TMI Blog1989 (11) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ypertension Diabetes Meccitus" for the last four years, returns for the above said assessment years could not be filed in time. The Income-tax Officer, the second respondent, levied interest under section 139(8) and section 217 of the Income-tax Act, 1961, by his order dated November 20, 1987. On January 23, 1988, the petitioner filed a representation before the first respondent under section 273A of the Income-tax Act, praying for waiver of interest under section 139(8) and section 217 of the Incometax Act by the second respondent and for waiver of penalty leviable under section 271(1)(a) and section 273(l) of the said Act. It is stated that the returns were filed by the petitioner voluntarily and in good faith before any notice under section 139 or 148 of the Income-tax Act was issued and that he made a full and true disclosure of his income and fully co-operated with the Department and paid the entire tax on the income returned and assessed by the second respondent. The first respondent waived 50 per cent. of the penalty and interest for the assessment years 1983-84 to 1986-87 by his order dated September 21, 1988. This order is assailed in the writ petition. It is submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cent. reduction of interest/penalty. For these reasons, submits learned counsel, the impugned order is liable to be quashed and the petitioner is entitled to the writ prayed for. Sri Suryanarayana Murthy, learned standing counsel for the Revenue, on the other hand, contends that it is only when the conditions mentioned in section 273A are satisfied that the first respondent, Commissioner of Income-tax, gets jurisdiction to grant relief which is discretionary and that the petitioner cannot claim the same as a matter of right ; the very fact that 50 per cent. penalty/interest is waived by the impugned order shows that the Commissioner applied his mind and exercised his jurisdiction and that, in an order of this nature, the Commissioner is not bound to give reasons. In view of the submissions of learned counsel for the parties, two questions arise : 1. What is the scope of section 273A of the Income-tax Act, 1961 ? 2. Is the Commissioner bound to give reasons in an order passed under section 273A ; if so, whether the impugned order is bad in law ? It would be apt to read section 273A of the Income-tax Act, 1961, which is in the following terms: "273A. Power to reduce or wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thstanding anything contained in sub-section (1), (a) if in a case the penalty imposed or imposable under clause (i) of sub-section (1) of section 271 or the minimum penalty imposable under section 273 for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the aggregate of the penalty imposed or imposable under the said clause or of the minimum penalty imposable under the said section for those years, exceeds a sum of fifty thousand rupees, or (b) if in a case falling under clause (c) of sub-section (1) of section 271, the amount of income in respect of which the penalty is imposed or imposable for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the aggregate amount of such income for those years, exceeds a sum of five hundred thousand rupees, no order reducing or waiving the penalty under sub-section (1) shall be made by the Commissioner except with the previous approval of the Board. (3) Where an order has been made under sub-section (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Act in respect of the relevant assessment year. Certain limitations are imposed in sub-section (2) of section 273A but they are not relevant for our purpose here. Sub-section (3) provides that where the order has been made under sub-section (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section in relation to any other assessment year at any time after the making of such order. Subsection (4) gives an additional power which is without prejudice to the powers conferred on him by any other provisions of the Act to reduce or waive the amount of penalty payable by the assessee under this Act or stay or compound any proceeding for the recovery of any such amount. But this power can be exercised only on an application made by the assessee and after recording reasons for so doing. Before exercising the power under sub-section (4), he has to satisfy that to do otherwise would cause genuine hardship to the assessee having regard to the circumstances of the case and that the assessee has co-operated in any enquiry relating to the assessment or any proceeding for the recovery of any amount due f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which also arose under the Wealth-tax Act, the learned single judge of the Delhi High Court held that if the conditions mentioned in section 18(2A) are fulfilled, the Commissioner was bound to waive or reduce penalty. Madhukar Manilal Modi v. CWT [1978] 113 ITR 318 (Guj), also arose under the Wealth-tax Act. The question here was as to the exercise of jurisdiction by the Commissioner when the requirements of section 18(2A) of the Wealth-tax Act were satisfied. A Division Bench of the Gujarat High Court held that, where all the conditions laid down in the section are satisfied, the authority cannot refuse to exercise his discretion. In this case, the Commissioner declined to exercise the jurisdiction on the ground that the assessee filed the return for the relevant assessment year only after he was asked during the assessment proceedings for the previous year and, therefore, the return was not filed voluntarily. It was held that the filing of the return was voluntary and that as the conditions imposed by the section were satisfied, there was no option to the Commissioner to refuse to exercise the discretion. In Seetha Mahalakshmi Rice and Groundnut Oil Mill Contractors Co. v. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) of section 273A would show that the duty to record reasons is mentioned in sub-section (4) but there is no such duty cast in respect of an order passed under sub-section (1). But inasmuch as the function of the Commissioner exercising discretionary power under sub-section (1) is quasi-judicial, such a duty has to be implied having regard to the nature of the order that he is required to pass under sub-section (1). In Sardar Kartar Singh v. CWT [1982] 135 ITR 379 (Gauhati), the exercise of power under sections 18(1)(a) and 18(2A) of the Wealth-tax Act came up for consideration before the Gauhati High Court. A learned single judge of the Gauhati High Court held that, though section 18(2A) does not require a recording of reasons by the Commissioner for waiving the amount of penalty imposed or imposable under law the thinking of the authority has to find a place in the order as it provides a check on the arbitrary use of the power. Therefore, the Commissioner has to pass reasoned order. In that case, the assessee had filed his wealth-tax return late. The conditions imposed in the said sections were satisfied. The Commissioner restricted the penalty to 25 per cent. of the normal p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of the return was held to be voluntary and the Commissioner was directed to exercise his discretion under section 273A of the Act. Learned counsel also relied on a decision of the Calcutta High Court in CIT v. Hindusthan Sanitary Ware and Industries Ltd. [1989] 180 ITR 21 (Cal). In that case, the Income-tax Officer passed the order under section 216 without recording reasons. This case is relied upon to show that non-speaking order under section 216 is invalid and liable to be quashed. It was held thus (page 28) : "The authority who makes an order in exercise of a quasi-judicial function must record his reasons in support of the order it makes. The requirement of a speaking order cannot be dispensed with even when the authority has been vested with discretionary power." From the above discussion, the following principles emerge: (i) the discretion conferred on the Commissioner under section 273A is a quasi-judicial power and that has to be exercised judiciously, reasonably but not capriciously or arbitrarily, (ii) the conditions mentioned in sub-sections (1) and (4) of section 273A are the sine qua non for the exercise of discretionary power under that section, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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