TMI Blog1993 (11) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... for the years 1975-76 and 1976-77 in time but the same were voluntarily filed by it for both the years, prior to the issuance of the notice under sub-section (2) of section 139 of the Act. It is further the case of the petitioner that for both the years, a full and true disclosure of the income was made and the petitioner had also paid tax on the income so disclosed. The Income-tax Officer, Ward 'C', Kota, who completed the assessment on January 17, 1980, issued a notice under sections 274/271(1)(a) and 273 of the Act, to the petitioner for both the years. The petitioner filed objections before the respondent under section 273A of the Act, seeking waiver of interest charged under sections 139(8) and 217 of the Act and penalties leviable under sections 271(1)(a) and 273 of the Act. Separate petitions to this effect were filed by the petitioner for the years 1975-76 and 1976-77, whereupon the petitions filed by the petitioner for both the years were decided by the common order dated January 14, 1981, whereby interest and penalties were reduced for both the years to the extent mentioned and indicated in the impugned order, against the respective years. It is against this common ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee under section 273A and no notice under section 271(1)(c) was issued by the Income-tax Officer and it was held by the Commissioner of Income-tax that the disclosure made was full and complete. The assessee had filed returns of his income on March 31, 1979, and March 21, 1979, for the assessment years 1975-76 and 1976-77, respectively. Thus, there was a delay of about 45 and 33 months in the filing of returns for the two years, respectively. Disallowance of Rs. 3,600 in each of the two years had also been made by the Income-tax Officer out of the salary payments treating the same to be not incidental to the business of the assessee and thus, interest and penalties were reduced as mentioned and indicated against each of the two years in the impugned order dated January 14, 1981, passed by the Commissioner of Income-tax, Jaipur. It would thus appear that in the instant case, the requirement of section 273A of the Act, i.e., the filing of the return prior to the detection by the Assessing Officer and prior to the issue of the notice under section 271(1)(c) of the Act were found to be satisfied. Shri Ranka has argued that once the requirements under section 273A are fully satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may meet the ends of justice. In Rohitkumar and Co. v. F. J. Bahadur, CIT [1991] 190 ITR 93, the Bombay High Court has taken the view that once the conditions required for exercise of discretion in any judicial or quasi-judicial proceedings are satisfied, exercise of discretion cannot be either arbitrary or capricious and has to be judicious and objective ; when power is given to a public authority for being used for the benefit of a class of persons and the conditions precedent for the exercise are well defined, there is a duty to exercise such power and, on failure to perform that duty, courts are not only empowered but are duty-bound to interfere and that section 273A confers a discretion on the Commissioner of Income-tax to waive or reduce penalty and interest and such conditions are necessarily referred to in clauses (b) and (c) of that section and making of a full and true disclosure of income voluntarily and in good faith is the common factor. Thus, the ratio of the various decisions as aforesaid, which have been cited before me by Shri N. M. Ranka, is that the power under section 273A to reduce or waive the amount of interest and penalties is undoubtedly discretionary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (1) on or before the 24th day of July, 1991, such person shall be entitled to further relief only once in relation to other assessment year or years if he makes an application to the income-tax authority referred to in sub-section (4) at any time before the 1st day of April, 1992. (4) Without prejudice to the powers conferred on him by any other provision of this Act, the Chief Commissioner or Commissioner may, on an application made in this behalf by an assessee, and after recording his reasons for so doing, reduce or waive the amount of any penalty payable by the assessee under this Act or stay or compound any proceeding for the recovery of any such amount, if he is satisfied that (i) to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case ; and (ii) the assessee has co-operated in any enquiry relating to the assessment or 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 waiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d penalties under section 273A has to take a decision by exercising his discretion judiciously and objectively. However, the question raised by Shri N. M. Ranka has not been dealt with and does not stand answered by any of the authorities as aforesaid and this court is called upon to consider that, in a given case, if the Commissioner comes to the conclusion that all the requirements prescribed under section 273A and all the conditions which could be conceived within the scope of the terms used in section 273A are fulfilled, in such a case, whether it should still be left open to the Commissioner not to grant waiver and exercise his discretion to the extent of reducing the amount of interest and penalties. When all the ingredients of full and true disclosure, voluntary filing of the return, good faith, co-operation in any enquiry are co-existing and yet the waiver is denied and the discretion is exercised only to the extent of reducing the amount of interest and penalties, the question arises as to which will be those cases in which the discretion will be exercised so as to grant complete waiver. Thus, it has to be considered as to what should be the guidelines to regulate the exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 273A are satisfied, the norms to be applied for the purpose of full waiver of the penalty are different from the norms for the full waiver of the amount of interest. In case the amount of penalty is to be waived completely it should be so waived in the normal course subject to the fulfilment of all the conditions under section 273A when there is a bona fide mistake on the part of the assessee and in such a case if at all full waiver is not granted, it is for the Commissioner of Income-tax to give reasons for not granting full waiver but for the purpose of deciding the question of waiver of interest, it is the assessee who has to show particular reasons as to why the amount of interest should be waived in full. Accordingly, I hold that in the case of a bona fide mistake when all the conditions of section 273A are satisfied, the grant of complete and full waiver of penalty should be the rule and the denial of full waiver and grant of reduction or partial waiver should be an exception for cogent and germane reasons to be recorded by the Commissioner of Income-tax; whereas on the question of interest, the full and complete waiver of the amount of interest should not be granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he years were filed voluntarily; (ii) that all the taxes had been paid ; (iii) that the assessee had co-operated with the Department in the completion of the assessment ; (iv) that this was the first application filed by the assessee under section 273 ; and (v) that no notice under section 271(1)(c) was issued by the Income-tax Officer. He has thus held that the disclosure made was full and final. In paragraph 3, he has recorded that there was a delay of 45 and 33 months in the filing of the returns for the two years, respectively, and that for each of the two years, disallowance of Rs. 3,600 had been made by the Income-tax Officer out of the salary payments treating the same to be not incidental to the business of the assessee, and then he proceeded to say that keeping in view all the facts of the case, the amount of interest and penalty is reduced as indicated against each of the years in the latter part of the said order. Thus a para-wise analysis of the order shows that the Commissioner of Income-tax had noted the ingredients provided under section 273A of the Act but he has not given any reasons as to why full waiver of the penalty has not been granted nor has he giv ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
