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PETITIONER: KISHAN LAL

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT:       22/01/1998

BENCH: B.N. KIRPAL, S.P. KURDUKAR

ACT:

HEADNOTE:

JUDGMENT:                THE 22ND DAY OF JANUARY, 1998 Present:                Hon’ble Mr. Justice B.N Kirpal                Hon’ble MR. Justice S.P.Kurdukar H.N. Salve,  Sr. Adv.,  Vineet Kumar,  Bhaiyaji  Gupta,  Ms. Kiran Bhardhwaj,  Ms. Nina  Gupta, Ms. Arpita Roy Choddhury, Advs, with him for the appellant B.B.Ahuja, Sr.  Adv., G.Venkatesh  Rao,  C.  Radha  Krishna, B.K.Prasad, end  Ms. A.Subhashini,  Advs, with  him for  the Respondents.                          O R D E R      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  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 interest which  was   payable  should   be  reduced,  if  not  waived altogether. Reasons  for seeking  a  favourable  order  were contained in t he application.      The applicant received a letter date 29th January, 1087 whereby this 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 considering the application  filed by  you and  the report of CIT in the matter, the Board is of the view that the conditions as laid down in  section 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 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

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quasi judicial decision. If it is satisfied that the reasons contained in  the application  would bring  the  case  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 b  e 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 specking order. Principles of  natural   justice  in   this  regard  would  be  clearly 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 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 & Arn. (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  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 question sec.220(2A) was not applicable  as this  sub-section was  inserted after the demand was  raised. We  express no  opinion on this question because this  will be one of the matters which the authority concerned may  have to decide. With the amendment being made in sub-section  (2A) an application to waive of interest has now to be decided by the Chief Commissioner or Commissioner, as the case may be. We, accordingly, allow this appeal, s et aside the  order of  the High Court and of the Central Board of Direct  Taxes and  restore  the  appellant’s  application under sec.220  (2A) to the file of Chief Commissioner, Delhi and direct  that the  same should be disposed of at an early date in  accordance with  law. There  will be no order as to costs.