KISHAN LAL versus UNION OF INDIA AND ANR

Citation: [1998] 1 S.C.R. 320 · Decided: 22-01-1998 · Supreme Court of India · Bench: B.N. KIRPAL · Disposal: Appeal(s) allowed
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Judgment (excerpt)

/ , , 
,\ 
A 
KISHAN LAL 
"-
v. 
UNION OF INDIA AND ANR 
JANUARY 22, 1998 
' 
B 
[B.N. K!RPAL AND S.P. KURDUKAR, JJ.] 
--4or 
Income Tax Act, 1961 : 
S. 220(2A)-Application for reducing the interest levied for default in 
c payment of tax within time-Decision on-Held, is subject to judicial review--
It would be imperative that reasons are given by authority concerned while 
disposing of the application-Assessee 's application restored to file of Chief 
Commissioner, Delhi for disposal in accordance with law. 
The Siemens Engineering and Manufacturing Co. of India Ltd. v. Union 
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D of India & Anr., [1976) 2 SCC 981, relied on. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1386 (NT) 
of 1987. 
From the Judgment and Order dated 10.4.87 of the Delhi High Court in 
E C.W.P. No. 994 of I987. 
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H.N. Salve, Vineet Kumar, Bhaiyaji Gupta, Ms. Kiran Bhardhwaj, Ms. 
Nina Gupta and Ms. Arpita Roy Chodhury for the appellant. 
B.B. Ahuja, G. Venkatesh Rao, C. Radha Krishna, B.K. Prasad and Ms. 
F A. Subhashini for the Respondents. 
~ 
... 
The following Order of the Court was delivered : 
Heard learned counsel for the parties. In the instant case interest was 
sought to be levied on the appellant under sec. 220(2) of the Income-Tax Act 
G on account of default having been committed by the appellant in payment of 
Income Tax within time. In order to avoid this levy, the appellant filed an 
--<'. 
application under sub-section (2-A) of sec.220 before the Central Board. of 
Direct Taxes, inter-alia, stating facts and reasons as to why the amount of 
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interest which was payable should be reduced, if not waived altogether. 
,. 
H Reasons for seeking a favourable order were contained in the application. 
320 
Kl SHAN LAL v. U.0.1 
321 
The appellant received a letter dated 29th January, I 987 whereby this A 
application was rejected. The said letter reads as follows:-
"Please refer to your petition dated nil and further petition dated 24.11.86 
on the subject mentioned above. The matter has been examined by the Board. 
After considering the application filed by you and the report of CJT in the 
matter, the Board is of the view that the conditions as laid down in section B 
220(2A) are not satisfied in your case and hence regrets its inability to 
interfere in the matter." 
A writ petition under Art. 226 of the Constitution was then filed in the 
High Court of Delhi and it was contended that while rejecting the application 
the Central Board of Direct Taxes had given no reasons. The High Court C 
observed, while dismissing the Writ Petition, that the order of the CBDT could 
not be said to be vitiated for this reason. 
When an application is filed under sub-section (2A) of Sec. 220 the 
authority concerned is called upon to take a quasi judicial decision. If it is 
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satisfied that the reasons contained in the application would bring the case D 
under Clauses (i) (ii) and (iii) of sec.220 (2A) then it has the power either to 
reduce or waive the amount of interest. Even though in the said sub-section 
it is not stated that any reasons are to be recorded in the order deciding such 
an application, it appears to us that it is implicit in the said provision that 
whenever such an application is filed the same should be decided by a 
speaking order. Principles of natural justice in this regard would be clearly E 
applicable. It will be seen that a decision which is taken by the authority. 
under sec.220 (2A) can be subjected to judicial review, as was sought to be 
done in the present case by filing a petition under Art. 226, this being so and 
where the decision of the application may have repercussion with regard to 
the amount of interest which an assessee is required to pay it would be p 
imperative that some reasons are given by the authority while disposing of 
the application. Mr. Salve, the learned senior counsel for the appellant has 
strongly relied upon the observations of this Court in The Siemens Engineering 
and Manufacturing Co. of India Ltd. v. Union of India & Anr., [ 1976] 2 SCC 
981 where at page 986 it has been stated that where an authority makes an 
order in exercise of its quasi judicial function it must .record its reasons in G 
support of the order it makes. In other words, every quasi judicial order must 
be supported by reasons. In our opinion, the observations in that case would 
apply in the present case also. 
We may here note the contention of Mr. Ahuja that in respect of the 
assessment year in questi
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