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TMI Blog1984 (11) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... s of his grievance under article 226 of the Constitution. A few facts material for the disposal of this writ petition may be noticed. The petitioner's mother, Smt. Devi Sundra, voluntarily filed returns of her income for nine assessment years, including the years mentioned above, on August 16, 1976. The returns for the years in question as also for other years were filed belatedly and the petitioner had rendered herself liable to pay penalty and penal interest under the provisions of the Act. Under section 273A of the Act, the Commissioner of Income-tax has jurisdiction to waive the penalty and penal interest. Taking advantage of this provision, the petitioner moved an application on September 1, 1979, for waiver of the said penalties; a copy of this application is annexure 2. This application was moved by the petitioner as his mother, Smt. Devi Sundra, had died in the meanwhile and in the assessment proceedings, the petitioner represented the estate of his mother. By a composite order dated August 10, 1977, the Income-tax Officer, "D" Ward, Circle II, Lucknow, completed assessment in respect of all the nine assessment years. By this order, the Income-tax Officer accepted the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Division Bench was of the opinion that after the petitioner had obtained complete success from the Income-tax Tribunal, he should have approached the Commissioner for waiver of penalty and penal interest bringing to his notice the changed circumstances. The petition was dismissed only on the ground that this demand for justice had not been made by the petitioner before approaching this court. No observation was made by the Division Bench with regard to the petitioner's entitlement to claim waiver of the penalty and penal interest. After the decision of the writ petition, the petitioner moved an application before the Commissioner on October 6, 1979, annexure 8. Through this application he brought to the notice of the Commissioner the changed circumstances arising from the decision of the Income-tax Appellate Tribunal and also the judgment of this court. It appears that the Commissioner of Income-tax had doubts about his competence to review the order of his predecessor and he, therefore, made a reference to the Central Government in the Ministry of Finance, Department of Revenue, for guidance. The Ministry advised the Commissioner through its letter dated December 8, 1980, annexu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed voluntarily prior to issue of notice under section 139(2)/148. The variation in income returned and income assessed is due to difference of opinion. The disclosure of income is treated to be full, true and in good faith. The assessee appears to have co-operated in enquiries relating to assessment proceedings and has paid taxes on income disclosed and income assessed. All the conditions for waiver of penalty under section 271(1)(a)/273(b) and interest under section 139(8)/217 for the assessment years 1968-69 to 1970-71 having been fulfilled, I consider it to be a fit case for waiver under section 273A. " While allowing claim for waiver of interest under section 139(8), he observed in respect of the years 1974-75 and 1975-76 as follows : " So far as the waiver petition relates to 1974-75 and 1975-76, I find that the Income-tax Officer has not initiated penalty proceedings for those years; hence, the petition for penalty is filed as infructuous. As regards interest for 1974-75 and 1975-76, I find that the assessee filed returns of income for these years voluntarily, prior to issue of notice under section 139(2)/148. Relevant assessments have been completed by the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (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 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, made full and true disclosure of such particulars; (c) in the cases referred to in clause (iii), has, prior to the issue of 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 eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (4) also. Under this provision, the power is available even to relieve an assessee of genuine hardship.The power is available not only to waive the amount of penalty but also to compound any proceeding for recovery of any such amount. From this, it would appear that the power of waiver can be exercised even while proceedings for recovery of penalty are going on. From this, it would further appear that the power of waiver may be exercised till the amount of penalty has not been finally recovered. If the power of waiver can be exercised under sub-section (4) till the amount has not been finally recovered, there will be no rational basis for depriving the Commissioner of the power to review his order passed under sub-section (1) at a stage earlier, i.e., between the imposition of penalty and its final recovery. This is the stage where the present matter appears to stand. For the discussion herein, we are of the opinion that under the scheme of section 273A, it is open to the Commissioner to review his earlier order passed under sub-section (1) thereof. We are consequently of the opinion that the Commissioner committed a manifest error when he rejected the petitioner's application da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... February 13, 1979, annexure 3, has been knocked off, yet the said order is sought to be applied against him. It is being applied against him by saying that he will have to pay penalty and penal interest as the same has not been wiped off by the Commissioner. Thus, it is a case of genuine hardship also against which an assessee can be relieved by the Commissioner in exercise of the jurisdiction conferred under the provision herein mentioned. Learned counsel for the petitioner had submitted that from the mere fact that in the opinion of the Income-tax Officer, the assessee's investment in construction of house was higher than that disclosed by her in her return, it could not be inferred that the disclosure of income was not full and true and lacked good faith. According to the learned counsel, it was only a matter of opinion inasmuch as the construction of the house itself had not been suppressed by the petitioner's mother. After disclosing the fact that the house had been constructed, she had given a certain figure of the investment made in the construction of the house. This figure in the opinion of the Income-tax Officer was low and he accordingly enhanced it and treated the dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty notices under sections 271(1)(a), 271(l)(c) and 273(b), that is, for failure to furnish returns, concealment of particulars of income and furnishing of inaccurate particulars of such income and failure without reasonable cause to furnish a statement of advance tax payable by him. At the same time, he also passed an order for charging of interest under section 139(8) and section 217 of the Act, viz., for late filing of return and for not sending the estimate. The petitioner without waiting for the result of the appeal or other proceedings, on September 1, 1977, filed an application before the Commissioner of Income-tax praying for waiver of penalty and interest in exercise of his power under section 273A of the Income-tax Act. In the meantime, the appeals filed by the petitioner against the assessment orders were allowed and reliefs for the year 1971-72 to 1973-74 were granted partly. The Commissioner of Income-tax took note of this appellate order dated October 12, 1978, and, vide his order dated February 13, 1979, accepted the petitioner's prayer for all the years except 1971-72 to 1973-74. Subsequently, vide order dated August 23, 1979, the Appellate Tribunal allowed the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power the Commissioner to waive or reduce the penalty imposed or imposable in respect of cases (i) for failure to furnish return under section 139(1), (ii) failure to furnish return with out reasonable cause within time allowed, (iii) for concealment of income or furnishing inaccurate particulars, and (iv) for submitting false estimate or failure to pay advance tax (referred to in section 273). The interest which can be waived or reduced is provided for under sub-section (iii), that is, which is paid or payable under sections 139(8), 215 and 217 of the Income-tax Act. The Commissioner of Income-tax rejected the fresh application of the petitioner on the ground that once powers under section 273A(3) have been exercised in favour of an assessee, he becomes disentitled to get relief of waiver or reduction of penalty in respect of any assessment year or years regarding the penalty and interest. Section 273A(3) reads as follows : " 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 in relation to any other assessment year at any time after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the same is not done, it would cause hardship to the assessee who has co-operated in assessment or recovery proceedings. The difference between sections 273A(1) and 273A(4) is obvious as powers under section 273A(1) are exercisable when the penalty is imposable or imposed and under sub-section (4) when the same becomes payable or even in the recovery proceedings. If an application under section 273A(1) for waiver is given when penalty becomes imposable, it can be given again under section 273A(4) when it becomes payable. If it has been moved at the earlier stage when it is imposed, even then at subsequent stage up to the recovery proceedings, the same can be made again and party may get relief if conditions under s. 273A(4) are satisfied. Section 273A(4) to the extent mentioned above is rather in the nature of an exception to section 273A(1) but it is not in the nature of review of the order passed by the Commissioner earlier under section 273A(1) as it will be fresh proceeding though it may result in variation or modification of the earlier order passed by the Commissioner. Apart from certain specific powers conferred upon a civil court, the Civil Procedure Code does not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned, the position is somewhat different. There is no provision corresponding to section 273A(4) regarding interest when it becomes payable. If the Commissioner exercises powers regarding interest imposed under the sections mentioned in section 273A(1)(iii) one way or the other, that order becomes final and cannot be reopened by him against either of his own motion or at the instance of the assessee concerned. The Commissioner of Income-tax waived the penalty and interest for 1968-69 to 1970-71 as the disclosure of income was held by him to be full, true and in good faith and that he also co-operated in the enquiry and paid the taxes. On the same grounds, interest under section 139(8) too was waived for 1974-75 and 1975-76. So far as the intervening years of 1971-72 to 1973-74 are concerned, there was no difference but interest was not waived on the ground of additions made for undisclosed investment for these years which were also upheld by the Appellate Assistant Commissioner that is the ground on which penalty was also not waived. The conclusion regarding the nature of disclosure and good faith for previous and subsequent years and that of intervening years are obviously n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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