The Hindu : Business : Interest for belated payment

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Monday, Aug 06, 2007
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Interest for belated payment

Recently, I received a notice under Rule 5 for interest charged by the Tax Recovery Officer (TRO) . It is learnt that this interest is charged for belated payment. I learnt that there is another interest under Sec. 22

0(2), where waiver is possible. Now my doubt is, whether I can seek waiver of Rule 5 interest? The TRO states that he is governed by the second schedule of the Income-tax Act. According to him, there is no mention of waiver in the second schedule, so that waiver of Rule 5 interest is not possible. Is it correct? Is there any court ruling, official notification etc. to clarify in this regard. I may add that the tax arrears pertain to my deceased father. He has no permanent account number (PAN). I have a PAN in my name. If the waiver is not granted, I have decided to pay this interest as legal heir. It is ascertained from the assessing officer having jurisdiction that there are no arrears in my father’s name. Yet there are arrears in the form of Rule 5 interest in the TRO’s books. Can I pay this interest which arose out of my father’s tax arrears in my PAN number. The TRO insists that PAN should be obtained for my dead father. I think this suggestion is ridiculous.

It may be seen from a reading of Rule 5 that this charge of interest during the period in which tax was in arrears after certificate was issued to TRO is also in accordance with Sec. 220(2), so that waiver for such interest could be given by the Commissioner under Sec. 220(2A) if the following conditions are satisfied:

“(i) payment of such amount has caused or would cause genuine hardship to the assessee; (ii) default in payment of the amount on which interest has been paid or was payable under the said sub-section was due to circumstances beyond the control of the assessee; and (iii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him”.

It would, therefore, be seen that such waiver is possible subject to the above conditions.

The reader does not have to take advice on waiver from the TRO. He has no power of waiver, since it is only the Chief Commissioner or Commissioner who has such power. If the reader could make out a case after payment of the relevant tax, waiver can be requested. The reader should, however, ascertain the facts as regards the period of delay and the reason why the reader’s father was unable to pay tax in time to justify the claim for waiver.

As for the payment, there is no need to pay in reader’s PAN number. The best course is to ask for the challan from the TRO in the name in which the arrears stand, so that the demand gets cancelled. It is not necessary in law that Permanent Account Number (PAN) should be obtained before acceptance of the amount, though an application can be made for PA number in the name of the reader as legal representative of the estate of her deceased father. If the reader pays in her PA number, there is likelihood of the amount going to her credit with interest continuing in arrears with the reader only being entitled to refund, which is wrongly paid.

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