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Purshottam Thackersey Vs. K.N. Anantarama Ayyar, Commissioner of Income-tax and Another (No. 2) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberWrit Petition No. 39 of 1980
Judge
Reported in(1985)44CTR(Bom)109; [1985]154ITR438(Bom); [1984]17TAXMAN162(Bom)
Acts Income Tax Act, 1961 - Sections 271(1) and 273A
AppellantPurshottam Thackersey
RespondentK.N. Anantarama Ayyar, Commissioner of Income-tax and Another (No. 2)
Excerpt:
direct taxation - penalty - sections 271 (1) and 273a of income tax act, 1961 - penalty imposed on assessee under section 271 (1) - assessee applied for waiver of penalty - commissioner by impugned order reduced penalty - appeal against reduction of penalty imposed under section 271 (1) (c) - commissioner reduced amount of penalty without assigning any reason - order of commissioner set aside. - - after setting out the relevant facts about the declaration of the dividends and non-receipt of the same, the assessee pointed out that the particulars of dividends were disclosed voluntarily and in good faith and before detection by the ito......is the karta. the order under challenge in this petition was passed on december 21, 1978, by the commissioner of income-tax under s. 273a of the i.t. act, 1961, and the relevent assessment years are 1968-69 to 1975-76. the assessee claims that among the properties held by the huf are shares in two private limited companies, m/s. sunderdas thackersey and bros. pvt. ltd. and m/s. ashvin properties pvt. ltd. both the said companies had their offices at calcutta and both the said companies were family concerns carried on exclusively by and under control of the brother of the petitioner in calcutta. the asessee claims that for the first time in december, 1976, the huf learnt that the companies had declared dividends for each year from year the 1960-61 onwards. the assessee claims that no.....
Judgment:

Pendse, J.

1. The petitioner is an assessable person on behalf of Purshottam Thackersey, HUF, of which the petitioner is the karta. The order under challenge in this petition was passed on December 21, 1978, by the Commissioner of Income-tax under s. 273A of the I.T. Act, 1961, and the relevent assessment years are 1968-69 to 1975-76. The assessee claims that among the properties held by the HUF are shares in two private limited companies, M/s. Sunderdas Thackersey and Bros. Pvt. Ltd. and M/s. Ashvin Properties Pvt. Ltd. Both the said companies had their offices at Calcutta and both the said companies were family concerns carried on exclusively by and under control of the brother of the petitioner in Calcutta. The asessee claims that for the first time in December, 1976, the HUF learnt that the companies had declared dividends for each year from year the 1960-61 onwards. The assessee claims that no intimation was given at any time to the members of the HUF about the declaration of the dividends nor was any payment received in pursuance of such declaration. The assessee therefore on December 31, 1976, adderssed a petition to the Commissioner of Income-tax under s. 273A of the I.T. Act, 1961, for waiver of penalty imposable under s. 271(1)(c) of the said Act. After setting out the relevant facts about the declaration of the dividends and non-receipt of the same, the assessee pointed out that the particulars of dividends were disclosed voluntarily and in good faith and before detection by the ITO. The assessee offered to pay the tax that may be found payable even with respect to the assessment years for which action has become time-barred. The assessee offered to co-operate in any inquiry regarding the assessment by the ITO, and requested that the penalties imposable may be waived. The Commissioner of Income-tax by the impugned order dated December 21, 1978, felt that the case of the assessee was fit for reduction rather than complete waiver of the case of the penalties under s. 217(1)(c) of the I.T. Act, 1961. The penalties for the assessment years 1968-69 and 1970-71 to 1975-76 were, therefore, reduced and that order is under challenge.

2. Shri Ganesh, learned counsel appearing on behalf of the petitioner, submits that the Commissioner has reduced the amount of penalty without assigning any reasons and it is not possible to gather from the order as to why the Commissioner declined to waive the penalty in its entirety. The learned counsel relied upon the decision of the Gujarat High Court in Rasiklal Ranchhodbhai Patel v. CWT [1980] 121 ITR 219, where it was observed that the Commissioner must disclose how his mind works in law and why it was decided not to waive the penalty but to reduce it and how the particular figure was arrived at. In my judgment, as the impugned order is entirely silent as to what reasons prompted the Commissioner to reduce the penalty instead of waiving it, it is necessary two set aside the order and remit the proceedings back to the Commissioner for fresh disposal. The Commissioner must consider all facets of the matter and exercise the powers under s. 273A of the I.T. Act, 1961, by a speaking order setting out the reasons, in case the entire penalty is not waived.

3. Accordingly, the petition succeeds and the rule is made absolute and the order dated December 21, 1978, passed by the Commissioner of Income-tax, Bombay city-V, Bombay, is set aside and the proceedings are remitted back to the Commissioner for passing a fresh order in accordance both the observations made in the judgment. There will be no order as to costs.


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