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Shital Prasad Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberC.M. Writ Petition No. 2270 of 1981
Judge
Reported in(1986)53CTR(All)247; [1986]161ITR259(All)
ActsIncome Tax Act, 1961 - Sections 139(1), 271(1), 273A, 273A(1) and 273A(4); Constitution of India - Article 226
AppellantShital Prasad
RespondentCommissioner of Income-tax
Appellant AdvocateK.B. Jindal, Adv.
Respondent AdvocateP.N. Misra and ;S.C. Misra, Advs.
Excerpt:
- - still not satisfied, the petitioner preferred appeals for all the three years before the income-tax appellate tribunal, allahabad. after the petitioner had obtained complete success in assessment from the income-tax appellate tribunal, he filed writ petition no. this petition was disposed of by a division bench of this court by the judgment and order dated july 6, 1979, annexure 7. the division bench was of the opinion that after the petitioner had obtained complete success from the income-tax tribunal, he should have approached the commissioner for waiver of penalty and penal interest bringing to his notice the changed circumstances. after reproducing the opinion of the ministry of law, the ministry of finance advised the commissioner that it was not open to him to review the.....s.c. mathur, j.1. by our short order dated november 29, 1984, we had allowed this petition and quashed the orders dated february 13, 1979, and february 19, 1981, annexures 3 and 10, respectively, passed by the commissioner of income-tax, lucknow, in proceedings under section 273a of the income-tax act, 1961, act no. 43 of 1961, in short 'act'.2. by the impugned order dated february 13, 1979, the petitioner's application under section 273a of the act for waiver of penalty and penal interest arising from late filing of income-tax returns for the assessment years 1971-72, 1972-73 and 1973-74 was rejected by sri s.k. lall, the then commissioner of income-tax, lucknow, and by order dated february 19, 1981, his successor, sri dharni dhar, has refused to reconsider the order of his predecessor.....
Judgment:

S.C. Mathur, J.

1. By our short order dated November 29, 1984, we had allowed this petition and quashed the orders dated February 13, 1979, and February 19, 1981, annexures 3 and 10, respectively, passed by the Commissioner of Income-tax, Lucknow, in proceedings under Section 273A of the Income-tax Act, 1961, Act No. 43 of 1961, in short 'Act'.

2. By the impugned order dated February 13, 1979, the petitioner's application under Section 273A of the Act for waiver of penalty and penal interest arising from late filing of income-tax returns for the assessment years 1971-72, 1972-73 and 1973-74 was rejected by Sri S.K. Lall, the then Commissioner of Income-tax, Lucknow, and by order dated February 19, 1981, his successor, Sri Dharni Dhar, has refused to reconsider the order of his predecessor in the light of subsequent developments. Left with no remedy, the petitioner has approached this court for redress of his grievance under Article 226 of the Constitution. A few facts material for the disposal of this writ petition may be noticed.

3. The petitioner's mother, Smt. Devi Sundra, voluntarily filed returns of her income for nine assessment years, including the years mentioned above, on August 16, 1976. The returns for the years in question as also for other years were filed belatedly and the petitioner had rendered herself liable to pay penalty and penal interest under the provisions of the Act. Under Section 273A of the Act, the Commissioner of Income-tax has jurisdiction to waive the penalty and penal interest. Taking advantage of this provision, the petitioner moved an application on September 1, 1979, for waiver of the said penalties ; a copy of this application is annexure 2. This application was moved by the petitioner as his mother, Smt. Devi Sundra, had died in the meanwhile and in the assessment proceedings, thepetitioner represented the estate of his mother. By a composite order dated August 10, 1977, the Income-tax Officer, 'D' Ward, Circle II, Lucknow, completed assessment in respect of all the nine assessment years. By this order, the Income-tax Officer accepted the returns for the years 1974-75, 1975-76 and 1976-77 in their entirety. Slight enhancement was made in the income for the years 1968-69, 1969-70 and 1970-71, but in the 'years in dispute, substantial enhancements were made. In the year 1971-72 against the returned income of Rs. 13,255, the income assessed was at Rs. 21,555; similarly, in the years 1972-73 and 1973-74, against the returned incomes of Rs. 10,755 and Rs. 7,083, the incomes assessed were Rs. 21,755 and Rs. 18,083, respectively. In view of the fact that returns had been filed belatedly, the officer directed issue of penalty notices under Section 271(1)(a). For the same reason, he also directed that interest be charged under Section 139(8). It was after the passing of this order that an application for waiver of penalty and penal interest was filed under Section 273A. Simultaneously, the petitioner preferred appeals before the Appellate Assistant Commissioner against the enhancement of the figures of income in the years 1971-72, 1972-73 and 1973-74. These appeals were partly allowed and the figures of assessed income were reduced. Still not satisfied, the petitioner preferred appeals for all the three years before the Income-tax Appellate Tribunal, Allahabad. The Tribunal granted relief to the petitioner in all the three years. Thus, the additions which had been made to the income by the Income-tax Officer were completely wiped off. The order of the Appellate Assistant Commissioner was rendered on October 12, 1978, and that of the Tribunal on August 23, 1979. The petitioner's application for waiver came to be disposed of by the Commissioner in between these two dates, i.e., on February 13, 1979, to be precise. By this date, the stigma of concealment of income which had been put up by the order of the Income-tax Officer had not been completely effaced as the Appellate Assistant Commissioner had allowed the appeals only partly. After the petitioner had obtained complete success in assessment from the Income-tax Appellate Tribunal, he filed Writ Petition No. 3/1626 of 1979 (Tax) in this court for quashing of the Commissioner's order dated February 13, 1979, and for the issuance of a mandamus to forbear the Income-tax Department from realising the penalty and penal interest from him. This petition was disposed of by a Division Bench of this court by the judgment and order dated July 6, 1979, annexure 7. The Division Bench was of the opinion that after the petitioner had obtained complete success from the Income-tax Tribunal, he should have approached the Commissioner for waiver of penalty and penal interest bringing to his notice the changed circumstances. The petition was dismissed only on the ground that this demand for justice had not been made by the petitioner before approachingthis court. No observation was made by the Division Bench with regard to the petitioner's entitlement to claim waiver of the penalty and penal interest. After the decision of the writ petition, the petitioner moved an application before the Commissioner on October 6, 1979, annexure 8. Through this application he brought to the notice of the Commissioner the changed circumstances arising from the decision of the Income-tax Appellate Tribunal and also the judgment of this court. It appears that the Commissioner of Income-tax had doubts about his competence to review the order of his predecessor and he, therefore, made a reference to the Central Government in the Ministry of Finance, Department of Revenue, for guidance. The Ministry advised the Commissioner through its letter dated December 8, 1980, annexure 9. In this letter, the Ministry reproduced the opinion rendered by the Central Law Ministry to the effect that the power under Section 273A was quasi-judicial and not administrative in character and, therefore, power of review could not be exercised as the same has not been conferred by the Act. After reproducing the opinion of the Ministry of Law, the Ministry of Finance advised the Commissioner that it was not open to him to review the order of his predecessor dated February 13, 1979. In view of the opinion given to him by the Ministry of Finance, the Commissioner of Income-tax by his order dated February 19, 1981, annexure 10, rejected the petitioner's application dated October 6, 1979. Having failed to obtain redress from the Commissioner of Income-tax, the petitioner has again approached this court through the instant petition.

4. Sri K. B. Jindal, learned counsel for the petitioner, has not assailed the proposition that the power conferred under Section 273A is quasi-judicial and not administrative. He, however, submits that even though the power of review may not have been specifically conferred, it is implicit in this scheme of Section 273A itself. On this basis, he presses that the Commissioner's order dated February 19, 1981, suffers from manifest illegality.

5. Sri S. C. Misra, learned counsel for the Income-tax Department, has opposed the petition on the grounds stated in the opinion of the Central Government.

6. Before proceeding to consider the scheme of Section 273A, it would be desirable to notice the ground on which Sri S. K. Lall rejected the petitioner's claim of waiver in respect of the years in question and the basis on which he allowed the said claim in respect of the other years. As already noticed, belated returns were filed by the petitioner's mother for several years. Therefore, the liability for payment of penalty and penal interest had been incurred not only in respect of the years in dispute but in respect of other years also. In other years, the claim for waiver wasallowed and it was only in respect of the three years, presently in dispute, that the claim for waiver was disallowed. While allowing waiver for the years 1968-69, 1969-70 and 1970-71, the Commissioner observed as follows :

'Shri D. P. Gupta, advocate, attended and was heard. I have also looked into the records of income for the assessment years 1968-69 to1970-71 filed voluntarily prior to issue of notice under Section 139(2)/148. The variation in income returned and income assessed is due to difference of opinion. The disclosure of income is treated to be full, true and in good faith. The assessee appears to have co-operated in enquiries relating to assessment proceedings and has paid taxes on income disclosed and income assessed. All the conditions for waiver of penalty under Section 271(1)(a)/273(b) and interest under Section 139(8)/217 for the assessment years 1968-69 to 1970-71 having been fulfilled, I consider it to be a fit case for waiver under Section 273A.'

While allowing claim for waiver of interest under Section 139(8), he observed in respect of the years 1974-75 and 1975-76 as follows :

'So far as the waiver petition relates to 1974-75 and 1975-76, I find that the Income-tax Officer has not initiated penalty proceedings for those years ; hence, the petition for penalty is filed as infructuous. As regards interest for 1974-75 and 1975-76, I find that the assessee filed retuns of income for these years voluntarily, prior to issue of notice under Section 139(2)/148. Relevant assessments have been completed by the Income-tax Officer on the returned income. The disclosure of income is thus full, true and in good faith. The assessee appears to have co-operated in enquiries relating to assessment proceedings and has paid taxes on income disclosed and income assessed. All the conditions for waiver of interest under Section 139(2) having been fulfilled, I consider it to be a fit case for waiver under Section 273A.'

The years in dispute were dealt with in para. 3 of the order as follows :

'As regards waiver of penalty and interest for the assessment years1971-72 to 1973-74, I find that the additions made for undisclosed investments for these years have been upheld by the Appellate Assistant Commissioner of Income-tax. These additions clearly attract penalty under Section 271(1)(c). As such, the disclosure for these years cannot be treated to be full, true and in good faith. Thus, the conditions for waiver of penalty and interest for these years remain unfulfilled. Assessee's request for these years is accordingly rejected.'

From the above, it would be seen that the only reason which weighed with the Commissioner for denying waiver in the disputed years was that the assessee had made concealment of substantial income in her voluntary returns for these years. If the stigma of concealment was not there, it is very apparent that the petitioner would have obtained relief from the Commissioner even at the initial stage. But, at that time, the stigma of concealment was sticking to the petitioner. It came to be removed only subsequently by the order of the Tribunal. The consequence of the Tribunal's order is that the petitioner had not concealed any income even in the years in dispute. Now, the scheme of Section 273A may be examined.

7. Section 273A reads as follows :

'(1) Notwithstanding anything contained in this Act, the Commissioner may, in his discretion, whether on his own motion or otherwise,--

(i) reduce or waive the amount of penalty imposed or imposable on a person under Clause (i) of Sub-section (1) of Section 271 for failure, without reasonable cause, to furnish the return of total income which he was required to furnish under Sub-section (1) of Section 139; or

(ii) reduce or waive the amount of penalty imposed or imposable on a person under Clause (iii) of Sub-section (1) of Section 271 ; or

(iii) reduce or waive the amount of interest paid or payable under Sub-section (8) of Section 139 or Section 215 or Section 217 or the penalty imposed or imposable under Section 273, if he is satisfied that such person-

(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 Income-tax Officer, 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 under Section 148, voluntarily and in good faith made full and true disclosure of his income and has paid the tax on the income so disclosed,

and also has, in all the cases referred to in Clauses (a), (b) and (c), cooperated in any enquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year.....

(3) Where an order has been made under Sub-section (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section in relation to any other assessment year at any time after the making of such order.

(4) Without prejudice to the powers conferred on him by any other provision of this Act, the Commissioner may, on an application made in this behalf by an assessee, and after recording his reasons for so doing, reduce or waive the amount of any penalty payable by the assessee under this Act or stay or compound any proceeding for the recovery of any such amount, if he is satisfied that-

(i) to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case; and

(ii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him,

(5) Every order made under this section shall be final and shall not be called into question by any court or any other authority.'

In order to enable the Commissioner to exercise the power of waiver under Sub-section (1) of Section 273A, the following conditions have to coexist :

(1) the disclosure of income should be made voluntarily and not in pursuance of the notice issued by the Department;

(2) the disclosure of income should be full and true;

(3) there should be good faith ;

(4) the assessee should have co-operated in the enquiry relating to assessment of his income; and

(5) the assessee should have either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act.

Once these conditions are fulfilled, the power may be exercised by the Commissioner suo motu or otherwise, i.e., on the application of the assessee. Now, the question for consideration is whether the power to waive conferred under Sub-section (1) gets exhausted after the passing of an order under that sub-section or it continues even thereafter. If it continues, it cannot be said that the power of review is not available. Apart from Sub-section (1), power of waiver has been conferred under Sub-section (4) also. Under this provision, the power is available even to relieve an assessee of genuine hardship. The power is available not only to waive the amount of penalty but also to compound any proceeding for recovery of any such amount. From this, it would appear that the power of waiver can beexercised even while proceedings for recovery of penalty are going on. From this, it would further appear that the power of waiver may be exercised till the amount of penalty has not been finally recovered. If the power of waiver can be exercised under Sub-section (4) till the amount has not been finally recovered, there will be no rational basis for depriving the Commissioner of the power to review his order passed under Sub-section (1) at a stage earlier, i.e., between the imposition of penalty and its final recovery. This is the stage where the present matter appears to stand. For the discussion herein, we are of the opinion that under the scheme of Section 273A, it is open to the Commissioner to review his earlier order passed under Sub-section (1) thereof. We are consequently of the opinion that the Commissioner committed a manifest error when he rejected the petitioner's application dated October 6, 1979, annexure 8, on the ground that he had no power to review the order of his predecessor. When we say that the power of review may be exercised till the amount of penalty has not been recovered, we should not be understood as laying down that the power cannot be exercised after the amount has been paid or realised. Perhaps, it may be exercisable even thereafter as under Sub-section (1) of Section 273A, it is also one of the conditions prescribed for exercising discretion to waive penalty that the amount of interest, apart from tax, should have been paid or satisfactory arrangements should have been made for its payment. However, we refrain from making a final decision on this aspect of the matter as the arguments of the learned counsel did not cover it.

8. Even if it were to be held that the power of review is not available to the Commissioner, we are of the opinion that it is a fit case in which relief should be granted to the petitioner. In view of Sub-section (5) of Section 273A, the Commissioner's order under Sub-section (1) is neither appealable nor revisable. However, the jurisdiction of this court under Article 226 is very wide and in exercise of this jurisdiction relief can be granted to the petitioner by quashing the Commissioner's order dated February 13, 1979, annexure 3, rendering the petitioner's application under Section 273A without an order, thereby necessitating disposal of the said application according to law. Once the application comes up for fresh disposal, the Commissioner cannot refuse to take note of the order passed by the Tribunal. We are inclined to adopt this course because the ends of justice require so. It may be pointed out that out of the five conditions enumerated hereinabove, under which the Commissioner could exercise the power of waiver, only conditions Nos. 2 and 3 were found to be wanting. Condition No. 3 was found to be wanting in view of the non-fulfilment of condition No. 2. By virtue of the Tribunal's order, condition No. 2 can no longer be said to be wanting. Thus, the very basis of theCommissioner's order dated February 13, 1979, has been knocked off. In the circumstances, there would be no justification to maintain the said order.

9. We are also of the opinion that the petitioner's case can be considered by the Commissioner under Section 273A(4)(i) inasmuch as although the basis of the order dated February 13, 1979, annexure 3, has been knocked off, yet the said order is sought to be applied against him. It is being applied against him by saying that he will have to pay penalty and penal interest as the same has not been wiped off by the Commissioner. Thus, it is a case of genuine hardship also against which an assessee can be relieved by the Commissioner in exercise of the jurisdiction conferred under the provision herein mentioned.

10. Learned counsel for the petitioner had submitted that from the mere fact that in the opinion of the Income-tax Officer, the assessee's investment in construction of house was higher than that disclosed by her in her return, it could not be inferred that the disclosure of income was not full and true and lacked good faith. According to the learned counsel, it was only a matter of opinion inasmuch as the construction of the house itself had not been suppressed by the petitioner's mother. After disclosing the fact that the house had been constructed, she had given a certain figure of the investment made in the construction of the house. This figure in the opinion of the Income-tax Officer was low and he accordingly enhanced it and treated the difference between the two figures as concealed income. It was also pressed that the mere fact that what is disclosed by the assessee in his return is not accepted in the order of assessment, would not disentitle the petitioner straightaway for the relief under Section 273A(1). According to the learned counsel, the assessment order cannot be the yardstick to measure 'good faith' and 'full and true disclosure of his income'. On this basis, it was submitted that even the original order dated February 13, 1979, annexure 3, suffered from manifest error. In support of this submission, the learned counsel relied upon the following authorities :

Shareef Ahmad v. CWT : [1979]117ITR35(All) , Sri Scetha Mahala-kshmi Rice and Groundnut Oil Mill Contractors Co, v. C1T : [1981]127ITR579(AP) and K. L. Sreenivasulu v. C1T : [1981]127ITR834(KAR) .

In view of our opinion that the petitioner's application for waiver will have to be reconsidered on the basis of the present facts, it is not necessary to deal with this argument of the learned counsel.

11. For the reasons given above, the writ petition is allowed and para. 3 of the order dated February 13, 1979 (annexure 3), is hereby quashed. The subsequent order of the Commissioner dated February 19, 1981, contained in annexure 10, is also hereby quashed. The Commissionershall reconsider the petitioner's application dated September 1, 1977 (annexure 2), so far as it relates to the waiver of penalty and penal interest for filing belated return in respect of the assessment years 1971-72, 1972-73 and 1973-74 in accordance with law taking into account the observations made hereinabove. The costs of this petition shall be easy.

U.C. Srivastava, J.

12. The writ petition has been allowed, vide order dated November 29, 1984, for the reasons to be given later on. I have gone through the reasons assigned by my brother, Mathur J., and would like to give a few words of my own for arriving at the said conclusion.

13. The mother of the petitioner who had earlier never filed any income-tax return, filed returns for nine assessment years, viz., 1968-69 to 1976-77, some one month and 10 days before her death. Subsequent proceedings were taken or took place against the petitioner, her son, who was her heir and legal representative. The returns were accepted with minor adjustments. The Income-tax Officer also passed orders for issuance of penalty notices under Sections 271(1)(a), 271(1)(c) and 273(b), that is, for failure to furnish returns, concealment of particulars of incone and furnishing of inaccurate particulars of such income and failure without reasonable cause to furnish a statement of advance tax payable by him. At the same time, he also passed an order for charging of interest under Section 139(8) and Section 217 of the Act, viz., for late filing of return and for not sending the estimate.

14. The petitioner without waiting for the result of the appeal or other proceedings, on September 1, 1977, filed an application before the Commissioner of Income-tax praying for waiver of penalty and interest in exercise of his power under Section 273A of the Income-tax Act. In the meantime, the appeals filed by the petitioner against the assessment orders were allowed and reliefs for the year 1971-72 to 1973-74 were granted partly. The Commissioner of Income-tax took note of this appellate order dated October 12, 1978, and, vide his order dated February 13, 1979, accepted the petitioner's prayer for all the years except 1971-72 to 1973-74. Subsequently, vide order dated August 23, 1979, the Appellate Tribunal allowed the appeal filed by the petitioner for all these three years. Prior to it on June 11, 1979, the Appellate Assistant Commissioner, vide order dated June 11, 1979, knocked off the penalty order which was passed by the Income-tax Officer on February 23, 1979, in pursuance of notice issued by him referred to earlier.

15. It is thereafter that the petitioner filed a writ petition against the order praying for issuance of a writ of mandamus passed by the Commissioner of Income-tax under Section 273A, referred to above, which was dismissed at the admission stage after hearing the counsel for the parties, vide orderdated July 6, 1979, on the ground that the petitioner had not approached the Commissioner in view of the subsequent order passed by the Assistant Commissioner of Income-tax dated June 11, 1979, knocking off the penalty order, as no mandamus lies unless there is demand and refusal of relief and after the aforementioned order had not yet approached the Commissioner of Income-tax. It was thereafter the petitioner again filed an application on October 6, 1979, viz., just on the date when three months after the passing of the earlier order were going to expire, before the Commissioner of Income-tax for waiver of penalty and interest in view of the changed circumstances, viz., the order passed by the Appellate Assistant Commissioner referred to above.

16. Section 273A of the Income-tax Act confers a special jurisdiction upon the Commissioner to waive the penalty and interest imposed or imposable upon an assessee notwithstanding anything contained in the Act. For exercise of this discretion, certain conditions must exist. Under Sub-section (1), satisfaction of good faith, co-operation with enquiry and true disclosure of income, or true disclosure of particulars or full disclosure of income and payment of tax on income so disclosed is required while under Sub-section (4) of the said section, satisfaction with genuine hardship to the assessee if no order of waiver is passed and co-operation of the assessee in enquiry relating to assessment or for recovery of amount, as the case may be, is a must. The objective tests and the satisfaction of the Commissioner of Income-tax on certain matters and finality to his order (sic). Sub-section (4) too makes it clear that the power under this section is quasi-judicial in nature.

17. Sub-section (1) (i), (ii) and (iii) of Section 273A empower the Commissioner to waive or reduce the penalty imposed or imposable in respect of cases (i) for failure to furnish return under Section 139(1), (ii) failure to furnish return with out reasonable cause within time allowed, (iii) for concealment of income or furnishing inaccurate particulars, and (iv) for submitting false estimate or failure to pay advance tax (referred to in Section 273). The interest which can be waived or reduced is provided for under Sub-section (iii), that is, which is paid or payable under Sections 139(8), 215 and 217 of the Income-tax Act.

18. The Commissioner of Income-tax rejected the fresh application of the petitioner on the ground that once powers under Section 273A(3) have been exercised in favour of an assessee, he becomes disentitled to get relief of waiver or reduction of penalty in respect of any assessment year or years regarding the penalty and interest. Section 273A(3) reads as follows :

'Where an order has been made under Sub-section (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section in relation to any other assessment year at any time after the making of such order.'

The sub-section though in terms does not put a curb on the powers of the Commissioner, disentitles an assessee from getting relief in respect of other assessment year or years if relief in respect of one or more than one assessment year had already been granted by the Commissioner in the matter of waiver or reduction of penalty and interest. It does not mean that once powers in favour of an assessee have been exercised under Section 273A(3), powers under that section cannot be exercised in his favour so long as he is an assessee or is deemed to be an assessee. This sub-section puts a bar only in respect of the year and years for which relief could have been asked for but either it was not asked for or was refused. The language of this sub-section does not disable the Commissioner of Income-tax from granting any further relief in respect of those years for which relief had already been granted if in his opinion reasons for the same exist which may even include correction of clerical and arithmetical errors. This power under Section 273A(3) is to be exercised where the penalty or interest is imposable or imposed. The Commissioner has got powers to waive or reduce the penalty even at the stage it becomes payable provided mitigating circumstances for the same exist. He can stay or compound the same even at the stage of recovery proceedings. These powers are contained in Section 273A(4) of the Income-tax Act which can be exercised only on the application of a party and not on his own motion. The said Sub-section (4) reads as under :

'(4) Without prejudice to the powers conferred on him by any other provision of this Act, the Commissioner may, on an application made in this behalf by an assessee and after recording his reasons for so doing, reduce or waive the amount of any penalty payable by the assessee under this Act or stay or compound any proceeding for the recovery of any such amount, if he is satisfied that-

(i) to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case; and

(ii) the assessee has co-operated in any enquiry relating to the assessment or any proceeding for the recovery of any amount due from him.'

The power is exercisable notwithstanding any other provision in the Income-tax Act and provided the Commissioner comes to the conclusion with reasons for the same that if the same is not done, it would cause hardship to the assessee who has co-operated in assessment or recovery proceedings. The difference between Sections 273A(1) and 273A(4) is obvious as powers under Section 273A(1) are exercisable when the penalty is imposable or imposed and under Sub-section (4) when the same becomes payable or even in the recovery proceedings. If an application under Section 273A(1) for waiver is given when penalty becomes imposable, it can be given again under Section 273A(4) when it becomes payable. If it has been moved at the earlier stage when it is imposed, even then at subsequent stage up to the recovery proceedings, the same can be made again and party may get relief if conditions under s. 273A(4) are satisfied. Section 273A(4) to the extent mentioned above is rather in the nature of an exception to Section 273A(1) but it is not in the nature of review of the order passed by the Commissioner earlier under Section 273A(1) as it will be a fresh proceeding though it may result in variation or modification of the earlier order passed by the Commissioner.

19. Apart from certain specific powers conferred upon a civil court, the Civil Procedure Code does not apply to proceedings under the Income-tax Act. Order 47, Rule 1, Civil Procedure Code conferring powers of review upon a civil court to review its order does not apply to the Commissioner or other officers exercising powers under the Indian Income-tax Act. Under a statute, powers of review are either conferred specifically or by implication. In the absence of any indication in the statute, an authority exercising judicial or quasi-judicial power cannot review his order except in exceptional cases for correcting its own mistakes. In the absence of any indication in the statute, there is no inherent power of review in the Tribunal or the authority concerned. The Income-tax Act does not confer any such power on the Commissioner to review his order. The only power conferred upon the Commissioner is under Section 154 of the Income-tax Act to correct apparent errors in his revisional orders under Sections 263 and 264 of the Income-tax Act. The Commissioner of Income-tax has thus no power to review his order passed under Section 273A(1) or 273A(4) on his own motion or at the instance of a party for giving relief or further relief, as the case may be.

20. The order imposing penalty was knocked off, vide order dated February 13, 1979. But in view of the order passed by the Commissioner regarding his prayer for waiving the same, an anomalous situation has arisen. There being no order imposing penalty, the question of its realisation may not arise, but in view of the Commissioner's order, realisation on the basis of the original order is said to have been maintained by the Commissioner. Question of realisation and payment of penalty is said to be hanging over his head. Section 273A(4) obviously overcomes this situation. The petitioner's application under Section 273A(4) becomes entertainable notwithstanding the fact that his application moved earlier at the stage when itwas only imposable has already been rejected. The Commissioner of Income-tax committed a manifest error of law in rejecting the application without considering the stage at which it was moved. So far as the conditions laid down in Section 273A(4) are concerned, they were fully satisfied as was held by the Commissioner in his first order regarding other years. By not entertaining the application and passing suitable orders, he failed to exercise a jurisdiction vested in him.

21. But so far as penal interest is concerned, the position is somewhat different. There is no provision corresponding to Section 273A(4) regarding interest when it becomes payable. If the Commissioner exercises powers regarding interest imposed under the sections mentioned in Section 273A(1)(iii) one way or the other, that order becomes final and cannot be reopened by him against either of his own motion or at the instance of the assessee concerned.

22. The Commissioner of Income-tax waived the penalty and interest for 1968-69 to 1970-71 as the disclosure of income was held by him to be full, true and in good faith and that he also co-operated in the enquiry and paid the taxes. On the same grounds, interest under Section 139(8) too was waived for 1974-75 and 1975-76. So far as the intervening years of 1971-72 to 1973-74 are concerned, there was no difference but interest was not waived on the ground of additions made for undisclosed investment for these years which were also upheld by the Appellate Assistant Commissioner that is the ground on which penalty was also not waived. The conclusion regarding the nature of disclosure and good faith for previous and subsequent years and that of intervening years are obviously not the same. The ground on which the conclusion for intervening period was arrived at was wiped out by the Appellate Assistant Commissioner. Interest was imposed under Section 139(8) and Section 217. The Commissioner did not consider the case of interest separately from that of penalty. He even did not consider the Explanation to Section 273A(1) of the Income-tax Act which was amended with effect from April 1, 1976. The ground which could have been a ground for not waiving or reducing the penalty could not necessarily be a ground for refusing waiver or reduction of interest imposed on two counts. The Commissioner thus did not apply his mind to the relevant considerations while considering the plea of the petitioner for the waiver of penal interest.

23. The question then which needs consideration is whether relief against this order passed on February 13, 1979, can be granted at this belated stage when the same was not even questioned in earlier petition. There is no absolute bar for not entertaining a belated writ petition. Thepetitioner has been agitating the matter continuously before one authority or the other and before this court which obviously was under legal advice. He was taking recourse to statutory remedy also. At the earlier stage, so far as penalty part of the order is concerned, it was difficult for him to challenge it in this court. The second petition was filed under the belief that because of subsequent order, no penalty and interest were chargeable and the same were to be waived, and so he approached this court. Thus, it could not be said that the petitioner was sleeping over his right or there were laches on his part. As such, in view of the facts of this case including the unbroken efforts for relief, the hardship and injustice which may otherwise result, it appears to be a fit case in which interference with the said order passed by the Commissioner be made both for the penalty as well as interest. The Commissioner of Income-tax will now reconsider the application of the petitioner dated September 1, 1977, and will pass orders in the matter in accordance with law.

ORDER

24. For reasons given in our judgment, the writ petition is allowed and para. 3 of the order dated February 13, 1979 (annexure 3), is hereby quashed. The subsequent order of the Commissioner dated February 19, 1981, contained in annexure 10 is also hereby quashed. The Commissioner shall reconsider the petitioner's application dated September 1, 1977 (annexure 2), so far as it relates to the waiver of penalty and interest for filing belated return in respect of the assessment years 1971-72, 1972-73 and 1973-74 in accordance with law taking into account the observations made in our judgments.

25. Costs of this petition shall be easy.


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