TMI Blog1978 (4) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... in due course. The petitioner-firm thereafter filed the returns for the assessment years 1972-73 and 1973-74. These assessment proceedings were pending completion. On 24th April, 1974, the petitioner filed a disclosure petition disclosing an amount of Rs. 1,25,000 to be assessed in 5 years from the assessment years 1969-70 to 1973-74 in equal amounts of Rs. 25,000 each. The application also contained a prayer for waiver of the penalties under section 271(4A) of the Act. On September 20, 1 974, a letter was sent by the Commissioner of Income-tax to the petitioner intimating that the application for waiver having been filed only after the detection by the department, the Commissioner intended to reject the application for waiver. A reply was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), 271(1)(c) and 273(c) as also interest under section 215 and under section 217 be waived." The Commissioner of Income-tax rejected the application by the impugned order dated September 17, 1976. Against the aforesaid order the present writ petition has been filed in this court. Before proceeding to decide the case, we wish to extract the relevant provisions of the Act which would assist in deciding the point in issue. Section 271 deals with failure to furnish returns, comply with notices, concealment of income, etc. The relevant portion of the said section reads : " (1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person--- (a) has wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or imposable under section 273, if he is satisfied that such person--- ............ (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 ; ............ " In the instant case, the prayer made by the petitioner was for the waiver of the penalty imposable on him under clause (iii) of section 271(1) as well as for the waiver of the amount of interest payable under sections 215 and 217 of the Act. Before the amendment made by the Taxation Laws (Amendment) Act, 1975, the power of waiver was conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t represent his correct income. The penalty may be imposed by the Income-tax Officer either in the course of the assessment or after the assessment is over. It, therefore, appears to us that the scope of the power of the Commissioner should not be confined to the stage where the penalty has already been imposed. It takes within its ambit even a case where the liability to pay penalty has been incurred and that may be imposed upon it. Similarly, the words used in clause (iii) of sub-section (1) of section 273A " or payable ". Under this clause, the Commissioner of Income-tax is authorised to reduce or waive the interest which may not have been actually levied and is capable of being imposed in future. In this view of the matter, the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to be quashed on this ground. Coming to the question relating to the waiver of interest, the Commissioner of Income-tax posed two questions which were required to be decided in that connection. These questions were, (1) whether waiver can be allowed in a case where the assessment has been made consequent upon the issue of a notice under section 148 ; and (2) whether the assessee's disclosure in the facts and circumstances of the case can be considered to be in good faith. It would be seen from the facts stated above that the application for the disclosure was made by the petitioner on 23rd April, 1974. It was only after the filing of the said application that for starting reassessment proceedings notices under section 148 were issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner was not in good faith. It may be true that the object of the petitioner-firm for making disclosure was to get round the difficulty of introducing secret cash but that is not a ground on which the benefit of section 273A(1)(iii) could be denied to him. The good faith which is required to be established for invoking the aforesaid provision is that in making the disclosure the petitioner must have acted honestly. In other words, he should not have been guilty of having acted dishonestly in making the disclosure. The fact that before making the disclosure his conduct had been dishonest or that he did not act in good faith is irrelevant for the purposes of applying these provisions. The disclosure is made by an assessee under this section fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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