9911796707
TMI Blog1990 (8) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 1987-88 showing her total income to be Rs. 17,691 which was assessed under section 143(1) of the Income-tax Act on August 31, 1987. Then, on January 12, 1988, the aforesaid search and seizure was carried out at the residence of Shri Kalianmal Jain who happened to be the petitioner's father and certain documents were seized. Some of the documents seized disclosed that certain gifts were received by the assessee through Nathulal, petitioner, in Writ Petition No. 4625 of 1989, Miss Sapna, daughter of Nathulal's brother, Shri Mahaveer Kumar and Smt. Ramjanki Devi, widowed sister of Nathulal. The gifts received which were shown in the documents were as under : ------------------------------------------------------------------------------------------------------------------------------------------------- Sl. No. Name and address Name and address Amount Particulars of gift of donee of donor ------------------------------------------------------------------------------------------------------------------------------------------------- Rs. 1. Smt. Ramianki Devi Sh. Jiwan Ram 4,50,000 DD No. 240262 dt. 1543, Singhiji-ka- Agarwal, Prop. 17-12-1986 of rasta, Chaura Rasta, M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior to filing the return a day earlier, a sum of Rs. 20,000 was also paid as part of the additional tax due and the balance tax was paid by redemption and encashment of seized N. S. Cs. and F. D. Rs. under the orders of the Commissioner of Income-tax, Jaipur. Similarly, Nathulal Jain submitted an application under section 273A of the Act on February 17, 1989, and filed voluntarily and suo motu returns disclosing taxable income of Rs. 5,72,049 instead of Rs. 20,649 initially disclosed. His application under section 273A of the Act before the Commissioner was also filed on February 17, 1989, and a day prior to it he too had deposited additional part of tax Rs. 20,000. In the same manner, Mahaveer Kumar Jain on the same day, filed returns disclosing taxable income of Rs. 5,06,710 instead of Rs. 2,34,307 shown initially and, on the same day, i.e., February 17, 1989, submitted an application under section 273A of the Act before the Commissioner after depositing a sum of Rs. 20,000 on February 16, 1989. It is pertinent to mention here that in the afternoon of February 17, 1989, itself, all the three petitioners had been served with notices under section 147(a) of the Act. The petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisite conditions were fully satisfied. Learned counsel for the petitioners further submitted that the Central Board of Direct Taxes, New Delhi, have issued circulars giving guidelines on September 29, 1981. Instruction No. 14, 17 (F) No. 281/36/81 -IT (INV.) is as under: "The various instructions issued by the Board contain only clarifications on the scope and applicability of section 271(4A)/273A of the Income-tax Act, and the corresponding provisions under the Wealth-tax Act. These, clarifications have been given in consultation with the Ministry of Law and relate to the conditions stipulated in section 271(4A)/273A of the Income-tax, Act and section 18(2A)/18B of the Wealth -tax Act which are to be satisfied before any waiver/reduction as envisaged in these provisions could be granted by the Commissioner. While the Commissioner should examine the applicability of section 273A of the income-tax Act/section 18B of the Wealth-tax Act in the light of these clarifications, once the stipulated conditions are satisfied the discretion of the Commissioner is not fettered by any advice/directions from any authority. The Commissioner being a quasi-judicial authority for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained to the gifts made from Gangtok. On the next date of the search, the statement of Nathulal was recorded which was self-contradictory. When Ramjanki Devi was asked about the gifts, she refused to have received the gift. Mahaveer Kumar had avoided giving a statement before the Income-tax Officer. It was found during investigation that persons in Gangtok were showing fictitious gifts made to Indian citizens. To illustrate, it was submitted that drafts were purchased in the names of persons who were non-existent such as one was in the name of one Mahendra Kumar alleged to have been written in the handwriting of Mahaveer Kumar. These drafts purchased in Jaipur were sent to Gangtok. The Income-tax Officer found foul play after recording the reasons as contemplated by section 148 of the Income-tax Act and initiated proceedings. The Department's case is that it was only after this when the petitioners came to know that they are in hot spot as the racket is unearthed, that they hurriedly filed revised returns admitting the said amount as income from "undisclosed sources". It is submitted that, in pursuance of the notices, the assessment orders have already been passed on March 27, 1989 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73A of the Act and its implications in the instant case, I deem it proper to deal with the preliminary objection raised by learned counsel for the Department. His objection is that, in view of the fact that appeals have been filed against the assessment orders dated March 27, 1989, wherein certain findings adverse to the petitioners have been given are challenged in appeals and since the said appeals are still pending, the writ petitions should be dismissed as premature. According to sub-section (5) of section 273A, every order made under this section is final. Sub-section (5) of section 273A of the Act reads as under : "Every order made under this section shall be final and shall not be called into question by any court or any other authority." A reading of the aforesaid provision shows that no remedy by way of appeal, or revision is provided against an order made under section 273A of the Act which section starts with a non-obstante clause "Notwithstanding anything contained in this section", giving exclusive power to the Chief Commissioner or the Commissioner to reduce or waive penalties in certain cases, i.e., the cases mentioned in this section. Besides this, this reduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losure of his income (b) in the case referred to in clause (ii), has prior to the detection by the Assessing Officer of the concealment of particulars of income or of the inaccuracy of particulars furnished in respect of such income, voluntarily and in good faith, made full and true disclosure of such particulars ; (c) in the cases referred to in clause (iii), has, prior to the issue o 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." I have already held above that the order passed under section 273A of the Act is a final order and no appeal or revision is provided from it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. (No. 1) v. Asst CIT [1990] 183 ITR 528 (Cal), the court followed the same principles as in the case mentioned above. In the light of the aforesaid case, the order passed by the Commissioner of Income-tax has to be examined. In all the three writ petitions, the Commissioner has passed identical orders except mentioning all the grounds in the first para. The second para of the three orders concerning the three writ petitions reads as under: "The assessee was afforded an opportunity of being heard. Detailed arguments have been filed and placed on file. The matter was discussed with the counsel of the assessee at length. I have seen and gone through the records. I notice that it is a search and seizure matter where the income-tax return and upward revision of income was occasioned by fear and not by voluntary desire to conform to the norms of law. The conditions of section 273A are not satisfied. Therefore, there is no case for waiver or reduction of penalty and interest. The petitions are rejected." The question, therefore, is whether this order can be said to be speaking order or an order dealing with the grounds mentioned in the application under section 273A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of concealed income by holding out temptation to the businessmen of giving relief against penalties and interest which may have been incurred by them under the normal law. The power conferred by this section can be exercised by the Commissioner waiving the penalty which has either already been imposed by an order passed by the Income-tax Officer or that may be imposable. Similarly, the amount of interest can be waived by the Commissioner whether it has already been paid or is payable in future. It is not correct, as held by the Commissioner, that the power could be exercised by him only when the penalty has been actually imposed. The Commissioner was not justified in rejecting the prayer made by the petitioner on this ground. On the question of waiver of interest, the Commissioner posed two questions :-(1) Whether waiver could be allowed in a case where the assessment had been made consequent upon the issue of a notice under section 148 and (2) whether the assessee's disclosure could be considered to be in good faith. On the first aspect, the application for disclosure was made by the petitioner on April 23, 1974. It was only after the filing of the said application that notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e returns and made disclosures of his income. He had of his own accord submitted the returns and made the disclosures. Nobody had asked, much less coerced him to do so because it was purely volitional act on the part of the assessee. The mere fact that the assessee was assessed to income-tax or advance tax demand had been made or that the Income-tax Officer knew that the assessee had earned taxable income will not be sufficient to come to the conclusion that the returns filed and the disclosures made by the assessee were not voluntary. The knowledge with the Income-tax Officer cannot act as a constraint on the assessee. If such knowledge could act as a constraint then no person, who is already an assessee, can avail of the concession provided by section 273A. The setting and the context of section 273A do not support the interpretation put on the word "voluntary" by the Commissioner. The Legislature wants to encourage voluntary disclosures of income. For this purpose, it has provided an inducement in the form of reduction or waiver of penalty. The provision has, therefore, to be liberally construed. The Commissioner had put a very narrow construction, which was not supported even b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions 139(2) and 148 of the Act. It would be purposeful to quote the case in extenso as it has a lot of bearing on the facts of the present case. The court held as under (headnote) : "A perusal of section 273A(1) of the Income-tax Act, 1961, shows that the Commissioner is enabled to exercise his discretion to reduce or waive a penalty imposed or imposable under section 271 (1) (a) for late filing of the return, if the following conditions exist : (i) The assessee had voluntarily made a disclosure of his income before any notice under section 139(2) of the Act had been served upon him, (ii) The disclosure should have been a full and true disclosure of the assessee's income made in good faith, and (iii) the assessee had 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 in respect of the relevant assessment year. Likewise in the case of penalty imposed or imposable under section 273(1) for not paying the advance tax, not only the aforementioned conditions are to be satisfied but the assessee has also to pay the tax on the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d faith and that it should be a full and true disclosure. All that the expression means is that before exercising the jurisdiction under section 273A, the Commissioner must be satisfied that the assessee while disclosing his income had acted in "good faith" and that as defined in the General Clauses Act, 1897, an act is deemed to be done in good faith, whether negligently or not, if it is, in fact, done honestly. Where an assessee discloses his income which he honestly believes to be true and full, it can be said that he has in good faith made a full and true disclosure of his income within the meaning of clauses (a) and (c) of section 273A(1). In a case where the income ultimately assessed is the same as that returned or disclosed by the assessee, it is apparent that the assessee has made a full and true disclosure of income. It is only in a case where the ultimate assessment made is more than the income disclosed by the assessee that the question whether the assessee honestly believed the income disclosed by him to be true and full can possibly arise. However, as provided in the Explanation to section 273A(1), the law presumes that every disclosure of income is true and full unle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent to the filing of the return right up to the date of making the assessment, but before the issue of the notice under section 139(2) or section 148, as the case may be, the assessee had in good faith truly and fully disclosed his income. Therefore, the Commissioner did not look into the matter from a correct point of view. The order of the Commissioner was quashed. [Matter remanded to the Commissioner for decision afresh in accordance with law]." In Shiv Narain Dhabhai v. CWT [1980] 121 ITR 224 (Raj), this court had held that it is essential for the Commissioner to record a finding whether the assessee has voluntarily and in good faith made a true and full disclosure of his net wealth. No facts or figures had been given in support of the finding to the effect that the disclosure of net wealth by the assessee was neither voluntary nor full and true. The findings are cryptic and miserably brief and since it was open to scrutiny by the court, a speaking order giving reasons in support of the conclusion arrived at should have been passed. Further, the assessee should be given full opportunity to represent his case and the order also suffers from misstatement of facts and, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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