TMI Blog1990 (2) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... seized certain items of gold ornaments and also account books. Immediately, with a view to settle the matter, the appellants, within 15 days of the search, filed petitions under section 273A of the Act before the first respondent making a disclosure of the income for securing the assessments on the basis thereof. They also filed revised returns for the years 1979-80 to 1983-84 and the original returns for the years 1984-85 and 1985-86. As the law then stood, namely, Explanation 2 to section 273A(1) of the Act which was in force for the period October 1, 1984, to May 24, 1985, if full disclosure is made within 15 days, the assessees are entitled to certain benefits. But, when the Income-tax Officer completed the assessment as per the revised and original returns, though he accepted the same as correct, he imposed interest under section 139(8) and section 217 of the Act and also initiated penal proceedings under sections 271 and 273 of the Act. The appellants filed revision petitions before the Commissioner of Income-tax and he gave certain deductions in the interest levied under section 139(8) of the Act. Since the Commissioner did not waive the interest in full and also did not wai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 article or thing belonging to person are seized under section 132 and within fifteen days of such seizure, the person makes a full and true disclosure of his income to the Commissioner, such person shall, for the purposes of clause (b) of this subsection, be deemed to have made, prior to the detection by the Income-tax 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, a disclosure of such particulars." Explanation 2 brings in a deeming provision providing that where any books of account, other documents, money, bullion, jewellery or other valuable article or thing belonging to a person are seized under section 132 of the Act and within 15 days of such seizure, the person makes full and true disclosur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 587 (HL) (at page 599) Lord Asquith observed that: "If one is bidden to treat an imaginary state of affairs as real, one must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it." This observation of Lord Asquith has been approved by the Supreme Court in State of Bombay v. Pandurang Vinayak, AIR 1953 SC 244, wherein the court observed that (headnote) : "When a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction and it should be carried to its logical conclusion." These two decisions have been followed by the Supreme Court in American Home Products Corporation v. Mac. Laboratories Pvt. Ltd., AIR 1986 SC 137 ; 1986] 1 SCC 465. For the purpose of section 273A(1)(ii) read with sub-clause (b) thereof, in the matter of waiving penalty imposable under section 271(1)(c), the deeming provision dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll disclosure" came up for consideration in Shankara Apaya Swami v. WTO [1976] 103 ITR 649 (Kar). Venkataramiah J., as he then was, considering a similar section in the Wealth-tax Act, namely, section 18(2A), explained that the said words relate to the return which is filed beyond time without reasonable cause. The learned judge observed (at p. 652): "The expression 'voluntarily' means 'without compulsion' and good faith' means 'with due care and caution'. Hence, if the return filed by the 'assessee does not show that he has deliberately furnished wrong particulars about his wealth or deliberately omitted to include all the items of taxable wealth then he should be considered as having satisfied the above condition ... It is needless to mention that the Commissioner while exercising his discretion under section 18(2A) has to bear in mind several factors such as the gravity of the default, the loss occasioned to the Revenue by the assessee not filing the return in time, and the extent of tax withheld. These factors are only illustrative but not exhaustive. Just like in criminal cases a judge while imposing a sentence on the accused who is found guilty of an offence takes into co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he term "good faith" occurring in section 273A of the Act, the High Court of Allahabad held that the assessee can be said to have acted in good faith if he discloses his income which he honestly believed to be true and full. In Hakam Singh v. CIT [1980] 124 ITR 228 (All), an application under section 273A of the Act was rejected by the Commissioner of Income-tax on the ground that the return filed by the assessee was not voluntary, for, in that case, there was a search on November 22, 1973, and the return was filed only on October 7, 1974, for the four years. Penalty proceedings were initiated for delayed submission of return and for not filing a return of advance tax under sections 271(1)(a) and 273(b). The Commissioner of Income-tax held that the returns were not voluntary and they were made after the search prompted by a sense of fear. The court held (at p. 232) : "A return filed under the constraint of exposure to adverse action by the Income-tax Department, in our opinion, will not be voluntary within the meaning of section 273A. The action of the petitioners in filing the returns after the books of account had been seized at a raid was impelled by the compelling circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosure of the income for earlier years also. The return and the disclosure will nevertheless be voluntary even though the intention of the appellants in so doing was only to save the penalty. Hence, the disclosure or the filing of the returns after the search by itself will not be decisive of the fact that the returns and disclosures are not voluntary. On a perusal of the impugned orders, it is seen that there is no detailed consideration of these aspects. The impugned orders in question fall into two categories : in the first category, the Commissioner rejected petition under section 273A of the Act on the ground that the returns are not voluntary, having been made after the search and in the other, namely, the order in W. A. No. 127 of 1989, the Commissioner rejected the petition on the ground that the disclosure was not voluntary because the same was made after the search. The question to be examined is not whether the return is voluntary for the purpose of section 273A(1)(a) and (c). The question is whether the disclosure in the return is made voluntarily and in good faith. If the respondent obtained the documents after search which would show that the assessees have supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectness of the orders. In the exercise of discretion under article 226 of the Constitution of India, this court is concerned only with the decision-making process. In Ranjit Thakur v. Union of India, AIR 1987 SC 2386, the Supreme Court observed (headnote) : "Judicial review, generally speaking, is not directed against a decision, but is directed against the 'decision-making process'. The question of the choice and quantum of punishment is within the jurisdiction and discretion of the court martial. But the sentence has to suit the offence and the offender. It should not be vindictive or unduly harsh. It should not be so disproportionate to the offence as to shock the conscience and amount in itself to conclusive evidence of bias. The doctrine of proportionality, as part of the concept of judicial review, would ensure that even on an aspect which is, otherwise, within the exclusive province of the court martial, if the decision of the court even as to sentence is an outrageous defiance of logic, then the sentence would not be immune from correction. Irrationality and perversity are recognised grounds of judicial review." The Supreme Court also held that the penalty imposed must ..... X X X X Extracts X X X X X X X X Extracts X X X X
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