1. The following question has been referred to us for our opinion, under Section 256(1) of the Income-tax Act, 1961 :
'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in deleting the penalties of Rs. 24,671 and Rs. 24,388 levied under Section 271(1)(a) for the assessment years 1958-59 and 1959-60?'
2. There is no dispute that the assessee did commit default in terms of Section 271(1) (a) and (c) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). The Income-tax Officer, for the assessment years 1958-59 and 1959-60, finally assessed the assessee on 29th March, 1967. The total income assessed was Rs. 1,01,712 and Rs. 98,035, respectively. Penalty proceedings under Section 271(1)(a) and 271(1)(c) of the Act was also initiated for both the years. The assessee then moved a' petition in April, 1967, before the Commissioner of Income-tax for settlement of his tax liability for various years, including the assessment years 1958-59 and 1959-60. The Commissioner called for a report from the Inspecting Assistant Commissioner of Income-tax, Range-C, Amritsar, and on receipt of his report the Commissioner conveyed his decision to the Inspecting Assistant Commissioner of Income-tax, who in turn conveyed it to the Income-tax Officer and the Income-tax Officer conveyed it to the assessee. The decision of the Commissioner is at annexure 'E' and is in the following terms:
'Sub.: Voluntary Disclosure Scheme under Section 271(4A) of the Income-tax Act, 1961, Shri Swaran Singh Shah, New Friends Colony, Taylor Road, Amritsar.
Please refer to your letter No. J-JJ/CIT/s-51/2331, dated the 18th June, 1968, on the subject mentioned above.
2. The proposals submitted in your letter, referred to above, have been accepted by the Commissioner of Income-tax, in the case of the completed assessments, where the relief is due to the assessee and, if he agrees to that, may be advised to withdraw the appeals and file revision petitions under Section 264, so that necessary relief may be afforded to him. The Commissioner of Income-tax has also agreed to the levy of minimum penalty at 20% under Section 271(1)(c) in this case for all the years where it is leviable. The Income-tax Officer should be asked to complete the assessment for the year 1960-61 expeditiously and also to check up whether the assessee derived any income from interest and property during the assessment year 1963-64 liable to be taxed in his hands.
3. In his petition the counsel of the assessee, Shri Bal Raj Kohli, has expressed his desire to meet the Commissioner of Income-tax before his application for settlement is decided. The Commissioner of Income-tax has desired that you may please explain the above position to the assessee and seek his agreement. The assessee's reaction to the above proposal may then be communicated to this office.'
3. The assessee conveyed his acceptance of the decision to the Income-tax Officer, vide annexure 'C' dated 14th January, 1969, and annexure 'H-3', dated 16th January, 1969. Annexure 'H-3' relates to the matter of penalty. An application was made by the assessee to the Commissioner of Income-tax wherein in paragraph (10) thereof it is stated as under:
'That in the circumstances, pointed out above, it is prayed that the file of the assessee may be summoned, the assessee may be heard through his counsel and assessment made may be reopened and the case of the assessee may be settled as submitted in this letter subject to such adjustments as your honous may determine and the amount of penalty imposable, if any, may please be waived under Section 271(4A) of the Income-tax Act.'
4. Later on, the Income-tax Officer initiated proceedings under Section 271(1)(a) of the Act with regard to the assessment years 1958-59 and 1959-60. The Income-tax Officer directed that penalties in the sum of Rs. 24,671 and Rs. 24,338 be levied for the assessment years 1958-59 and 1959-60, respectively. The assessee being dissatisfied appealed to the Appellate Assistant Commissioner, but the Appellate Assistant Commissioner affirmed the decision of the Income-tax Officer and rejected the appeal. The assessee then filed a further appeal to the Income-tax Appellate Tribunal. The Appellate Tribunal allowed the appeal and observed the following;
'In the present case, we are of the opinion that no penalty would be levied for belated submission of a return after ' Settlement' and that the assessee should be given the benefit of doubt. The silence of the Commissioner should be considered in favour of the subject, particularly in view of the express mention of one kind of penalty and silence about the others. The penalty is deleted.'
5. The department, being dissatisfied, has asked the Tribunal to refer the question of law, already set out, for our opinion.
6. Before we proceed to answer the question, it will be advisable to refer to Section 271 of the Act. The scheme of the section is this: that Sub-section (1) creates three offences in Clauses (a), (b) and (c) and penalty for them is provided in Clauses (i), (ii) and (Hi). Sub-section (4A) of Section 271 of the Act deals with the powers of the Commissioner and is 'in the following terms:
'(4A) Notwithstanding anything contained in Clause (i) or Clause (iii) 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, or
(ii) reduce or waive the amount of minimum penalty imposable on a person under Clause (iii) of Sub-section (1), 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; and in the case referred to in Clause (ii) of this sub-section has, prior to the detection by the Income-tax Officer, of the concealment of particulars of income in respect of which the penalty is imposable, 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 ;
(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 ;
7. Provided that-
(i) if in a case the minimum penalty imposable under Clause (i) of Sub-section (1) for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the aggregate of the minimum penalty imposable under the said clause for those years, exceeds a sum of fifty thousand rupees, or
(ii) if in a case falling under Clause (c) of Sub-section (1) the amount of income in respect of which penalty is imposable for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the aggregate amount of such income for those years, exceeds a sum of five hundred thousand rupees, no order reducing or waiving the penalty shall be made by the Commissioner unless the previous approval of the Board has been obtained.'
8. Vide Sub-section (4B) of Section 271 of the Act, which is in the following terms, the order of the Commissioner is final;
'(4B) An order under Sub-section (4A) shall be final and shall not be called in question before any court of law or any other authority.'
9. It is not disputed that the power to levy penalties under Section 271(1) of the Act lies with the Income-tax Officer except in the case of Clause (c) where the amount of penalty sought to be levied exceeds Rs. 1,000. In that event, the Income-tax Officer has to refer the case to the Inspecting Assistant Commissioner of Income-tax under Section 274 of the Act. Otherwise, the power to levy penalty is that of the Income-tax Officer and he alone initiates the proceedings. When the assessee moved the Commissioner of Income-tax for settlement, the Income-tax Officer had already initiated the proceedings under Section 271(1) (a) and (c) of the Act. Therefore, the matter, when it went to the Commissioner! was with regard to both the penalties and the Commissioner only passed an order with regard to the penalty under Section 271(1)(c) of the Act and did not pass any order with regard to the penalty sought to be imposed under Section 271(1)(a). Sub-section (4A) 6f Section 271 gives the Commissioner power either to waive or reduce the penalty. Now, waiver can be express or it can be by implication. In the present case due to the silence of the Commissioner in face of the facts placed before him, namely, that the Income-tax Officer had proposed penalties under Sub-clauses (a) and (c) of Section 271 of the Act, it must be assumed that the Commissioner waived the penalty under Section 271(1)(a) of the Act. This is the view that the Tribunal has taken and we see no error in it.
10. For the reasons recorded above, we answer the question referred to us in the affirmative, that is, in favour of the assessee. There will be no order as to costs.