The Commissioner refused to waive the interest on my demand because I own property worth crores. Is owning assets an answer to genuine hardship?
No, not by itself. The Supreme Court set aside the High Court's judgment and remitted the waiver application to the Commissioner to be considered afresh. Genuine means real, not fake, not a ruse; genuine hardship means a genuine difficulty; and it does not follow that a person holding large assets can never be in difficulty merely because he could sell them and pay. The Court also held that the authority had to take into account what the assessee had actually offered to do - here, that he had asked the department to sell the securities it had seized and appropriate the proceeds towards his tax - and that the department's silence on that offer told against it.
Decided by the Supreme Court (Supreme Court of India; S.B. Sinha and Cyriac Joseph, JJ.) on 2008-10-01, reported as (2008) 306 ITR 196 (SC); (2008) 219 CTR 313; Civil Appeal No. 5950 of 2008, arising out of SLP (C) No. 4091 of 2007. It bears on section 220(2), section 220(2A), section 132, section 245D of the Income Tax Act 1961, in Demand, Recovery & Stay matters.
Waiver applications under s.220(2A) are refused on one sentence more often than any other: that the assessee owns assets and could sell them, so there is no hardship. This is the decision that says that sentence is not an answer. It also gives the practitioner the frame in which to write the application - three conditions, taken separately, with the assessee's own conduct and any unanswered offer to the department put squarely in issue. And because the words genuine hardship recur in s.119(2)(b), the same reasoning is what a reader needs when he is asking for a belated return or a belated refund claim to be admitted.
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The appellant carried on money-lending and share trading. In a raid in September 1994 the department seized shares of a market value of Rs 61.38 lakhs and a demand draft for Rs 10 lakhs. The appellant asked the department to sell the seized shares quickly and appropriate the proceeds towards his tax. It did not do so, though between January and March 1995 it recovered about Rs 40 lakhs. The department's answer to the request was that it could not sell the securities until the amount of tax was ascertainable. Proceedings before the Settlement Commission concluded on 2 December 1999. The Income-tax Officer then levied interest of Rs 31,41,106 under s.220(2). The appellant applied for waiver under s.220(2A). The Commissioner rejected the application by an order of 26 November 2002, holding that the appellant owned substantial assets, including property worth about Rs 2 crores, and therefore suffered no genuine hardship. The High Court dismissed the writ petition on 27 July 2006. The appellant came to the Supreme Court by special leave.
The appeal was allowed to the extent indicated. The impugned judgment was set aside and the matter remitted to the Commissioner of Income Tax for consideration afresh. No costs. On the substance, the Court held that the expression genuine hardship in s.220(2A) requires a purposive construction; that genuine means not fake or counterfeit, real, not pretending; that a genuine hardship means a genuine difficulty; and that it does not follow from a person holding large assets that he would never be in difficulty on the footing that he could sell them and pay the interest. The Court also held that the authorities below had ignored the appellant's voluntary offer to have the seized securities sold and the department's unexplained silence on it, and that the department's own reason for not selling - that the tax was not yet ascertainable - cut both ways and had to be weighed in the assessee's favour on the hardship question as well.
The Court read s.220(2A) as conferring a discretion that is conditioned on three matters being satisfied together: that payment of the amount has caused or would cause genuine hardship to the assessee, that the default in payment was due to circumstances beyond his control, and that he has co-operated in any inquiry relating to the assessment or in any proceeding for recovery of any amount due from him. It then construed the word genuine, taking the dictionary meaning and applying it to the statutory context rather than treating hardship as a purely financial test. The Commissioner's reasoning had been that a man with assets is not in hardship because he can realise them; the Court held that this does not follow. It added that compulsion to pay any unjust dues per se would cause hardship, which locates the hardship enquiry in the justice of the demand and not only in the assessee's liquidity. On the facts, the decisive matter was what the department had not done. The appellant had asked it to sell the securities it held and appropriate the proceeds; it did not, and it did not explain why, beyond saying the tax was not ascertainable. That reason, the Court held, applied equally to the hardship enquiry, and the courts below had ignored the reciprocal effect of it. The voluntary nature of the offer ought to have been considered seriously by the authorities. Because it had not been, the right course was not to decide the waiver itself but to send it back.
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 sell those assets and pay the amount of interest levied.
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Handle my notice → Ask a CA on WhatsAppNo, not by itself. The Supreme Court set aside the High Court's judgment and remitted the waiver application to the Commissioner to be considered afresh. Genuine means real, not fake, not a ruse; genuine hardship means a genuine difficulty; and it does not follow that a person holding large assets can never be in difficulty merely because he could sell them and pay. The Court also held that the authority had to take into account what the assessee had actually offered to do - here, that he had asked the department to sell the securities it had seized and appropriate the proceeds towards his tax - and that the department's silence on that offer told against it. This was decided by the Supreme Court (Supreme Court of India; S.B. Sinha and Cyriac Joseph, JJ.) and bears on section 220(2), section 220(2A), section 132, section 245D of the Income Tax Act 1961. It is reported as (2008) 306 ITR 196 (SC); (2008) 219 CTR 313; Civil Appeal No. 5950 of 2008, arising out of SLP (C) No. 4091 of 2007. Waiver applications under s.220(2A) are refused on one sentence more often than any other: that the assessee owns assets and could sell them, so there is no hardship. This is the decision that says that sentence is not an answer. It also gives the practitioner the frame in which to write the application - three conditions, taken separately, with the assessee's own conduct and any unanswered offer to the department put squarely in issue. And because the words genuine hardship recur in s.119(2)(b), the same reasoning is what a reader needs when he is asking for a belated return or a belated refund claim to be admitted. If it applies to you, the first step is this: Put the three statutory conditions in your application in the order the section puts them, and answer each separately - genuine hardship, default due to circumstances beyond your control, and co-operation in the inquiry or the recovery proceeding. An order that deals with one and ignores the others is vulnerable.
The appellant carried on money-lending and share trading. In a raid in September 1994 the department seized shares of a market value of Rs 61.38 lakhs and a demand draft for Rs 10 lakhs. The appellant asked the department to sell the seized shares quickly and appropriate the proceeds towards his tax. It did not do so, though between January and March 1995 it recovered about Rs 40 lakhs. The department's answer to the request was that it could not sell the securities until the amount of tax was ascertainable. Proceedings before the Settlement Commission concluded on 2 December 1999. The Income-tax Officer then levied interest of Rs 31,41,106 under s.220(2). The appellant applied for waiver under s.220(2A). The Commissioner rejected the application by an order of 26 November 2002, holding that the appellant owned substantial assets, including property worth about Rs 2 crores, and therefore suffered no genuine hardship. The High Court dismissed the writ petition on 27 July 2006. The appellant came to the Supreme Court by special leave. The matter was decided on 2008-10-01 by the Supreme Court (Supreme Court of India; S.B. Sinha and Cyriac Joseph, JJ.). On those facts the Supreme Court held as follows. The appeal was allowed to the extent indicated. The impugned judgment was set aside and the matter remitted to the Commissioner of Income Tax for consideration afresh. No costs. On the substance, the Court held that the expression genuine hardship in s.220(2A) requires a purposive construction; that genuine means not fake or counterfeit, real, not pretending; that a genuine hardship means a genuine difficulty; and that it does not follow from a person holding large assets that he would never be in difficulty on the footing that he could sell them and pay the interest. The Court also held that the authorities below had ignored the appellant's voluntary offer to have the seized securities sold and the department's unexplained silence on it, and that the department's own reason for not selling - that the tax was not yet ascertainable - cut both ways and had to be weighed in the assessee's favour on the hardship question as well.
The Court read s.220(2A) as conferring a discretion that is conditioned on three matters being satisfied together: that payment of the amount has caused or would cause genuine hardship to the assessee, that the default in payment was due to circumstances beyond his control, and that he has co-operated in any inquiry relating to the assessment or in any proceeding for recovery of any amount due from him. It then construed the word genuine, taking the dictionary meaning and applying it to the statutory context rather than treating hardship as a purely financial test. The Commissioner's reasoning had been that a man with assets is not in hardship because he can realise them; the Court held that this does not follow. It added that compulsion to pay any unjust dues per se would cause hardship, which locates the hardship enquiry in the justice of the demand and not only in the assessee's liquidity. On the facts, the decisive matter was what the department had not done. The appellant had asked it to sell the securities it held and appropriate the proceeds; it did not, and it did not explain why, beyond saying the tax was not ascertainable. That reason, the Court held, applied equally to the hardship enquiry, and the courts below had ignored the reciprocal effect of it. The voluntary nature of the offer ought to have been considered seriously by the authorities. Because it had not been, the right course was not to decide the waiver itself but to send it back. In the words reproduced by the source cited on this page: "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 sell those assets and pay the amount of interest levied." The decision followed or applied M/s. TCV Engineering Ltd v. ACIT (Madras High Court, 13 November 2018) - applied, reproducing the dictionary passage and the large-assets passage; Dr. (Smt.) Sujatha Ramesh v. CBDT (Karnataka High Court, 24 October 2017) - applied to an application for condonation of delay under s.119(2)(b).
It was decided by the Supreme Court on 2008-10-01 and is reported as (2008) 306 ITR 196 (SC); (2008) 219 CTR 313; Civil Appeal No. 5950 of 2008, arising out of SLP (C) No. 4091 of 2007. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 220(2), section 220(2A), section 132, section 245D, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed to the extent indicated. The impugned judgment was set aside and the matter remitted to the Commissioner of Income Tax for consideration afresh. No costs. On the substance, the Court held that the expression genuine hardship in s.220(2A) requires a purposive construction; that genuine means not fake or counterfeit, real, not pretending; that a genuine hardship means a genuine difficulty; and that it does not follow from a person holding large assets that he would never be in difficulty on the footing that he could sell them and pay the interest. The Court also held that the authorities below had ignored the appellant's voluntary offer to have the seized securities sold and the department's unexplained silence on it, and that the department's own reason for not selling - that the tax was not yet ascertainable - cut both ways and had to be weighed in the assessee's favour on the hardship question as well. It arises in Demand, Recovery & Stay matters, on section 220(2), section 220(2A), section 132, section 245D of the Income Tax Act 1961, and was decided by Supreme Court of India; S.B. Sinha and Cyriac Joseph, JJ.. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the department holds anything of yours - seized assets, attached securities, a deposit - record in writing what you asked it to do with them and when. An unanswered offer to have seized assets sold and appropriated is the strongest single fact in this case. Do not let the officer reduce the hardship question to a balance sheet. The answer to 'you own assets' is that the Supreme Court has said in terms that owning assets does not mean a person can never be in difficulty. Where you say the demand itself is unjust, say so under this head too: the Court's words are that compulsion to pay any unjust dues per se would cause hardship. Ask for a speaking order. The remedy when the Commissioner does not engage with the material is a writ to have the application reconsidered, which is what the Supreme Court ordered here, not a fresh application.
Still good law. This is the governing Supreme Court authority on genuine hardship and it is applied constantly, by High Courts across the country and from within a few years of the decision to the present. The Madras High Court in M/s. TCV Engineering Ltd v. ACIT (13 November 2018) reproduces the dictionary passage and the large-assets passage word for word and applies them to a refusal of waiver. The Karnataka High Court in Dr. (Smt.) Sujatha Ramesh v. CBDT (24 October 2017) reproduces the same two passages and applies them to an application for condonation of delay under s.119(2)(b). Nothing overruling, doubting or narrowing it was found. That second decision shows how far the construction reaches: the words genuine hardship appear in s.119(2)(b) as well, and courts hearing condonation applications under that provision decide them on this case, which is why it matters to far more readers than the small number of waiver applications would suggest. Two things to keep in view. First, the decision does not decide that the appellant was entitled to waiver; it decides that the Commissioner had not addressed the question properly and must do so again, and an order following it should be read for what it requires the authority to consider, not for a result. Second, the 1 April 2026 boundary. The Income-tax Act, 1961 was repealed on that date by s.536(1) of the Income-tax Act, 2025, but s.536(2)(c) continues it for proceedings in respect of any tax year beginning before 1 April 2026, so a waiver application on interest for such a year is still decided under s.220(2A) and this decision still governs it. The corresponding provision in the 2025 Act is not stated here because it was not established on the department's own page for the section. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Read in full on its own address, indiankanoon.org/doc/823815, twice and on different questions, and cross-checked against a court document that has nothing to do with Indian Kanoon's rendering of it: the Madras High Court judgment in M/s. TCV Engineering Ltd v. ACIT of 13 November 2018, W.P. Nos. 4155 and 4156 of 2004, which reproduces the dictionary passage and the large-assets passage inside quotation marks and gives the citation as (2008) 219 CTR 313 and (2008) 306 ITR 196 and the appeal number as Civil Appeal No. 5950 of 2008. The primary text and the cross-check agree exactly. Three matters of detail a reader should carry. First, on the shape of the order: the operative words are that the impugned judgment is set aside, that the matter is remitted to the Commissioner of Income Tax for consideration afresh, that the appeal is allowed to that extent, and that there are no costs. It is a remand and not a waiver, and it should never be cited as though the Supreme Court granted relief on the merits. Second, on the facts, which carry more weight than the law here: the appellant did not merely plead poverty, he had asked the department to sell what it had already seized from him and appropriate the proceeds, and the department neither did so nor explained why. The Court's point is that the reason the department gave for not selling - that the tax was not yet ascertainable - is a reason that works against it when the same period is looked at through the hardship question. An application that has no equivalent fact in it is a weaker application than this one. Third, on the sections listed with this entry: s.132 and s.245D appear because the seizure and the Settlement Commission proceedings are part of the narrative the Court relies on, not because the judgment construes either provision. It construes s.220(2A) and nothing else. The interest in dispute, Rs 31,41,106, was levied under s.220(2) after the Settlement Commission proceedings concluded on 2 December 1999, and the Commissioner's refusal is dated 26 November 2002 - dates worth noting because the gap between demand and waiver order is itself often the hardship. One last point on citation. The case is often cited simply as Malani; there is an unrelated Supreme Court decision of 11 October 2007, Administrator, Unit Trust of India v. B.M. Malani, and a reader searching by surname alone will meet it first. The tax decision is the one of 1 October 2008. The Court did not decide whether this appellant was entitled to waiver, and nothing in the judgment says he was. It sent the application back. It does not lay down what quantum of assets, or what ratio of assets to demand, would or would not amount to hardship, and it gives no test beyond the words genuine difficulty. It does not deal with the second and third statutory conditions on their own terms: the whole of the discussion is on hardship, and a reader whose problem is whether his default was due to circumstances beyond his control, or whether he co-operated, will not find the answer here. It does not decide whether the department was obliged to sell the seized securities when asked, only that its failure to answer the request was a matter the Commissioner had to weigh. It says nothing about the rate of interest under s.220(2), nothing about partial waiver as against full waiver, and nothing about whether a fresh application may be made after a refusal. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed to the extent indicated. The impugned judgment was set aside and the matter remitted to the Commissioner of Income Tax for consideration afresh. No costs. On the substance, the Court held that the expression genuine hardship in s.220(2A) requires a purposive construction; that genuine means not fake or counterfeit, real, not pretending; that a genuine hardship means a genuine difficulty; and that it does not follow from a person holding large assets that he would never be in difficulty on the footing that he could sell them and pay the interest. The Court also held that the authorities below had ignored the appellant's voluntary offer to have the seized securities sold and the department's unexplained silence on it, and that the department's own reason for not selling - that the tax was not yet ascertainable - cut both ways and had to be weighed in the assessee's favour on the hardship question as well.
TaxSphere, “B.M. Malani v CIT”, https://taxnotice.vittsphere.com/caselaw/case/bm-malani-v-cit-genuine-hardship-under-section-220-2a/ (validity last checked 2026-09-23)
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