V.S. Dave, J.
1. A common question as to 'whether the petitioners' applications under Section 273A of the Income-tax Act, 1961, has been wrongly rejected by the Commissioner of Income-tax', is involved in all the above three cases which have cropped up because of the fact that application was moved post search and seizure operation carried on by authorised officers of the Income-tax Department under Section 132 of the Income-tax Act, 1961, at the residential premises of Shri Kalianmal Jain at house No. 1563, Singhiji-ka-rasta, Jaipur, on January 12, 1988.
2. In order to appreciate the point involved in these cases, it would be relevant to quote briefly the facts of each writ petition. In Writ Petition No. 4624 of 1989, Smt. Ramjanki Devi is a partner in a firm, Messrs. Chandmal Kalianmal, Jaipur, which is an assessee for the last several years. The petitioner, Smt. Ramjanki, too was assessed for the assessment year 1987-88 showing her total income to be Rs. 17,691 which was -assessed under Section 143 of the Income-tax Act on August 31, 1987. Then, on January 12, 1988, the aforesaid search and seizure was carried out at the residence of Shri Kalianmal Jain who happened to be the petitioner's father and certain documents were seized. Some of the documents seized disclosed that certain gifts were received by the assessee through Nathulal, petitioner, in Writ Petition No. 4625 of 1989, Miss Sapna, daughter of Nathulal's brother, Shri Mahaveer Kumar and Smt. Ramjanki Devi, widowed sister of Nathulal. The gifts received which were shown in the documents were as under :
SI. No.Name and address of doneeName and address of donorAmount Rs.Particulars of gift1.Smt. Ramjanki Devi 1543, Singhiji-ka-rasta, Chaura Rasta, JaipurSh. Jiwan Ram Agarwal, Prop. M/S. Jiwan Ram Agarwal, M. G. Marg, Gangtok4,50,000DD No. 240262 dt, 17-12-1986 of UCO Bank, Gang-tok, drawn at Jaipur.2.Sh. Nathulal Jain 1543, Singhji ka-Rasta, Chaura Rasta, JaipurSh. Jagat Singh Prof M/s. Jagat Singh, A mar Singh Mangan, K Sikkim5,50,000DD No. 240264 dt. 17-12-1986 of UCO. Bank, Gangtok, drawn at Jaipur3.Miss Sapna Jain Minor d/o Maha-veer Kumar Jain, 1543, Singhiji-ka-Rasta, JaipurSh. Rameshwar Lal Kandoi s/o Sh. Bajrangdas Kandoi, Prop. M/s. Sanjay Enterprises, M. G. Marg, Gangtok1,21,000DD No. 240289 dt. 12-1-1987 of UCORank Gangtok, drawn at. Jaipur.4.Miss Sapna Jain Minor d/o Maha-veer Kumar Jain, 1543,Singhiji-ka-Rasta, JaipurSh. Chouthmai Joshi s/o Mohanlal Joshi, Prop. M/s. Ramesh ChandSushil Kumar, E-Distt, Gangtok1,71,000DD No. 709372 dt. 12- 1-1987 of SBI, (Gangtok, drawn at Jaipur
3. An order under Section 132 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), was passed against Shri Nathulal Jain and the assessing authority included total gifts amounting to Rs. 12,92,000 in the hands of Nathulal as income from undisclosed sources provisionally. No proceedings under Section 182 of the Act were initiated against Ramjanki Devi. However, it was held that the gift of Rs. 4,50,000 was income from undisclosed sources of Nathulal Jain. The assessing authority also included the amount of Rs. 2,92,000 received by Miss Sapna Jain in the hands of Shri Nathulal Jain, thereby treating the same as Shri Nathulal's income from undisclosed sources. All the three petitioners individually filed returns of income for the assessment year 1987-88 suo motu and, according to them, voluntarily and in good faith and prior to detection or even allegation of any concealment of any particulars of income. Ramjanki Devi disclosed her taxable income to be Rs. 4,74,691 for the assessment year 1987 88. She filed the said return on February 7, 1989, and, on the same day, filed a petition under Section 273A of the Act before the Commissioner of Income-tax praying for waiver of penalty, if any, imposable under Section 271 of the Act and waiver of interest, if any, under Section 215 and penalty, if any, imposable under Section 273 of the Act. It is also pertinent to mention here that, prior to filing the return a day earlier, a sum of Rs. 20,000 was also paid as part of the additional tax due and the balance tax was paid by redemption and encashment of seized N.S.Cs. and F. D. Rs. under the orders of the Commissioner of Income-tax, Jaipur,
4. Similarly, Nathulal Jain submitted an application under Section 273A of the Act on February 17, 1989, and filed voluntarily and suo motu returns disclosing taxable income of Rs. 5,72,049 instead of Rs. 20,649 initially disclosed. His application under Section 273A of the Act before the Commissioner was also filed on February 17, 1989, and a day prior to it he too had deposited additional part of tax Rs. 20,000. In the same manner, Mahaveer Kumar Jain on the. same day, filed returns disclosing taxable income of Rs. 5,06,710 instead of Rs. 2,34,307 shown initially and, on the same day, i.e., February 17, 1989, submitted an application under Section 273A of the Act before the Commissioner after depositing a sum of Rs. 20,000 on February 16, 1989. It is pertinent to mention here that in the afternoon of February 17, 1989, itself, all the three petitioners had been served with notices under Section 147 of the Act. The petitioners' case, therefore, on the aforesaid facts, is that, in the course of assessment proceedings under Section 147 of the Act, the reassessing authority confronted the assessee with either the donors of the gifts or the alleged purchaser of the draft and that the Income-tax Commissioner mechanically rejected the application moved under Section 273A of the Act and levied both penalty and interest as shown in annexure 5 in each of the writ petitions.
5. The petitioners' submission is that the application under Section 273A of the Act has been wrongly rejected without proper application of mind to the facts and circumstances of the case. It is submitted that the impugned order is not a speaking order and hence it is difficult to make out as to on what ground the application has been rejected. It is submitted that an order under Section 273A of the Act is a quasi judicial order which is required to be an express and speaking order and must disclose the mind of the deciding authority, since it is open to scrutiny under article 227 of the Constitution of India. It is submitted that respondent No. 3 was unnecessarily obsessed with the fact that the application arose in a search and seizure matter and the disclosure was made on account of fear and was not by a voluntary desire to conform to the norms of law. It is submitted that there was no warrant for corning to such a conclusion that neither the facts of the case disclosed nor the circumstances were such from which such an inference can be drawn. It is submitted that the petitioners have deposited the tax prior to the service of the notice under Section 148 of the Act and the disclosure was voluntary and in good faith. Learned counsel submits that, in order to attract the applicability of Section 273A of the Act, the following ingredients are required to be satisfied :
1. The assessee had voluntarily made a disclosure of his incomebefore evasion of tax was detected.
2. the disclosure should have been full and true disclosure of the assessee's income made in good faith.
3. the assessee had co-operated in any inquiry relating to the assessment of his income, and
4. the assessee had paid or made satisfactory arrangements for thepayment of any tax or interest payable in consequence, of any order passedin respect of the relevant assessment year.
6. In all the three writ petitions, it is submitted that the aforesaid four requisite conditions were fully satisfied. Learned counsel for the petitioners further Submitted that the Central Board of Direct Taxes/New Delhi, have issued circulars giving guidelines on September 29, 1981. Instruction No. 14, 17 (F) No. 281786/81-IT (INV.) is as under :
'The various instructions issued by the Board contain only clarifications on the scope and applicability of Section 271(4A)/273A of the Income-tax Act, and the corresponding provisions under the Wealth-tax Act. These clarifications have been given in consultation with the Ministry of Law and relate to the conditions stipulated in Section 271/273A of the Income-tax Act and Section 18(2A)/18B of the Wealth-tax Act which are to be satisfied before any waiver/reduction as envisaged in these provisions could be granted by the Commissioner. While the Commissioner should examine the applicability of section 273A of the Income-tax Act/section 18B of the Wealth-tax Act in the light of these clarifications, once the stipulated conditions are satisfied the discretion of the Commissioner is not fettered by any advice/directions from any authority. The Commissioner being a quasi-judicial authority for the purposes of these sections should apply his mind to the facts of the case and pass an order on merits. In this connection, reference may be made to the Board's Instruction No. 1377/ F. No. 281/40/79. IT(INV.) dated January 27, 1981, in which the Board has brought to the notice of the Commissioners its earlier instructions and the decisions of the High Courts, and has advised the Commissioners that as the orders under Section 271(4A)/ 273A of the Income-tax Act and Section 18(2A)/18B of the Wealth-tax Act are quasi-judicial orders, they should be supported by reasons with reference to the facts of the case.'
7. In support of his arguments, Shri Mehta submitted that Section 273A of the Act has been carefully worded by the Legislature and the words used are 'voluntarily and in good faith made full and true disclosure of his income' and these words have been interpreted several times by various courts. Learned counsel placed reliance on Seetha Mahalakshmi Rice and Groundnut Oil Mill Contractors Co. v. CIT : 127ITR579(AP) , Jakhodia Brothers v. CIT : 115ITR61(All) , Harjas Rai v. CIT , Dhan Raj v. Commissioner of Income-tax : 140ITR652(All) ; S. R. Jadav Desai v. WTO : 121ITR531(KAR) , Radhey Shyam Chandrika Prasad v. CIT : 139ITR274(All) , Shiv Narain Dhabhai v. CWT , Rasoolji Buxji v. CIT , A. C. Gopinatha Menon v. CIT : 173ITR404(Ker) and Kundan Lal Behari Lal v. CWT : 98ITR359(All) . Learned counsel also submitted that, in view of the fact that on February 17, 1988, itself, notice in proceedings under Section 147 of the Act had been issued which will not be meant to have been that the petitioners had the knowledge because there is distinction between notice issued and notice served. What is required in law is the service of the notices and not the mere issuance of the notice. Learned counsel relied on CWT v. Kundan Lal Behari Lal : 99ITR581(SC) .
8. Mr. V. K. Singhal appearing for the Revenue submitted that the facts and circumstances of the case were such which disclosed that it was a racket which was unearthed and the Department detected several cases where the Department has been defrauded and for this reason facts required to be looked into from a different angle.
9. It is submitted that when the documents were seized in the search, they pertained to the gifts made from Gangtok. On the next date of the search, the statement of Nathulal was recorded which was self-contradictory. When Ramjanki Devi was asked: about the gifts, she refused to have received the gift. Mahaveer Kumar had avoided giving a statement before the Income-tax Officer. It was found during investigation that persons in Gangtok were showing fictitious gifts made to Indian citizens. To illustrate, it was submitted that drafts were purchased in the names of persons who were non-existent such as one was in the name of one Mahendra Kumar alleged to have been written in the handwriting of Mahaveer Kumar. These drafts purchased in Jaipur 'were sent to Gangtok. The Income-tax Officer found foul play after recording the reasons as contemplated by Section 148 of the Income-tax Act and initiated proceedings. The Department's case is that it was only after this when the petitioners came to know that they are in hot spot as the racket is unearthed, that they hurriedly filed revised returns admitting the said amount as income from 'undisclosed sources'. It is submitted that, in pursuance of the notices, the assessment orders have already been passed on March 27, 1989, and the petitioners' appeals are pending against those assessment orders. In the assessment order, it is submitted that the assessing authority has given a categorical finding that the returns cannot be considered to be valid revised returns under Section 139 of the Act and it was not a voluntary action of the assessees and they were guilty of designed concealments. The submission of learned counsel is that the assessees had not declared correct particulars in the original returns filed and had also not made honest statements under Section 132 of the Act and/or proceedings under Section 132 when the donors were required to be produced.
10. As against the arguments of learned counsel for the petitioner, Mr. Singhal submitted that Section 235 of the Act contemplates five conditions instead of four :
1. That the action should be voluntary and in good faith.
2. There should be full and true disclosure.
3. The return should be revised prior to detection of concealment.
4. The assessee should co-operate in the enquiry proceedings relating to assessment; and
5. The tax should be paid or satisfactory arrangements should be made and lastly in a case where the amount is more than Rs. 1 lakh, prior approval of the Board is to be taken.
11. It is submitted that none of the aforesaid ingredients was satisfied in the instant case. It is submitted that by February 17, 1989, when the application had been moved, concealed income had already been detected. It is also submitted that since appeals have been filed against the reassessment orders, these writ petitions are not maintainable. In support, of his contentions, learned counsel referred to Alukkas Jewellery v. CIT : 176ITR198(Ker) , Dr. Brij Mohan Bhargava v. CIT , Sdtish Chandra Agarwal v. CIT : 168ITR481(All) , Badri Prasad Om Prakash v. CIT , Jugalkishore Chandak v. CIT : 170ITR93(MP) , Om Prakash Bhatia v. ITO : 183ITR336(Cal) , State of U.P. v. Maharaja Dharmander Prasad Singh, : 1SCR176 , P.D. Varghese and E.J. Davis v. CIT : 180ITR187(Ker) , K.M. Rajan, Rajan and Co. v. CIT : 180ITR228(Ker) .
12. I have carefully considered the rival contentions, perused the record and have gone through the case law.
13. Before appreciating the submissions of learned counsel for the parties regarding interpretation of Section 273A of the Act and its implications in the instant case, I deem it proper to deal with the preliminary objection raised by learned counsel for the Department. His objection is that, in view of the fact that appeals have been filed against the assessment orders dated March 27, 1989, wherein certain findings adverse to the petitioners have been given are challenged in appeals and since the said appeals are still pending, the writ petitions should be dismissed as premature. According to Sub-section (5) of Section 273A, every order made under this section is final. Sub-section (5) of Section 273A of the Act reads as under :
'Every order made under this section shall be final and shall not be called into question by any court or any other authority.''
14. A reading of the aforesaid provision shows that no remedy by way of appeal or revision is provided against an order made under Section 273A of the Act which section starts with a non-obstante clause 'Notwithstanding anything contained in this section', giving exclusive power to the Chief Commissioner or the Commissioner to reduce or waive penalties in certain cases, i.e., the cases mentioned in this section. Besides this, this reduction or waiver of penalty or interest is not only in cases where the penalty is imposed or interest is levied or paid but is also applicable in cases where the same is imposable or payable and, therefore, the application under this section is independent Of any other provisions of the Act. It may also be mentioned that when the Commissioner has to satisfy himself about the voluntary disclosure in good faith, he has to satisfy that it is prior to the issue of notice to the assessee under Sub-section (2) of Section 139 of the Act and also prior to the notice under Section 148. Thus, his order is not dependent upon or in any way to be influenced or guided by orders passed in proceedings under Section 139 or Section 148 of the Act or at a subsequent stage also. In this view of the matter, the pendency of the appeals against the orders of reassessment in pursuance of notice under Section 147(a) of the Act has no bearing and that is not a bar to the maintainability of this writ petition.
15. Two points emerge in these writ petitions for consideration :
(1) Whether the order passed by the Commissioner of Income-tax is not a speaking order and is liable to be set aside on this ground; and
(2) Whether the assessees had voluntarily made disclosure of their income before the evasion of tax was detected and such disclosure was full and true and was made in good faith ?
16. Section 273A of the Income-tax Act reads as under :
'Section 273A. (1) Notwithstanding anything contained in this Act, the Chief Commissioner or 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 Assessing 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), co-operated 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.''
17. I have already held above that the order passed under Section 273A of the Act is a final order and no appeal or revision is provided from it. This provision is independent of any other provision in the Income-tax Act and, in view of the fact that the Commissioner is expected to consider the question of reducing or waiving the penalty or interest, as the case may be, on the grounds mentioned in the application, it is expected of him that he will exercise his sound judicial discretion as his order is subject to scrutiny by this court in the power of superintendence. Whenever an order is to be passed by a quasi-judicial authority, now it is well-settled that it must satisfy the tests laid down in series of judgments. It may be made clear that this court has no jurisdiction, express or implied, to enter into the merits or the questions of fact and, even if two views are possible in a particular matter, then too there is no jurisdiction to interfere under articles 226 and 227 of the Constitution of India but it has certainly a right to examine the order passed by the quasi-judicial authority to find out whether there is an error apparent on the face of the Record or violation of principles of natural justice. It is also a principle of judicial review that a decision is vitiated if it is given after taking into account irrelevant facts or neglecting to take into account all relevant facts or is so manifestly unreasonable that no reasonable authority entrusted with the power in question could reasonably have made such a decision. It has been held in State of U. P. v. Maharaja Dharmander Prasad Singh : 1SCR176 , that the judicial review of a decision-making process includes examination, as a matter of law, of the relevance of the factors. In Om Prakash Bhatia v. ITO : 183ITR336(Cal) , it was held in a writ petition filed against an order under Section 273A of the Act that the concept is now very clear that a writ court is not sitting in appeal upon the decision of a statutory authority. The writ court has to examine the decision-making process. Unless the order complained of is without jurisdiction or in excess of jurisdiction or the same is perverse causing manifest injustice or the order is arbitrary and unfair, the writ court will be slow to interfere in the matter. The court further held that, on the material on record and the reasons assigned in passing the impugned orders, there was no irregularity or illegality or any lack of jurisdiction and hence dismissed the writ petition. In Dunlop India Ltd. (No. 1) v. Asst. CIT : 183ITR528(Cal) , the court followed the same principles as in the case mentioned above. In the light of the aforesaid case, the order passed by the Commissioner of Income-tax has to be examined. In all the three writ petitions, the Commissioner has passed identical orders except mentioning all the grounds in the first para. The second para of the three orders concerning the three writ petitions reads as under :
'The assessee was afforded an opportunity of being heard. Detailed arguments have been filed and placed on file. The matter was discussed with the counsel of the assessee at length. I have seen and gone through the records. I notice that it is a search and seizure matter where the income-tax return and upward revision of income was occasioned by fear and not by voluntary desire to conform to the norms of law. The conditions of Section 273A are not satisfied. Therefore, there is no case for waiver or reduction of penalty and interest. The petitions are rejected.'
18. The question, therefore, is whether this order can be said to be a speaking order or an order dealing with the grounds mentioned in the application under Section 273A of the Act. The petitioner has placed on record the copy of the application moved under Section 273A of the Act as well as the submissions made in writing which were supplemented by yet another written submission. Ex facie it is not borne out as to in what manner his mind was applied by the learned Commissioner while disposing of the application. In Dr. Brij Mohan Bhargava v. CIT , the court held that a perusal of Section 273A gives discretion to the Commissioner when the requisite conditions envisaged by the section are satisfied that he may reduce or waive the penalty or interest imposable under the given sections of the Act. However, even when the requisite conditions are made out for the exercise of the discretion under Section 273A, it is not incumbent upon the Commissioner to exercise his discretion to give relief and he does not have to give the reasons either while declining relief or giving only partial relief; He has, however, to give reasons when he exercises his discretion in order to give relief. The learned judge further held that, in working out the provisions of this kind, certain amount of arbitrariness was, in any case, inherent. I am in respectful disagreement with the view taken in this case that no reasons are required to be given when the relief is refused absolutely . The learned judge has not given any reasoning also in his judgment and has refused to follow the ratio of the decision in the case of Travancore Rayons Ltd. v. Union of India : 1978(2)ELT378(SC) . In P. D. Varghese and E. J. Davis v. CIT : 180ITR187(Ker) , it has been held that Section 273A has a specific statutory content emphasising that it is a matter of discretion for the Commissioner of Income-tax. Just like any other discretion, this one, statutorily stated to be such a discretion, has to be judicially exercised. However, if two views are possible and one view has been taken by the Commissioner of Income-tax, the High Court will not be justified in interfering with the exercise of his discretion. Even if another view could have been taken by the court, that would not be a good ground for interfering with the discretion already exercised. In Jakhodia Brothers v. CIT : 115ITR61(All) the court has considered the object underlying Section 273A and has held as under (headnote) :
'The main object of Section 273A is to facilitate voluntary disclosure of concealed income by holding out temptation to the businessmen of giving relief against penalties and interest which may have been incurred by them under the normal law. The power conferred by this section can be exercised by the Commissioner waiving the penalty which has either already been imposed by an order passed by the Income-tax Officer or that may be imposable. Similarly, the amount of interest can be waived by the Commissioner whether it has already been paid or is payable in future. It is not correct, as held by the Commissioner, that the power could be exercised by him only when the penalty has been actually imposed. The Commissioner was not justified in rejecting the prayer made by the petitioner on this ground.
On the question of waiver of interest, the Commissioner posed two questions :--(1) Whether waiver could be allowed in a case where the assessment had been made consequent upon the issue of a notice under Section 148 and (2) whether the assessee's disclosure could be considered to be in good faith. On the first aspect, the application for disclosure was made by the petitioner on April 23, 1974. It was only after the filing of the said application that notices under Section 148 were issued with respect to the assessment years 1969-70 to 1971-72. The petitioner thereafter filed the returns. It could not be said that the action taken by the petitioner was not voluntary. What is required to be shown is that the assessee had, 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 had paid the tax on the income as disclosed. The order of the Commissioner showed that the application was filed by the petitioner on his own without being influenced or asked by anyone. On the findings it could not be said that the disclosure was not voluntary.
The Commissioner was also wrong in holding that the disclosure made by the petitioner was not in good faith. It may be true that the object of the petitioner for making the disclosure was to get round the difficulty of introducing secret cash but that is not a ground on which the benefit of Section 273A could be denied to him. The good faith which is required to be established for invoking the aforesaid provision is that, in making the disclosure, the petitioner must have acted honestly. In other words, he should not have been guilty of having acted dishonestly in making the disclosure. The fact that before making the disclosure his conduct had been dishonest or that he did not act in good faith is irrelevant- for the purpose of applying these provisions. The disclosure under this section is made by an assessee for the purpose of getting the benefits provided therein. The fact that in the past the assessee did not make a full disclosure of his income and concealed the same is immaterial. Therefore, the ground on which the Commissioner rejected the application filed by the petitioner for reduction of interest was not tenable in law.'
19. In Harjas Rai v. CIT , the assessee could not file his return of income within the prescribed period for the assessment year 1966-67 and it was a case of filing a delayed voluntary return. No notice has been given under Section 139 of the Act. Proceedings for levy of penalty under Section 271 were initiated. There was only an application under Section 273A. Considering the scope of the word 'voluntary', the court held as under (headnote) :
'No notices under Section 139 or Section 148 had been issued to the assessee when he filed the returns and made disclosures of his income. He had of his own accord submitted the returns, and made the disclosures. Nobody had asked, much less coerced him to do so because it was purely a volitional act on the part of the assessee. The mere fact that the assessee was assessed to income-tax or advance tax demand had been made or that the Income-tax Officer knew that the assessee had earned taxable income will not be sufficient to come to the conclusion that the returns filed and the disclosures made by the assessee were not voluntary. The knowledge with the Income-tax Officer cannot act as a constraint on the assessee. If such knowledge could act as a constraint then no person, who is already an assessee, can avail of the concession provided by Section 273A. The setting and the context of Section 273A do not support the interpretation put on the word 'voluntary' by the Commissioner. The Legislature wants to encourage voluntary disclosures of income. For this purpose, it has provided an inducement in the form of reduction or waiver of penalty. The provision has, therefore, to be liberally construed. The Commissioner had put; a very narrow construction, which was not supported even by the dictionary meaning of the word 'voluntary'.'
20. In Dhan Raj v. CIT : 140ITR652(All) , the court held that there is no warrant for saying, under the provisions of Section 273A, that a full and true disclosure of income can be made only in a valid return filed by an assessee. The disclosure contemplated by the provision can be made by way of a petition. The main object of the provision is to facilitate a voluntary disclosure of concealed income by holding out to the businessmen a temptation of reliefs against penalties and interest to which they may have been liable under the normal law. In S. R. Jadav Desai v. WTO : 121ITR531(KAR) which was a case under the Wealth-tax Act, a similar situation arose. The court held as under (headnote)
'The Commissioner of Wealth-tax had missed the crucial fact that the waiver of the penalty was in regard to the returns filed in the status of Hindu undivided family and the notices issued under Section 17 of the Act were not to the Hindu undivided family but were only in regard to the assessment as an individual and, since the assessment as an individual was not correct, no such assessment existed. The returns filed in the status of Hindu undivided family which had been accepted and acted upon were not pursuant to the ^notices under Section 17 or any notice under section, 14 of the Act. The returns were not filed under any compulsion but were filed by the assessee of his own accord. Further, the notice under Section 17 of the Act must relate to the particular return in regard to which penalty for failure to file it within time is imposed. It was not the case of the Commissioner of Wealth-tax that any notice under Section 17 or Section 14 of the Act had been issued to the assessee in the status of a Hindu undivided family. Therefore, it cannot be said that the filing of the return was anything but voluntary.
[The order of the Commissioner of Wealth-tax was set aside with a direction to dispose of the application filed by the assessee under Section 18 of the Act on the basis that the returns were filed voluntarily].'
21. In Radhey Shyam Chandrika Prasad v. CIT : 139ITR274(All) , the court, in detail, discussed the provisions of law and gave meaning to the phrase, 'in good faith made full and true disclosure of his income'. The court considered the scope of Section 273A specially with reference to Sections 139 and 148 of the Act. It would be purposeful to quote the case in extenso as it has a lot of bearing on the facts of the present case. The court held as under (headnote) :
'A perusal of Section 273A of the 'Income-tax Act, 1961, shows that the Commissioner is enabled to exercise his discretion to reduce or waive a penalty imposed or imposable under Section 271 for late filing of the return, if the following conditions exist:
(i) The assessee had voluntarily made a disclosure of his income before any notice under Section 139 of the Act had been served upon him,
(ii) The disclosure should have been a full and true disclosure of the assessee's income made in good faith, and
(iii) the assessee had co-operated 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 in respect of the relevant assessment year.
Likewise in the case of penalty imposed or imposable under Section 273 for not paying the advance tax, not only the aforementioned conditions are to be satisfied but the assessee has also to pay the tax on the income so disclosed. However, where notice under Section 139 of the Act has not been issued, the, assessee should have voluntarily and in good faith made a disclosure of his true and full income prior to the issue of the notice under Section 148 of the Act.
The first condition, namely, that the assessee should have voluntarily made a full and true disclosure of his income before the issue of a notice under Section 139 or Section 148 of the Act, as the case may be, does not necessarily imply that, in all cases, disclosure of true and full income should have been made at the time of filing of the initial return or that once a return showing income which may not be true and full has been filed by the assessee, any subsequent disclosure of true and full income by him before the issue of a notice under Section 139 or Section 148 can be taken into account for considering as to whether or not a penalty can be waived under Section 273A of the Act. So long as the assessee has in good faith made a true and full disclosure of his income either before the issue of a notice under Section 139 or Section 148 of the Act, even if such disclosure has been made at the time of assessment, the first condition would be satisfied, and if all other conditions mentioned in the section co-exist, the Commissioner will have jurisdiction to deal with the matter in his discretion.
The effect of the Explanation to Section 273A is that, notwithstanding that the income ultimately assessed is more than the income returned by the assessee, it would, for the purpose of the section, be presumed that the assessee had truly and fully disclosed the particulars of his income unless it can be shown that the income assessed in excess of the returned income is the income, particulars of which have either been concealed or inaccurately furnished by the assessee, i.e., in all cases, where there has been no concealment or inaccurate furnishing of the particulars of his income by the assessee, it will, for the purposes of Section 273A, have to be taken that the assessee has truly and fully disclosed his income.
Likewise, in Clauses (a) and (c) of Section 273A the expression 'in good faith made full and true disclosure of his income' should be interpreted as laying down a single condition which cannot be split up into two different conditions, namely, that the disclosure should be made in good faith and that it should be a full and true disclosure. All that the expression means is that before exercising the jurisdiction under Section 273A, the Commissioner must be satisfied that the assessee while disclosing his income had acted in 'good faith' and that as defined in the General Clauses Act, 1897, an act is deemed to be done in good faith, whether negligently or not, if it is, in fact, done honestly. Where an assessee discloses his income which he honestly believes to be true and full, it can be said that he has in good faith made a full and true disclosure of his income within the meaning of Clauses (a) and (c) of Section 273A. In a case where the income ultimately assessed is the same as that returned or disclosed by the assessee, it is apparent that the assessee has made a full and true disclosure of income. It is only in a case where the ultimate assessment made is more than the income disclosed by the assessee that the question whether the assessee honestly believed the income disclosed by him to be true and full can possibly arise. However, as provided in the Explanation to Section 273A, the law presumes that every disclosure of income is true and full unless the excess of the assessed income over the returned income can be said to be the income which had either been concealed by the assessee or the particulars whereof had been inaccurately furnished by him. It is only in a case where, to begin with, the assessee had at one stage concealed the particulars of his income or had furnished inaccurate particulars thereof (as contemplated by Section 271 of the Act) but had subsequently, before the issue of a notice either under Section 139 or Section 148 of the Act, as the case may be, disclosed his true and full income, which is different from that ultimately assessed, that the question of considering whether the disclosure made by the assessee had been made in good faith or not arises. All other cases will fall in the category where the disclosure is either, in fact, true and full or it will be presumed to be true and full and the question of considering whether the same had been made in good faith does not arise. The mere fact that either the income assessed was actually more than the income returned or disclosed by the assessee or that the assessee had actually agreed to a higher assessment would, by itself, not oust the jurisdiction of the Commissioner to deal with the application under Section 273A. In such cases, the Commissioner will have to. find whether the excess income as assessed over the returned income represented the income which had either been concealed or particulars whereof had been furnished inaccurately and whether at any subsequent stage prior to the issue of the notice under Section 139 or Section 148, the assessee had in good faith truly and fully disclosed his income.
Held, on the facts of the case, that the order passed by the Commissioner merely proceeded on the basis that as the assessee had agreed to a higher assessment and as he did not maintain proper accounts, it meant that he had no intention of disclosing the income correctly and that the disclosure of income was neither full nor complete, nor was it made in good faith. The Commissioner did not go into the question as to whether, despite the shortcomings in not maintaining the proper account books, the excess of income assessed over that disclosed by the assessee in each of the two years could be said to be the assessee's concealed income or the income, particulars whereof had been wrongly given, or whether at any stage, subsequent to the filing of the return right up to the date of making the assessment, but before the issue of the notice, under Section 139 or Section 148, as the case may be, the assessee had in good faith truly and fully disclosed this income. Therefore, the Commissioner did not look into the matter from a correct point of view. The order of the Commissioner was, quashed.
[Matter remanded to the Commissioner for decision afresh in accordance with law].'
22. In Shiv Narain Dhabhai v. CWT , this court had held that it is essential for the Commissioner to record a finding whether the assessee has voluntarily and in good faith made a true and full disclosure of his net wealth. No facts or figures had been given in support of the finding to the effect that the disclosure of net wealth by the assessee was neither voluntary nor full and true. The findings are cryptic and miserably brief and since it was open to scrutiny by the court, a speaking order giving reasons in support of the conclusion arrived at should have been passed. Further, the assessee should be given full opportunity to represent his case and the order also suffers from misstatement of facts and, therefore, the order was set aside. Reference can also be made to the decision in Seetha Mahalahshmi Rice and Groundnut Oil Mill Contractors Co. v. CIT : 127ITR579(AP) . If the present case is decided in the light of the cases quoted above, then there is no hesitation in holding that the order passed by the Commissioner is very brief and cryptic. In fact, in all the three cases, the same order has been reproduced without proper application of mind. It was expected of the learned Commissioner to have considered, in the circumstances of each case, as to whether the filing of the application was suo motu, voluntary and in good faith. As alleged by the petitioner, the same had been done prior to the service of notice of reassessment proceedings and, in that eventuality, the matter requires consideration. It is not essential that in all search and seizure matters, one can infer that the income-tax return and the upward revision of income is always occasioned by fear and not by a voluntary desire to seek the benefit of Section 273A of the Act. There has been no occasion to move an application under Section 273A of the Act unless there is fear of imposing penalty or interest or both and, therefore, fear is inherent. In every case, the question is whether it is a voluntary disclosure and whether the said disclosure is full and true and made in good faith. It was essential for the learned Commissioner to give a finding that the application has not been made in good faith. The petitioners have made detailed submissions in writing before the learned Commissioner wherein case law was also cited and a copy of the same has been placed on record. But a perusal of the order does not make out as to whether the grounds raised have been considered or not. In this view of the matter, I hold that the order passed by the learned Commissioner of Income-tax is not a speaking order and is liable to be set aside on that ground. The second question does not call for consideration because I am inclined to send the case back to the learned Commissioner for passing a proper order in accordance with law.
23. The result is that these writ petitions are allowed, the order dated September 12, 1989, passed by the learned Commissioner of Income-tax in each of the cases is set aside and the application moved under Section 273A of the Act filed before the learned Commissioner is restored and it is directed that the same be decided in accordance with law. Parties shall bear their own costs.