B.M. MALANI versus COMMR. OF INCOME TAX & ANR.

Citation: [2008] 14 S.C.R. 63 · Decided: 01-10-2008 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2008] 14 S.C.R. 63 
\ 
B.M. MALANI 
A 
v. 
COMMR. OF INCOME TAX & ANR. 
(Civil Appeal No. 5950 of 2008) 
OCTOBER 01, 2008 
B 
[S.B. SINHA AND CYRIAC JOSEPH, JJ] 
). 
Income Tax Act, 1961 - s. 220 (2-A) - Waiver of interest 
payable by assessee - Non-deposit of tax by assessee - Levy 
of interest for non-payment of dues - Request by assessee to c 
the Authority to dispose of shares and securities seized from 
his premises to appropriate sale proceeds towards taxes but 
request not met with - Application for waiver of interest - Re-
jection of, by Commissioner of Income Tax as also High Court 
- On appeal, held: Statutory Authority on receipt of request of D 
assessee to sell his shares and securities should have taken 
some action - Compulsion to pay any unjust dues per se 
would cause hardship - Commissioner and High Court did 
not consider in its proper perspective whether default in pay-
ment of amount due to circumstances beyond control of as-
E 
sessee - However, said ground not available to assessee in 
respect of demand draft seized as he did not make any re-
quest- Thus, in the interests of justice order of High Court set 
aside and matter remitted to Commissioner for fresh consid-
eration. 
F 
'Genuine hardship' - Interpretation of - Held: 'Genuine 
hardship' means genuine difficulty - Principle of purposive 
construction is to be applied for determining whether any hard"' 
ship had been caused or not. 
Appellant was engaged in money lending business 
G 
-{ 
and was trading in shares and securities. Raid was con-
ducted in his residential premises and shares and secu-
rities worth market value of Rs. 61.38 lakhs and a demand 
draft of Rs. 10 lakhs in the name of P company were seized. 
63 
H 
64 
SUPREME COURT REPORTS 
[2008] 14 S.C.R. 
A The appellant-assessee was to pay tax. He requested the 
Income Tax Authorities to dispose of the s•eized shares 
and securities expeditiously and appropriate the sale pro-
ceeds towards taxes but the request was not met with. 
The Income Tax Department recovered Rs.40 lakhs from 
B the appellant. The Settlement Commission did not accept 
the income declared by the ,appellant and 1enhanced the 
amount of taxable income. Appellant filed application u/s. 
245C(1) of the Income Tax Act. The Settlement Commis-
sion passed an order dated 2.12.1999. The Department 
c encashed the demand draft which was seized. Thereaf-
ter, it levjed interest for a sum of Rs. 31,41,106/ for non-
payment of the dues u/s.220 (2) of the Act. The said 
amount was rectified to the extent of Rs.24,36,352/-. Ap-
pellant filed application u/s. 220 (2-A) for waiver of inter-
D est but the same were rejected. The Commissioner of In-
come Tax held that the appellant did not satisfy the con-
ditions required for allowing waiver application; and that 
the levy of interest did not cause genuine hardship to the . 
appellant. Writ petition filed thereagainst was also dis-
missed. Hence the present appeal. 
E 
Allowing the appeal and remitting the matter, the 
Court 
· 
HELD: 1.1 For interpretation of term genuine hard-
ship, the principle of purposive construction should be 
F 
resorted to. Levy of interest although is statutory in na-
ture, inter alia for re-compensating the revenue from loss 
suffered by non-deposit of tax by the assessee within the 
time specified therefor. The said principle should also be 
applied for the purpose of determining as to whether any 
G hardship had been caused or not. A genuine hardship 
would, inter alia, mean a. genuine difficulty. That per se 
would not lead to a conclusion that a person having large 
assets would never be in difficulty as he can ~ell those 
assets and pay the amount of interest levied. [Para 8] [7 4-
H B-C] 
(-
t, 
B.M. MALANI v. COMMR. OF INCOME 
65 
TAX &ANR. 
-\ 
New Collins Concise English Dictionary - referred to. 
A 
1.2 The ingredients of genuine hardship must be de-
termined keeping in view the dictionary meaning thereof 
and the legal conspectus attending thereto. For the said 
purpose, the well-known principle, namely, a person can-
B 
not take advantage of his own wrong, may also have to 
) 
be borne in mind. The said principle should be applied 
even in a case of this nature. A statutory authority despite 
receipt of such a request could have kept mum. It should 
.... 
have taken some action. It should have responded to the 
" 
prayer of the appellant to sell his shares and securities. c 
[Para 8] [7 4-D-F] 
Priyanka Overseas Pvt. Ltd. & Anr. v.

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