Wp/1787/1994 Of Madhuri v. Commissioner Of Income Tax, Nagpur And Anor

IN THE HIGH COURT OF JUDICATUTRE AT BOMBAY,NAGPUR BENCH NAGPUR. WRIT PETITION NO.1787 OF 1994. PETITIONER: Madhuri w/o Pramod Shaha, aged about 38 years, Occu: Private Tuitions,resident of Akola, Tq. and Distt. Akola. :VERSUS: RESPONDENTS: 1. Commissioner of Income Tax, Vidarbha Region, Nagpur. 2. The Income Tax Officer, Ward - 2, Akola. -=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Mr.G.B.Lohia and R.S.Agrawal Advocates for the petitioner.Mr.A.S.Jaiswal, Advocate for the respondents. =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- CORAM: ANOOP V.MOHTA AND C.L.PANGARKAR,JJ. DATE OF RESERVING THE JUDGMENT: 31/07/2008. DATE OF PRONOUNCING THE JUDGMENT: 07/08/2008. ORAL JUDGMENT: (Per Anoop V.Mohta,J) 1.Thepetitionerhaschallengedtheorderdated21/10/1993 passed by the Commissioner, Income Tax Vidarbha Region, Nagpur whereby the interest under Section 139 (8) of theIncome Tax Act (for short 'Act') and penalties under Section271(1)(a) for the assessment year 1985-86 to 1989-90 have beenretained though prayed for waiving the same.Therefore, thepetition. 2.The petitioner is a house wife and earning through theprivate tuitions.She voluntarily submitted the returns of incometax for the assessment year 1985-86 to 1989-90 on 25/10/1989.The returns were submitted in good faith.There was no priornotice under Section 139(2) or 148 or 142(1) of the Act receivedby the petitioner.On the date of submission of her returns, shedisclosed full and true income. She was unable to file the returnsearlier as she was not aware of the provisions of the Act. Anyhow,voluntarily and in good faith she submitted the returns.Sherendered cooperation totheIncome Tax Departmentduringassessment proceedings.She paid the requisite tax also.Thereturns were duly accepted by respondent no.2 under Section143(1) of the Act. 3.The petitioner submitted the returns in response to thegeneral representation by the Deputy Commissioner of Income Tax,Akola that department would be waiving interest and penalty ofthose who have not filed returns though have assessable income.As averred, this assurance was given in the meeting held by Tax BarAssociation, Akola. The petitioner, therefore, requested for waiverof interest and penalties, however, the same was rejected.Thepetitioner, therefore, moved respondent no.1 an application underSection273-AoftheAct.Afterhearing,anorderdated21/10/1993 was passed.The said order is final and conclusiveunder Section 273-A(5) of the Act. 4.The relevant Section of the Act i.e. 273A is reproduced asunder - “273A.Power to reduce or waive penalty, etc., in–certaincases(1)Notwithstandinganythingcontained in this Act, the Chief Commissioner orCommissioner may, in his discretion, whether on hisown motion or otherwise - (i) reduce or waive the amount of penalty imposed orimposable on a person under clause (i) of sub-section(1) of Section 271 for failure, without reasonablecause, to furnish the return of total income which hewas required to furnish under sub-section (1) ofSection 139; or (ii) reduce or waive the amount of penalty imposedor imposable on a person under clause ((iii) of sub-section (1) of Section 271; or (iii) reduce or waive the amount of interest paid orpayable under sub-section (8) of section 139 orsection 215 or section 217 or the penalty imposed orimposable under section 273, if he is satisfied that such person - (a) in the case referred to in clause (i), has, prior tothe issue of a notice to him under sub-section (2) ofsection 139, voluntarily and in good faith made fulland true disclosure of his income ; (b) In the case referred to in clause (ii), has prior tothedetectionbytheAssessingOfficer,oftheconcealment of particulars of income or of theinaccuracy of particulars furnished in respect of suchincome, voluntarily and in good faith, made full andtrue disclosure of such particulars; (iii) reduce or waive the amount of interest paid orpayable under sub-section (8) of section 139 orsection 215 or section 217 or the penalty imposed orimposable under section 273, if he is satisfied that such person - (a) in the case referred to in clause (i), has, prior tothe issue of a notice to him under sub-section (2) ofsection 139, voluntarily and in good faith made fulland true disclosure of his income ; (b) In the case referred to in clause (ii), has prior tothedetectionbytheAssessingOfficer,oftheconcealment of particulars of income or of theinaccuracy of particulars furnished in respect of suchincome, voluntarily and in good faith, made full andtrue disclosure of such particulars; (c) in the cases referred to in clause (iii), has, prior tothe issue of a notice to him under sub-section (2) ofsection 139, or whether no such notice has beenissued and the period for the issue of such notice hasexpired, prior to the issue of notice to him undersection 148, voluntarily and in good faith made fulland true disclosure of his income and has paid thetax on the income so disclosed, and also has, in all the cases referred to inclauses (a), b) and (c), co-operated in any enquiryrelating to the assessment of his income and haseither paid or made satisfactory arrangements for thepaymentofanytaxorinterestpayableinconsequence of an order passed under this Act inrespect of the relevant assessment year, *Explanation I – for the purposes of this sub-section,a person shall be deemed to have made full and truedisclosure of his income or of the particulars relatingthereto in any case where the excess of incomeassessed over the income returned is of such a natureas not to attract the provisions of clause (c) of sub-section (1) of section 271. *Explanation 2. - (Inserted by TLA Act, 1984, wef1-10-84 and omitted by FA 85 wef 24-5-85). 5.The Division Bench of Bombay High Court in (1989) 75 CTR (Bom) 76 (Laxman ..vs.. Commissioner of Income Tax):(1988) 174 ITR P.465 (Bom.)has explained the scheme andpurpose of the Section in following words. 12. On behalf of the respondent, it was contended that the power under S.273A of the Act is purelydiscretionaryincharacterand,underthecircumstances, no interference in writ jurisdiction iscalled for.We find it difficult to accept thiscontention.Once the conditions required forexercise of discretion in any judicial or quasi- judicialproceedingsaresatisfied,exerciseofdiscretion cannot be either arbitrary or capriciousand has to be judicious and objective.When thepower is given to a public authority for being usedfor the benefit of a class of persons and theconditions precedent for the exercise are well-defined, there is a duty to exercise such power andon failure to perform that duty, Courts are not onlyempowered but are duty bound to interfere. In theinstant case, refusal to exercise discretion is for noother reason than misconception of the scope of thepower and hence a writ of mandamus can beissued directing the CIT to entertain the applicationand to proceed to exercise the discretion within thelimits specified by law. 6.The same view was taken in case of Cheldas Khushaldas Patel & Ors. .Vs. C.I.T. Reported in 103 CTR (Guj.) P.1 equal to(1992) 196 ITR P.200 (Guj.). 7.TheBombayHighCourtinAnand B.Apte ..vs..-Commissioner of IncomeTax 2004 (270) ITR 581further observed that Section 273A of the Act contemplates full and true disclosuremade voluntarily and in good faith even though such a disclosure ismade through belated returns.In that case, the application ofwaiver under Section 273 of the Act cannot be rejected on theground that there was no voluntary disclosure, and as such order ofCommissioner was quashed and set aside and the matter wasremanded to decide the application on merit. 8.In Shrikrishna S.Bhagwat ..vs.. S.N.Soni, Commissioner of Income Tax 2004 ITR (270) Bom. 186, this court while consideringSection 139(8), 217 and 273(1)(b) and specially Section 273A hasobserved as under - 7.TheBombayHighCourtinAnand B.Apte ..vs..-Commissioner of IncomeTax 2004 (270) ITR 581further observed that Section 273A of the Act contemplates full and true disclosuremade voluntarily and in good faith even though such a disclosure ismade through belated returns.In that case, the application ofwaiver under Section 273 of the Act cannot be rejected on theground that there was no voluntary disclosure, and as such order ofCommissioner was quashed and set aside and the matter wasremanded to decide the application on merit. 8.In Shrikrishna S.Bhagwat ..vs.. S.N.Soni, Commissioner of Income Tax 2004 ITR (270) Bom. 186, this court while consideringSection 139(8), 217 and 273(1)(b) and specially Section 273A hasobserved as under - “Dissection of the above provisions would spell out thecondition precedent for exercise of discretion to waivethe penalty or interest under section 273A of the Act,which can be cataloged as under : (a) voluntary disclosure of income before issuance ofnotice under section 139(2); (b) making of full and true disclosure of the income ingood faith; (c)co-operationintheconductofincometaxassessment proceedings; (d) payment or satisfactory arrangement for payment oftax or interest payable in consequence of an orderpassed with respect to the relevant assessment year. The Division Bench of th is court in the case ofLaxman v. CIT [1988] 174 ITR 465 had also an occasionto deal with the interpretation of Section 273A of theAct, wherein the Division Bench observed that the mostimportant facet of Section 273A is furnishing of return inrespect of income voluntarily and in good faith with fulland true disclosure of particulars thereof. According totheDivisionBench“voluntary”means“withoutcompulsion”. Secondly, according to the Division Benchthough “good faith” is not defined under the Act,considering the definition given under section 2(22) ofthe General Clauses Act it means an act done honestlyevenifitistaintedwithnegligenceormistake.According to the Division Bench all that is required isthat disclosure of income must be full and true accordingto the honest belief of the assessee.” And thereby in that matter also the order of the Commissioner was quashed and the matter was remanded back to decide applicationunder Section 273 of the Act by a reasoned order as expeditiouslyas possible.It is necessary for the commissioner to take intoconsideration all the material available on the record (SangramSingh Mehta .vs. Income Tax Officer (2008)296 ITR 483 (Raj.). 9.In Sukhdev Hargopal Puri ..vs.. Union of India and others[2005] 279 ITR 591 (Bom),this court has considered the power ofCommissioner to grant waiver as a one time measure can grantrelief with regard to any number of assessment years based uponthe Section 273A(3) of the Act. 10.In the present case, there is no dispute that the returnwas filed before any demand notice was issued by the department.The returns were admittedly filed late but considering the schemeof Section 273A as explained and as all the ingredients areavailable, the concerned respondent ought to have considered thecase in view of the scheme and purpose of Section 273A asobserved above. In our view, all those ingredients are available infavour of the petitioner. 11.There is amendment to Section 273A of the Act w.e.f.1/4/1989.The said new sub-section, however, is applicable toassessment year 1989-90 onwards.The case of the petitioner,therefore, is in no way affected by the said amendment as returnspertain to years 1985-86 to 1988-89. 10.In the present case, there is no dispute that the returnwas filed before any demand notice was issued by the department.The returns were admittedly filed late but considering the schemeof Section 273A as explained and as all the ingredients areavailable, the concerned respondent ought to have considered thecase in view of the scheme and purpose of Section 273A asobserved above. In our view, all those ingredients are available infavour of the petitioner. 11.There is amendment to Section 273A of the Act w.e.f.1/4/1989.The said new sub-section, however, is applicable toassessment year 1989-90 onwards.The case of the petitioner,therefore, is in no way affected by the said amendment as returnspertain to years 1985-86 to 1988-89. 12.The Supreme Court judgment, as cited by the leanedcounsel appearing for the respondent, in Commissioner of IncomeTax .vs. I.M.Patel and Co., 1992 ITR SC 297,deals with Section271(1)(a) of the Act which provides that reasonable cause for delayin filing the return needs to be explained by the assessee. That wasnot the case of filing of return voluntarily and in good faith. In thatcase, the assessee was unable to explain the delay in filing thereturn.The facts and circumstances, therefore, are quite distinctand distinguishable.The second judgment as cited by therespondent is Commissioner of Income Tax ..vs.. Abdul HamidShah Mohamed, 1983 ITR (141) p.413 (Bom.).In that case alsosection 139 r/w 271 were involved. However, liberty was granted totheassesseetofileapplicationunderSection273Aforappropriate relief.Therefore, this case is also of no assistance tothe petitioner in view of the issue as raised in the present case,dealing with principly the scheme and object of Section 273A of theAct. 13.The non-obstante clause of Section 273A makes theprovision single out of lot. The power/discretion so provided to theCommissioner to waive/reduce penalty and interest needs to beexercisedjudiciously,fairly,reasonably,objectivelyandnotarbitrarily.The Commissioner, essentially after applying his mindto facts and circumstances of the case needs to pass speaking andreasoned order after taking into consideration the scheme andobject of the Section 273A including the elements like; voluntaryact of filing return in good faith; full and true disclosure of income;payment of the tax; and cooperation. Once the case is made outfor waiver/reduction, the Commissioner needs to exercise thepowers in favour of the assessee. 14.The reason given by respondent to reject petitioner'sapplication is insufficient and there is failure to consider all theelements to exercise the power and discretion as contemplatedunder scheme of the Section 273A. The late filing of return by itselfcannot be the only reason to reject the application in case of returnfiled voluntarily and in good faith like present one, as those werefiled even prior to the notice or any such demand. 15.Taking all these into account, we quash and set aside theorderoftheCommissionerofIncomeTaxpassedincaseNo.410004/273A/14D/90-91 dated 21/10/1993.The applicationfiled by the petitioner be reconsidered, in view of above, on merit,expeditiously. The petition is allowed with no order as to costs. JUDGE JUDGE. chute