TMI Blog1990 (7) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... late filing of returns for each of these years by order dated March 25, 1980. According to the petitioner, due regard was not given to the facts pointed out on behalf of the petitioner. Later, the petitioner made an application under section 18B of the Act for relief in respect of the penalties not only for the aforesaid years but also for earlier years 1967-68 to 1969-70. The Commissioner of Wealth-tax, Patiala, passed an order on January 14, 1986, on this application. In it, the Commissioner said that: "On a consideration of the circumstances of the case, the inheritance by the assessee, his background and the fact that, except for the assessment years 1970-71 and 1971-72, no notices were served on the assessee, I consider that the assessee is entitled to relief under section 18B of the Wealth-tax Act for the other years. However, in view of the circumstances and specially the fact that initially the assessee failed to make ... I hold that he is not entitled to full waiver of the penalty levied on him. The penalty levied will be reduced to 1 % of the amount levied/leviable . . . " The result of this order was that there was no relief granted to the petitioner in respect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net wealth, and (b) in the case referred to in clause (ii), has, prior to the detection by the Assessing Officer, of the concealment of particulars of assets or of the inaccuracy of particulars furnished in respect of any asset or debt in respect of which the penalty is imposable, voluntarily and in good faith made full and true disclosure of such particulars, and also has co-operated in any inquiry relating to the assessment of his net wealth and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year. Explanation. -For the purposes of this sub- section, a person shall be deemed to have made full and true disclosure of the particulars of his assets or debts in any case where the excess of net wealth assessed over the net wealth returned is of such a nature as not to attract the provisions of clause (c) of sub-section (1) of section 18. (2) Notwithstanding anything contained in sub-section (1), if in case falling under clause (c) of sub-section (1) of section 18, the net wealth in respect of which the penalty is imposed or imposable for the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only to reduction or waiver of the amount of penalty payable by the assessee but extends also to stay or to compound any proceeding for the recovery of any such amount after recording reasons therefor, if he is satisfied that to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case, provided the assessee has co-operated-in the enquiry relating to the assessment or in any proceeding for the recovery of any amount due from him. Quite clearly, the scope of the power conferred under sub-section (4) is wider than that conferred by sub-section (1) of section 18B, provided the circumstances contemplated by sub-section (4) for grant of relief exist to the satisfaction of the Commissioner. The power under sub-section (4), on the language used therein, can be exercised even at the stage when the amount of penalty imposed upon the assessee is in the process of being recovered. After the passing of the Taxation Laws (Amendment) Act, 1975, Circular No. 179 dated September 30, 1975, was issued by the Director, Central Board of Direct Taxes. It describes the subject of the circular to be explanatory notes on the provisions coming into force w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (c) in the cases referred to in clause (iii), has, prior to the issue of a notice to him under sub-section (2) of section 139, or where no such notice has been issued and the period for the issue of such notice has expired, prior to the issue of notice to him under section 148, voluntarily and in good faith made full and true disclosure of his income and has paid the tax on the income so disclosed, and also has, in all the cases referred to in clauses (a), (b) and (c), co-operated in any enquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year. Explanation 1. -For the purposes of this sub-section, a person shall be deemed to have made full and true disclosure of his income or of the particulars relating thereto in any case where the excess of income assessed over the income returned is of such a nature as not to attract the provisions of clause (c) of sub-section (1) of section 271., Explanation 2. -Where any books of account, other documents, money, bullion, jewellery or other valuable art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any proceeding for the recovery of any amount due from him : Provided that where the amount of any penalty payable under this Act or, where such application relates to more than one penalty, the aggregate amount of such penalties exceeds one hundred thousand rupees, no order reducing or waiving the amount or compounding any proceeding for its recovery under this sub-section shall be made by the Commissioner except with the previous approval of the Board. (5) Every order made under this section shall be final and shall not be called into question by any court or any other authority." The language in which sub-section (3) and sub-section (4) of section 273A are couched is identical with the language of section 18B(3) and (4), except the proviso which is found in sub-section (4) of section 273A. In the relevant part, paragraphs 31 and 32 of the circular says that : "31. The Amending Act has deleted the existing sub-sections (4A) and (4B) of section 271 of the Income-tax Act relating to powers of the Commissioner to reduce or waive penalty in certain cases and re-enacted these provisions, with several modifications, in new section 273A. The main points of difference between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is found to have co-operated in the proceedings and it is felt by the Commissioner that continuing with realisation of the amount of penalty from him would result in great hardship to the assessee. The intention of Parliament in enacting sub-section (4) was clear. It wanted to vest the Commissioner with greater discretion in extending relief to an assessee who was found to have co-operated in the enquiry relating to assessment or proceedings for recovery of the amount due from him but who was likely to face genuine hardship in case the amount was sought to be recovered from him further. What is clear, therefore, from the language in which sub-section (1) and sub-section (4) of section 273A of the Income-tax Act or section 18B(1) and section 18B(4) of the Wealth-tax Act are couched is that the further discretion contemplated under subsection (4) was to be in addition to and not in substitution of the power contemplated in the matter for the Commissioner under subsection (1). If the contents of the power under both the sub-sections were to be treated as in substitution of each other, the enactment of one of the two sub-sections would amount to an exercise in redundancy. Such action o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 18B of the Act and section 273A of the Income-tax Act was to enlarge the powers of the Commissioner in the matter of grant of relief to an assessee regarding the amount of penalty. This is how the Department understood the contents of these provisions. Their understanding was clearly consistent with the avowed object with which greater powers for grant of relief in the matter of penalty were being conferred on the Commissioner by these provisions, particularly those contained in sub-section (4). The interpretation of the Central Board of Direct Taxes can be considered only as an aid to understanding the intention of Parliament in enacting, in particular, sub-section (4). Such an interpretation is permissible, as is clear from the decision of the Supreme Court in Desh Bandhu Gupta and Co. v. Delhi Stock Exchange Association Ltd. [1980] 50 Comp Cas 84; AIR 1979 SC 1049, wherein the Supreme Court took note of a press statement or press note which had been issued by the Finance Ministry immediately upon the issue of the notification in question for coming to a conclusion as to the nature of contracts which were to be considered as being covered by the notification issued u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions contained in Chapter IV of the Motor Vehicles Act, 1939, to run its buses or the Government could also resort to other provisions of the Act for it. If a literal interpretation of sub-section (3) of section 18B, as suggested on behalf of the Revenue, is accepted, it would lead to a manifestly absurd result which could not have been intended by the Legislature. It would make exercise of power under sub-section (4) impossible and render it otiose in case an assessee had approached the Commissioner for relief under sub-section (1) earlier. A prayer for reduction or waiver of the amount of penalty can be sought under sub-section (1) where the amount of penalty may either have been imposed or may even be imposable. Under sub-section (4), a prayer can be made for its reduction or waiver when the penalty has become payable or for its stay or compounding of the proceeding for the recovery of an amount of penalty already imposed is going on. If the rule contained in sub-section (3) is held applicable even in respect of exercise of power under sub-section (4), the result that would follow would clearly negate the existence of the power in the Commissioner to grant relief under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pages 339-340) : ... We should find out the intention from the language used by the Legislature and if strict literal construction leads to an absurd result, i.e., a result not intended to be subserved by the object of the legislation found in the manner indicated before, then if another construction is possible apart from the strict, literal construction, then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. Further more, in the instant case, we are dealing with an artificial liability created for counteracting the effect only of attempts by the assessee to reduce tax liability by transfer . . . " In this respect, taxing statutes are not different from other statutes. In Attorney-General v. Carlton Bank [1899] 2 QB 158, Lord Russel of Killowen C. J. said (at p. 164) : "I see no reason why special canons of construction should be applied to any Act of Parliament, and I know of no authority for saying that a t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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