TMI Blog1988 (7) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. But, for late filing of the return and for not filing the estimate of advance tax, penalty proceedings, respectively, under sections 271(1)(a) and 273(l)(b) of the Act were initiated. The petitioner made an application to the Commissioner of income-tax (respondent) under section 271(4A) on September 15, 1974. After section 273A replaced section 271, another application under the new provision was made on November 27, 1978. These applications were made for exercise of discretion to reduce or waive the penalty imposed or imposable under section 273A(1)(i) and to reduce or waive the amount of interest paid or payable under section 139(8) of the Act, for late filing of the income-tax returns and under section 217 for not filing estimates of advance tax. The Commissioner, by order dated December 30, 1978 (annexure-3), refused to exercise the discretion vested in him by section 273A on the ground that the income-tax returns were not flied "voluntarily" as contemplated by section 273A(a) and (c) and as a result, the conditions precedent for exercise of discretion were not satisfied. The substance of the order is that the Inspector had visited the new building in the course of survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds thus: "273A. (1) Notwithstanding anything contained in this Act, the Chief Commissioner or Commissioner may, in his discretion, whether on his own motion or otherwise, (i) reduce or waive the amount of penalty imposed or imposable on a person under clause (i) of sub-section (1) of section 271 for failure, without reasonable cause, to furnish the return of total income which he was required to furnish under sub-section (1) of section 139 ; or (ii) reduce or waive the amount of penalty imposed or imposable on a person under clause (iii) of sub-section (1) of section 271 ; or (iii) reduce or waive the amount of interest paid or payable under sub-section (8) of section 139 or section 215 or section 217 or the penalty imposed or imposable under section 273, if he is satisfied that such person (a) in the case referred to in clause (i), has, prior to the issue of notice to him under sub-section (2) of section 139, voluntarily and in good faith made full and true disclosure 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any relief under this section in relation to any other assessment year at any time after the making of such order, (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 penality 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 waiving the amount or compounding any proceeding for its recovery under this sub-section shall be made by the Chief Commissioner or Commissioner except with the previous approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifies that if section 271(1)(c) is not attracted, the assessee shall be deemed to have made a full and true disclosure of income. The same approach will be necessary even in the case of interest tinder section 273A(1)(iii) though the concept of penal interest and the concept of penalty are not the same. The scheme is that mere difference between the income returned and income assessed does not attract penalty and, therefore, is no ground to hold that there is no full and true disclosure for the purposes of section 273A. The term "good faith" is not defined under the Act but is defined under section 2(22) of the General Clauses Act. Either under the General Clauses Act or in ordinary parlance, an act done in good faith means an act done honestly even if it is tainted with negligence or mistake. All that is required is that disclosure of income must be full and true according to the honest belief of the assessee. Applying the said test to the case at hand, it cannot be said that disclosure of income was, incomplete and untrue to the knowledge of the assessee. All his returns are accepted. Variation has been mainly in the valuation of the new construction. Is the very late filing of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the negative. The facts in the case of Sarvaria v. CWT [1986] 158 ITR 803 decided by the Delhi High Court are nearer to the facts obtaining in the instant case. That case is no doubt under section 18(2A) of the Wealth-tax Act, 1957, but that section and section 273A of the Act are in pari materia. Returns of wealth for the assessment years 1965-66 to 1970-71 were filed in December 1970. The assessee had come up for survey during the course of survey operations carried out by the Department in respect of agricultural properties and the survey report was submitted to the Wealth-tax Officer seven days before the returns were filed. Repelling the contention of the Department that the returns were filed under constraint of detection and, therefore, not voluntary, it was observed (p. 809) : "In the facts and circumstances of the present case, it cannot, be held that merely because there was a survey of agricultural properties showing that the petitioner also owned agricultural land, he was under 'constraint' to make full disclosure of his net wealth. Further, the survey report cannot, in my view, be equated with seizure of books of account of the assessee from search of his premises. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (c) for concealment of income was proposed. The Allahabad High Court rightly held that the returns were filed not voluntarily but under constraint of detection and follow-up action which were bound to follow. On behalf of the respondent, it was contended that the power under section 273A of the Act is purely discretionary in character and, under the circumstances, no interference in writ jurisdiction is called for. We find it difficult to accept this contention. 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 the 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. In the instant case, refusal to exercise discretion is for no other reason than misconception of the scope of the power and hence a writ of mandamus can be issued directing the Commissioner to entertain th ..... 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