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S. Sannaiah Vs. Commissioner of Income-tax, Mysore and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 3260 of 1970
Judge
Reported in[1974]95ITR435(KAR); [1974]95ITR435(Karn); (1973)1MysLJ418
ActsIncome Tax Act, 1961 - Sections 139(1), 139(2), 271(1) and 271(4A)
AppellantS. Sannaiah
RespondentCommissioner of Income-tax, Mysore and anr.
Appellant AdvocateS.P. Bhat, Adv.
Respondent AdvocateS.R. Rajasekhara Murthy, Adv.
Excerpt:
.....in good faith and that he has not made full disclosure of his income. the expression 'voluntarily and in good faith' occurring in clause (a) of sub-section (4a) refers to the 'full disclosure of income' of the assessee. under clause (a) of sub-section (4a), the commissioner has to be satisfied that the assessee has made full disclosure of his income voluntarily and in good faith. there is an obligation cast under section 271(4a) on the commissioner to examine the case of the petitioner and satisfy himself as to whether he fully satisfies all the conditions laid down in clauses (a), (b) and (c) and if any of the conditions have not been satisfied, then the commissioner ought to state as to which condition has not been satisfied......(4a), the commissioner has to be satisfied that the assessee has made full disclosure of his income voluntarily and in good faith. there is an obligation cast under section 271(4a) on the commissioner to examine the case of the petitioner and satisfy himself as to whether he fully satisfies all the conditions laid down in clauses (a), (b) and (c) and if any of the conditions have not been satisfied, then the commissioner ought to state as to which condition has not been satisfied. in other words, the order of refusal to exercise the discretion should be a speaking order as the same is open to scrutiny by this court. since the impugned order is not a speaking order, the same cannot be allowed to stand undisturbed. accordingly, we allow this writ petition, quash the impugned order.....
Judgment:

Govinda Bhat, J.

1. This matter arises under the Income-tax Act, 1961, hereinafter referred to as the Act. The petitioner owned one lorry since the year 1964. Prior to the assessment year 1965-66, he was not an assessee under the Act. He did not file his return of income for the assessment years 1965-66 to 1969-70 as required under the Act. On November 4, 1969, he voluntarily submitted his returns for the assessment years 1965-66 to 1969-70. On the said returns, the assessing authority (respondent No. 2) completed the assessment and passed assessment orders on November 20, 1969. On the same day, the 2nd respondent issued notices to the petitioner under sub-section (1) of section 271 of the Act to show cause why penalty should not be imposed on him. On receipt of the said notices, the petitioner made an application dated March 2, 1970, before the Commissioner of Income-tax in Mysore (respondent No. 1) for waiving the penalty under section 271(4a) of the Act. In the said application the petitioner stated that he has fully satisfied the requisite conditions for exercise of the discretion of the Commissioner for reduction or waiver of the amount of minimum penalty imposable on the petitioner. It was expressly stated that he had filed his returns of income for the assessment years 1965-66 to 1969-70 voluntarily before notices under section 139(2) were issued, that he had co-operated fully in the enquiry relating to the assessment and that he has already paid the tax assessed. The Commissioner of Income-tax by his order dated April 27, 1970, rejected the said application on the ground that the conditions for invoking his discretion under section 271(4A) have not been satisfied. The said order reads thus :

'The petition dated March 2, 1970, for waiver of penalty imposable under section 271(1)(a) for the assessment years 1965-66 to 1968-69 is rejected, as the conditions for invoking section 271(4A) are not satisfied in this case'.

2. The petitioner has challenged the said order under article 226 of the Constitution. The ground urged by Sri S. P. Bhat for the petitioner is that the order of the commissioner is not a speaking order. The 1st respondent has not filed any counter-affidavit, but a counter-affidavit has been filed by Sri A. R. Balakrishna Tilakan, Income-tax Officer (O. S. D.), Bangalore, in which the reasons for rejection of the petitioner's application have been set out.

3. That the order of the 1st respondent impugned is not a speaking order has not been disputed and cannot be disputed. But it was urged by Sri S. R. Rajasekhara Murthy for the department that, if we peruse the counter-affidavit filed by the Income-tax Officer, the order impugned can be supported and, therefore, we should not interfere in the instant case.

4. Sub-section (4A) of section 271, so far as it is relevant, reads thus :

'Notwithstanding anything contained in clause (i).... of sub-section (1), the Commissioner may, in his discretion -

(i) reduce or waive the amount of minimum penalty imposable on a person under clause (i) of sub-section (1) for failure, without reasonable cause, to furnish the return of total income which such person was required to furnish under sub-section (1) of section 139, .... if he is satisfied that such person -

(a) in the case referred to in clause (i) of this sub-section has, prior to the issue of notice to him under sub-section (2) of section 139, voluntarily and in good faith, made full disclosure of his income......

(b) has co-operated in any enquiry relating to the assessment of such income; and

(c) has either paid or made satisfactory arrangements for payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year'.

5. The discretion that is vested in the Commissioner under sub-section (4A) is either to reduce or waive the amount of minimum penalty imposable on a person under sub-section (1) of section 271, if the conditions laid down in clauses (a), (b) and (c) are satisfied. If the said conditions are satisfied, the Commissioner has no discretion to refuse to reduce or waive the amount of minimum penalty imposable, but he is under a statutory duty to exercise his discretion of either reducing or waiving the penalty. In the instant case it was not contended by the learned counsel for the department that conditions laid down by clauses (b) and (c) have not been satisfied. All that was stated in the counter-affidavit was that the returns by the petitioner were not filed in good faith and that he has not made full disclosure of his income. That the petitioner had submitted his returns voluntarily before the issue of notices to him under sub-section (2) of section 139 is undisputed. The expression 'voluntarily and in good faith' occurring in clause (a) of sub-section (4A) refers to the 'full disclosure of income' of the assessee. Under clause (a) of sub-section (4A), the Commissioner has to be satisfied that the assessee has made full disclosure of his income voluntarily and in good faith. There is an obligation cast under section 271(4A) on the Commissioner to examine the case of the petitioner and satisfy himself as to whether he fully satisfies all the conditions laid down in clauses (a), (b) and (c) and if any of the conditions have not been satisfied, then the Commissioner ought to state as to which condition has not been satisfied. In other words, the order of refusal to exercise the discretion should be a speaking order as the same is open to scrutiny by this court. Since the impugned order is not a speaking order, the same cannot be allowed to stand undisturbed. Accordingly, we allow this writ petition, quash the impugned order dated April 27, 1970 (exhibit 'C'), and direct the 1st respondent to make a fresh order in accordance with law in the light of this order. It is ordered accordingly.

6. No costs.


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