1997 (11) TMI 44 - HC - Income Tax

Issues Involved:
1. Voluntariness of the disclosure made by the petitioner.
2. Existence of an alleged agreement or assurance regarding waiver of interest and penalties.
3. Judicial discretion exercised by the Commissioner under Section 273A of the Income-tax Act, 1961.
4. Jurisdiction of the High Court under Article 226 of the Constitution of India.

Detailed Analysis:

1. Voluntariness of the Disclosure Made by the Petitioner:
The petitioner filed a revised return on March 7, 1989, declaring an income of Rs. 1,95,640, up from Rs. 12,000 initially declared. This revised return included Rs. 1,90,000 as income from other sources, which the petitioner claimed was voluntarily surrendered to cover disputed donations. However, the Commissioner, relying on the Allahabad High Court decision in Hakam Singh v. CIT [1980] 124 ITR 228, concluded that the disclosure was not voluntary. The Commissioner noted that investigations into the trust's donations had started as early as June 1988, and the revised return was filed only after these investigations had revealed irregularities. The court held that the revised return filed under constraint of exposure or likelihood of adverse action could not be deemed voluntary.

2. Existence of an Alleged Agreement or Assurance Regarding Waiver of Interest and Penalties:
The petitioner claimed that an agreement was reached with the tax authorities, wherein it was agreed that penalties and interest would be waived or reduced. This claim was supported by an affidavit from the petitioner's Chartered Accountant, Mr. T. C. Jain. However, the respondents, supported by the affidavit of Mr. G. C. Bansal, Income-tax Officer, denied the existence of any such agreement. The court determined that this was a disputed issue of fact, which could not be resolved under its writ jurisdiction.

3. Judicial Discretion Exercised by the Commissioner Under Section 273A of the Income-tax Act, 1961:
Section 273A of the Act allows the Commissioner to reduce or waive penalties and interest if the disclosure is made voluntarily and in good faith. The Commissioner must also be satisfied that the assessee has cooperated with the tax authorities. The court noted that the Commissioner had exercised his discretion judiciously and had given due consideration to all relevant facts, including the affidavit of Mr. T. C. Jain. The Commissioner concluded that the disclosure was not voluntary and that the petitioner had not acted in good faith. The court found no reason to interfere with this finding, as it was based on a fair appreciation of the evidence.

4. Jurisdiction of the High Court Under Article 226 of the Constitution of India:
The court emphasized that its jurisdiction under Article 226 is not to act as an appellate or revisional authority. It can only interfere if the decision is violative of fundamental rights, against principles of natural justice, or patently wrong on facts or law. The court found that the Commissioner's order did not suffer from any such vices. The assessment of tax is a quasi-judicial procedure, and certiorari or prohibition may issue in appropriate cases. However, the court held that it should not interfere where disputed facts need investigation or where the income-tax authorities' decision is within their jurisdiction and not violative of fundamental rights or natural justice.

Conclusion:
The court dismissed the petition, holding that the Commissioner had exercised his discretion under Section 273A in a judicial and judicious manner. The petitioner's revised return was not voluntary, and the claim of an agreement regarding waiver of interest and penalties was a disputed fact not suitable for resolution under writ jurisdiction. The petition was found to be misconceived and without merit, resulting in its dismissal with costs of Rs. 2,500.

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