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Millan Bone Mills Vs. Commissioner of Income-tax and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberCivil Miscellaneous Writ Petition No. 194 of 1980
Judge
Reported in(1984)39CTR(All)101; [1984]149ITR663(All); [1984]17TAXMAN118(All)
ActsIncome Tax Act, 1961 - Sections 139(2), 139(8), 271(1) and 273A(1)
AppellantMillan Bone Mills
RespondentCommissioner of Income-tax and anr.
Appellant AdvocateD.C. Chaturvedi, Adv.
Respondent AdvocateM. Katju, Adv.
Excerpt:
.....to him under sub-section (2) of section 139, voluntarily and in good faith made full and true disclosure of his income ;(b) in the case referred to in clause (ii), has, prior to the detection by the ito, 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; (c) in the cases referred to in clause (iii), has, prior to the issue of a notice to him under sub-section (2) of section 139, or where no such notice has been issued and the period for the issue of such notice has expired, prior to the issue of notice to him tinder section 148, voluntarily and in good faith made a full and true disclosure of his income and has paid the tax on the income..........to him under sub-section (2) of section 139, voluntarily and in good faith made full and true disclosure of his income ;(b) in the case referred to in clause (ii), has, prior to the detection by the ito, 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;(c) in the cases referred to in clause (iii), has, prior to the issue of a notice to him under sub-section (2) of section 139, or where no such notice has been issued and the period for the issue of such notice has expired, prior to the issue of notice to him tinder section 148, voluntarily and in good faith made a full and true disclosure of his income and has paid the tax on the income.....
Judgment:

Seth, J.

1. The papers in connection with this writ petition were placed before us today for considering the prayer for interim relief. Asthe parties have exchanged their affidavits, learned counsel appealing for them requested that instead of considering the prayer for interim relief, we should hear and dispose of the petition itself on merits. We have accordingly heard counsel for both the parties on merits of the petition itself and are proceeding to dispose of the same.

2. By this petition under art, 226 of the Constitution the petitioner prays that the order dated February 23, 1980, passed by the Commissioner Agra, refusing to waive/reduce the penalty and interest in exercise of powers under Section 273A of the I.T. Act, be quashed.

3. The petitioner is a registered partnership firm. For the assessment years 1973-74, 1974-75 and 1975-76, it filed its income-tax returns late but before any notice was issued to ii under Section 139(2) of the I.T. Act. Eventually, the ITO passed the assessment orders in respect of each of the three years and imposed a penalty under Section 271(1)(a) and also charged interest under Section 139(8) as hereunder :

Assessmentyear

Penaltiesimposed u/s. 271(1)(a)

Interestcharged u/s 139(8)

1973-74

11,760

7,056

1971-75

9,820

4,804

1975-76

1,080

1,615

4. The petitioner then invoked the jurisdiction of the Commissioner and requested him to waive/reduce the amount of penalty and interest in exercise of powers under Section 273A(1). The Commissioner, vide his order dated February 23, 1980, rejected the petitioner's application on the ground that the condition precedent for the exercise of jurisdiction under Section 273A(1) of the I.T. Act was not fulfilled inasmuch as the assessee's case could not be regarded as one of disclosure for invoking the provisions of Section 273A of the Act for waiver/reduction of the penalties imposed under Section 271(1)(a) and interest charged under Section 139(8) of the Act for the assessment years 1973-74 to 1975-76 inasmuch as the assessee was a regular assessee who had been assessed to tax ever since the assessment year 1969-70. Aggrieved, the petitioner has approached this court for relief under art. 226 of the Constitution.

5. The casts of the petitioner before us is that the Commissioner committed an apparent error in taking the view that in the instant case the requisite conditions laid down under Section 273A(1) of the I.T. Act for waiver/ reduction of penalties and charging of interest were not fulfilled inasmuch as the assessee had been a regular assessee assessed to tax since the assessment year 1969-70. A plain reading of Section 273A(1) shows that the conditions precedent for the exercise of discretion for waiver/reducing thepenalty and charging of interest are that the Commissioner should be satisfied that the person making the claim :

(a) in the case referred to in Clause (i), has, prior to the issue of a notice to him under Sub-section (2) of Section 139, voluntarily and in good faith made full and true disclosure of his income ;

(b) in the case referred to in Clause (ii), has, prior to the detection by the ITO, 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;

(c) in the cases referred to in Clause (iii), has, prior to the issue of a notice to him under Sub-section (2) of Section 139, or where no such notice has been issued and the period for the issue of such notice has expired, prior to the issue of notice to him tinder Section 148, voluntarily and in good faith made a full and true disclosure of his income and has paid the tax on the income so disclosed.

6. We find that there is nothing in the order of the Commissioner to show that he had applied his mind about the existence or non-existence of any of the aforementioned conditions. Instead, he thought that the conditions precedent for exercise of discretion under Section 273A did not exist as the petitioner was an old assessee. There is nothing in the three clauses of Section 273A(1) mentioned above which shows that the discretion tinder Section 273A is not to be exercised in the case of a person who had been a regular assessee. It is thus clear that the Commissioner has rejected the petitioner's request for waiving/reducing the imposition of penalty and charge of interest on irrelevant considerations and this has the effect of vitiating his order.

7. A similar view was taken by the Punjab and Haryana High Court in the case of Dr. Paramjit Singh Grewal v. CIT .

8. In the result, the petition succeeds and is allowed. The order of the Commissioner dated February 28, 1980 (annex. 1 to the writ petition) is quashed. The Commissioner is directed to reconsider the petitioner's prayer for waiving/reducing the penalties imposed under Section 271(1)(a) of the I.T. Act and the interest charged under Section 139(8) and to dispose of the same afresh in accordance with law. Parties are directed to bear their own coats.


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