In our opinion, non-consideration of these factors has the effect of vitiating the conclusion recorded by respondent No. 1 that the assessee had furnished incorrect particulars in Form 15-H.

We are also inclined to agree with the learned counsel for the petitioners that filing of incorrect particulars in Form 15-H cannot lead to an inference that Sh. Megh Raj had deliberately tried to mislead the authorities and wanted to avoid payment of tax or to filed the return in time. The old age and illiteracy of the assessee were important factors which respondent No. 1 should have taken into account while judging the veracity of the assertion made by him that he had signed Form 15-H on the dotted lines. Therefore, without examining other issues raised in the petition, we deem it proper to remand the case to respondent No. 1 for deciding the petitioners application for waiver of interest afresh.

Hence, the writ petition is allowed and order Annexure P-1 is quashed with a direction to respondent No. 1 to decide the application filed by the petitioners under Section 119(2)(a) of the 1961 Act afresh.

The petitioners are directed to appear before respondent No. 1 in person or through their Advocate on 18.8.2003 who, we expect, will pass a fresh