Satish Kumar Sanghi v. Commissioner Of Income Tax, Rohtak And Another

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.10568 of 2012 Date of decision: February 05, 2013 Satish Kumar Sanghi Petitioner Versus Commissioner of Income Tax, Rohtak and another Respondents CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’BLE MR. JUSTICE GURMEET SINGH SANDHAWALIAHON’BLE MR. JUSTICE GURMEET SINGH SANDHAWALIA Present: Mr. Aman Bansal, Advocate for the petitioner.Mr. Inderpreet Singh, Advocate for the revenue. Ajay Kumar Mittal,J. 1.Prayer in this writ petition filed under Articles 226/227 ofthe Constitution is for issuance of a writ in the nature of certiorari forquashing the impugned order dated 1.2.2012, Annexure P.14 passedby respondent No.1 – Commissioner of Income Tax, Rohtak, wherebythe claim of the petitioner for waiver of interest under Sections 139(8)and 217 and penalties under Sections 271(1)(a) and 273 of theIncome Tax Act, 1961 (in short, “the Act”) has been rejected. Furtherprayer for quashing the demand notice dated 26.3.2012 AnnexureP.15, notice dated 19.11.1991, Annexure P.1 under Section 148 of theAct and also for refund of the interest has also been made. 2.A few facts relevant for the decision of the controversyinvolved, as narrated in the petition, may be noticed. The petitioner is an agriculturist. His only source of income was agriculture incomewhich did not require filing of income tax return. Vide notificationdated 13.8.1979, some land of the petitioner was acquired by theGovernment and vide award dated 7.1.1981, compensation for theland acquired was awarded at the rate of ` 12000/- and ` 15000/-per acre for barren and irrigated land respectively. The petitionersought enhancement by filing application under Section 18 of theLand Acquisition Act, 1894. Vide order dated January 20, 1989, thecompensation was enhanced to ` 24000/- and ` 30,000/- per acre forbarren and irrigated land respectively alongwith interest at the rate of9% per annum from 7.1.1981 to 6.1.1982 and 15% per annum from7.1.1982 onwards. The compensation amount was received by thepetitioner on 15.9.1990. Thereafter, the petitioner after calculatingthe interest of each of the relevant years submitted his income taxreturns voluntarily on 27.2.1991 and the said returns were dulyaccepted by the concerned officer under Section 143(1) of the Act on7.8.1992. The Assessing Officer while framing assessment leviedinterest under Sections 139(8) and 217 of the Act. The AssessingOfficer also passed the order for issuance of penalty notices underSections 271(1)(a), 271 (1) (c) and 273 of the Act. The penaltyproceedings were later on dropped by the Assessing Officer videseparate orders. On 12.10.1992, the petitioner filed a petition underSection 273A of the Act for waiving of interest. The Commissioner ofIncome Tax, Rohtak waived the penalty and interest upto 70% of theamount vide order dated 17.3.1993, Annexure P.5 in respect of the years 1982-83 to 1988-89. The application for waiver of interest forthe year 1989-90 was not entertained in view of amendment in the Actw.e.f 1.4.1989. Feeling aggrieved, the petitioner approached thisCourt through CWP No.15887 of 1993 against the order passed by therespondent under Section 273A of the Act. For the assessment years1982-83 to 1988-89, the writ petition was allowed while relying uponthe observations made by this Court in Parkash Devi vs. CWT,Jalandhar, (1983) 141 ITR 122 and the case was remitted back to therespondent to re-decide the application. The petitioner approachedthe respondent several times to decide the pending application butultimately, vide impugned order dated 1.02.2012, the claim of thepetitioner was rejected. Hence the present petition. years 1982-83 to 1988-89. The application for waiver of interest forthe year 1989-90 was not entertained in view of amendment in the Actw.e.f 1.4.1989. Feeling aggrieved, the petitioner approached thisCourt through CWP No.15887 of 1993 against the order passed by therespondent under Section 273A of the Act. For the assessment years1982-83 to 1988-89, the writ petition was allowed while relying uponthe observations made by this Court in Parkash Devi vs. CWT,Jalandhar, (1983) 141 ITR 122 and the case was remitted back to therespondent to re-decide the application. The petitioner approachedthe respondent several times to decide the pending application butultimately, vide impugned order dated 1.02.2012, the claim of thepetitioner was rejected. Hence the present petition. 3.Learned counsel for the petitioner submitted that theCommissioner of Income Tax, Haryana, Rohtak while adjudicatingthe application under Section 273-A of the Act on 17.3.1993 afterrecording that the conditions enumerated in Section 273-A of the Actwere complied with, had waived of only 70% of the total amount ofinterest and penalty, which was challenged by way of CWP No.15887of 1993. This Court on 26.8.1996 had remanded the matter for theassessment years 1982-83 to 1988-89 to the Commissioner of IncomeTax to decide the same keeping in view the observations made inSmt.Parkash Devi's case (supra). However, the petition with regard toassessment year 1989-90 was rejected by this Court. According to thelearned counsel, after the remand by this Court, the Commissioner ofIncome Tax on 1.2.2012 while deciding the application under Section 273A of the Act had even withdrawn the benefit of the waiver whichhad been allowed to the petitioner earlier. It was urged that the saidaction of the respondent-CIT was in grave violation of the mandategiven by this Court while deciding CWP No.15887 of 1993 on26.8.1996. 4.Learned counsel for the respondents supported the orderpassed by the Commissioner of Income Tax. 5.After hearing learned counsel for the parties, we findmerit in the writ petition. 6. A Division Bench of this Court while considering theprovisions relating to Section 18B of the Wealth Tax Act, 1957 whichare pari materia to those in Section 273A of the Act, in Smt. ParkashDevi's case (supra), held that the following five conditions arerequired to be fulfilled:- “1) that the returns were filed by the petitioner prior tothe issuance of a notice to her under sub-section (2) ofsection 14 of the Act;the issuance of a notice to her under sub-section (2) ofsection 14 of the Act; 2) that these were filed voluntarily and in good faith; 3) that the petitioner had made full and true disclosure ofher net wealth; her net wealth; 4) that she had cooperated in the inquiry relating to theassessment of her net wealth; and assessment of her net wealth; and 5) that she had paid or made satisfactory arrangementsfor the payment of the tax or interest payable inconsequence of an order passed under the Act in respectof the relevant assessment years.”for the payment of the tax or interest payable inconsequence of an order passed under the Act in respectof the relevant assessment years.” 7. Further, this Court while delving into the scope of Section 273A of the Act in Shanti Sarup Sharma vs. Commissioner of “Section 273A of the Income Tax Act, 1961,empowers the Commissioner to reduce or waiveinterest and penalty. The power under Section 273Ais discretionary. The Commissioner is given thediscretion, when the requisite conditions envisagedby that section are satisfied, that he may waive orreduce the penalty or the interest imposable under theAct. However, the exercise of discretion cannot beeither arbitrary or capricious and has to be judiciousand objective. Section 273A does not confer absolutediscretion upon the Commissioner to pass any orderwhich he pleases to make. He is required to considerthe application on the merits.” 7. Further, this Court while delving into the scope of Section 273A of the Act in Shanti Sarup Sharma vs. Commissioner of “Section 273A of the Income Tax Act, 1961,empowers the Commissioner to reduce or waiveinterest and penalty. The power under Section 273Ais discretionary. The Commissioner is given thediscretion, when the requisite conditions envisagedby that section are satisfied, that he may waive orreduce the penalty or the interest imposable under theAct. However, the exercise of discretion cannot beeither arbitrary or capricious and has to be judiciousand objective. Section 273A does not confer absolutediscretion upon the Commissioner to pass any orderwhich he pleases to make. He is required to considerthe application on the merits.” 8. In the present case, this Court while remanding the caseon earlier occasion in CWP No.15887 of 1993 had directed thatkeeping in view the observations made in Smt.Parkash Devi's case(supra) , the Commissioner of Income Tax shall pass fresh order underSection 273-A of the Act. The waiver of only 70% of the interest andpenalty was held not to be proper while adjudicating the aforesaid writpetition. 9.A perusal of the impugned order herein shows that nowthe Commissioner of Income Tax has even withdrawn the saiddiscretion which was exercised qua granting 70% of the waiver oftotal amount of interest and penalty. A reading of the order shows thatno legal and valid reason has been given therefor. Moreover, this orderis in contradiction to the order passed by this Court while remandingthe case to the Commissioner of Income Tax for passing fresh orders in accordance with law. 10. In such circumstances, ordinarily we would have referredthe matter back to the respondent after setting aside the order dated1.2.2012, Annexure P.14, for passing order afresh in accordance withlaw. However, keeping in view the fact that the matter has already beenremanded to the Commissioner of Income Tax on anearlier occasion and he had faulted in passing order in accordance withthe provisions of the Act, we have examined the matter and afterhearing counsel for the parties at length, we have arrived at theconclusion that the assessee fulfilled the requirements as envisagedunder Section 273A of the Act and the present case calls for completewaiver of interest and penalty for the assessment years 1982-83 to1988-89. Consequently, we allow this writ petition and set aside theimpugned order dated 1.2.2012, Annexure P.14 and, thus, there will becomplete waiver of interest and penalty in the facts and circumstancesof the case. As a necessary corollary, it is further directed that in caseany amount has been got deposited from the petitioner on the aforesaidcount, the same shall be refunded to the petitioner in accordance withlaw. (Ajay Kumar Mittal)Judge February 05, 2013'gs' (Gurmeet Singh Sandhawalia) Judge