Dipak Kumar Sen, J.
1. Sudhinendra Nath Patra, the petitioner herein, was assessed to income-tax in the assessment year 1969-70, on income derived from house property, business in gold and gold ornaments, interest, dividend and commission earned as a life insurance agent. For the said assessment year the petitioner had paid an advance tax of Rs. 600 on an estimated total income of Rs. 9,000 under Section 212(1) of the I.T. Act, 1961.
2. The petitioner filed his return of income on or about the 19th September, 1969, and the assessment was completed on the 29th March, 1972, on a total income determined at Rs. 3,37,770 in which Rs. 2,46,148 was added as deemed income under Section 69A of the I.T. Act, 1961. On successive appeals preferred before the AAC and the Tribunal, the petitioner obtained relief and his total income for the said assessment year was finally determined at Rs. 1,56,170.
3. As the advance tax paid by the petitioner fell short of the actual tax payable by the prescribed percentage, the ITO levied interest on unpaid tax under Section 215 of the I.T. Act, 1961. Being aggrieved thereby the petitioner made an application before the ITO on the 28th April, 1975, under Section 215(4} of the said Act read with Rule 40 of the I.T. Rules, 1962, for waiver and/or reduction of such interest. It was contended by the petitioner that it was not possible for him to anticipate the additions which were made under Section 69A of the said Act by way of deemed income. It was further contended that the petitioner should not be held liable to pay interest for the delay of 2 1/2 years in completing the assessment.
4. The ITO passed an order dated the 12th May, 1975, recording, inter alia, as follows :
'I have considered the application. I am unable to entertain the petition and waive/reduce the interest charged under Section 215.'
5. Being aggrieved by the said order the petitioner made an application for revision of the same under Section 264 of the I.T. Act, 1961, before the CIT and reiterated his contentions made before the ITO. The petitioner also filed his written submissions in the revision as directed. The Commissioner disposed of the revision by an order dated the 4th March, 1976. He held thatin respect of the said assessment year the assessee should have anticipatedthat amounts would be added to his income under Section 69A of the Act as inthe said year the I.T. authorities had conducted a raid on the premises ofthe petitioner in April, 1968, when foreign gold, ornaments made out offoreign gold and foreign currency were discovered. The assessee shouldhave either filed a proper estimate of his income taking into account hisdeemed income or he should have paid the advance tax as demanded. Asthe assessee had failed to do either and as the ITO had to investigate thematter before making additions to the assessee's income under Section 69A ofthe Act it could not be said that the delay in completion of the assessmentfor the said year was not attributable to the assessee. He dismissed thepetitioner's application for revision in respect of the said assessmentyear. The petitioner is aggrieved by the said orders of the ITO and the CITin rejecting the petitioner's claim for waiver or reduction of interest andcontends that the said decisions are illegal and invalid on, inter alia, thefollowing grounds:
(a) The ITO was not justified in rejecting the application of the petitioner for waiver or reduction of the interest levied without a speakingorder and as a quasi-judicial authority he was bound to decide the same onmerits.
(b) The ITO failed to act judicially in exercising his powers under Section 215(4) of the I.T. Act, 1961, read with Rule 40 of the I.T. Rules, 1962.
(c) The Commissioner also acted illegally and arbitrarily in holding that the assessee should have taken into consideration the deemed income includible under Section 69A of the said Act at the time of filing the estimate of his income for the purpose of payment of advance tax and in holding that the assessee could have anticipated the inclusions in his income under Section 69Aof the Act.
(d) The Commissioner acted erroneously and, arbitrarily in holding that the delay of 2 1/2 years in the completion of assessment for 1969-70, the assessment year, was attributable to the assessee and failed to take into consideration the facts on record in coming to the said conclusion.
6. The present rule was issued on the 7th June, 1976, calling upon the respondents, viz., the ITO, 'A' Ward, Nadia, the CIT, West Bengal-XIII, and the CBDT to show cause why appropriate writs should not be issued directing them to recall and/or forbear from giving effect to the said impugned orders of the ITO and the CIT, commanding them to refrain from taking any steps thereunder and for setting aside or, quashing the same. An interim order was issued restraining the respondents from giving effect to the said impugned orders and from taking any steps in pursuance thereof till the disposal of the rule.
7. This application is opposed and an affidavit of the CITY West BengalXIII, affirmed on the 9th February, 1977, has been filed in opposition tothe petition. The petitioner has affirmed a further affidavit on the 19thof September, 1977, in reply thereto.
8. The learned advocate, appearing for the petitioner, reiterated at thehearing that the IT.O would be deemed to be a quasi-judicial authoritydealing with the petitioner's application under Rule 40 of the I.T. Rules,1962, and was bound to give due consideration to all facts and circumstances and make a speaking order disclosing reasons in support thereof. Healso submitted that the Commissioner failed to take into, consideration thescope and effect of Section 69A of the I.T, Act, 1961, which provides for inclusions and additions in the assessable income amounts deemed as income bya fiction of law and the same could not have been in the contemplation ofthe assessee in making his estimate. In any event, the Commissioner,having accepted the position that the delay in finalising the assessment wason account of investigations, should not have held that such delay wasattributable to the assessee.
9. In support of his contentions learned advocate for the petitioner cited the following decisions:
(a) State of Gujarat v. Patel Raghav Natha : 1SCR335 . Inthis case, the Supreme Court considered a decision of .the Commissioner of Rajkot Division who set aside an order of the Collector granting permissionto the petitioner to use some land for, non-agricultural purpose withoutseating any reasons and observed as follows:(p. 1301):
'We are also of, the opinion that the order of the Commissioner shouldbe quashed on the ground that he did not give any reasons for his conclu-sions. We have already extracted the passage above which shows thatafter reciting the various contentions he baldly stated his conclusions; without disclosing his reasons. In a matter of this kind the Commissionershould indicate his reasons, however, briefly, so that an aggrieved partymay carry the matter further if so advised.' (b) Siemens Engineering and . v. Unionof India : AIR1976SC1785 , In this case, the decision of an AssistantCollector of Customs in respect of levy of import duty on certain importeditems was taken up to the Collector of Customs and finally to the Government of India for revision. The authorities refused to interfere with theimpugned order.
The Supreme Court discussed the nature and contents of orders to be passed by quasi-judicial authorities and observed as follows (p. 1789):
'It is now settled law that where an authority makes an order in exercise of a quasi-judicial function, it must record its reasons in support of the order it makes. Every quasi-judicial orders must be supported byreasons.....it is essential that administrative authorities and Tribunalsshould accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them. Then alone administrative authorities and Tribunals exercising quasi-judicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law.' (c) CIT v. Lalit Prasad Rohini Kumar : 117ITR603(Cal) . In this case, one of the questions referred to this court under the I.T. Act was whether the ITO had exercised discretion vested in him under Rule 48 of the Indian I.T. Rules, 1922, or Rule 40 of the I.T. Rules, 1962, as the same was not apparent from records. It was held that under Section 215 of the I.T. Act, 1961, the ITO had power and a duty to charge interest under certain circumstances and also a similar discretion to waive or reduce such interest in circumstances mentioned in Rule 40 of the 1962 Rules. The ITO was under a duty to consider whether the circumstances on record warranted waiver or reduction even without the assessee seeking to agitate the question. That the ITO had in fact made such considerations must be manifest from either the order or it may be ascertained aliunde from the records. It could even be established that from the facts on record the inevitable conclusion was that the Income-tax Officer must have considered the matter.
10. The learned advocate for the respondents has relied on the affidavit of the CIT and in particular to the statements therein that the ITO rejected the application of the petitioner under Rule 40 of the I.T. Rules, 1962, after having considered the facts and circumstances and the materials on record and after applying his mind to the same.
11. He contended that once the ITO has exercised his discretion the same would be conclusive and there should not be any further interference with his order under Article 226 of the Constitution. In support of his contentions, the learned advocate cited a decision of the Allahabad High (Court in Lalloomal Dalai v. ITO : 36ITR397(All) . This decision was cited for the following observations in the judgment (p. 400):
'There is then the presumption in favour of the regularity of the proceedings taken by the Income-tax Officer. No doubt, one fact, viz., that the assessment was not completed within one year after the submission of the return, is admitted but the other essential fact that the delay in assessment was not attributable to the assessee, as asserted by the petitioner.was denied in the counter-affidavit on behalf Of the department. That was a question which could only be decided by the appropriate income-tax authority. It was a matter of discretion with the Income-tax Officer as the proviso only contains an enabling provision giving powers to the Income-tax Officer to reduce or waive the interest payable by the assessee. There is no mandatory direction that he must always do so. In this particular case, no question can arise for interference by this court in respect of the exercise of the discretion by the Income-tax Officer when it is not even asserted that the Income-tax Officer paid no heed to this provision of law and that he ignored it when he passed the order.'
12. After due consideration of the submissions made on behalf of the parties and the decisions cited it appears to me that the allegations in the petition to the effect that the ITO did not apply his mind or consider the relevant facts and circumstances should have been controverted by the ITO and not by the CIT who has affirmed the relevant paragraphs in the said affidavit as true to his knowledge. It is unlikely the Commissioner would have personal knowledge of the proceeding before the ITO.
13. Apart from that, the learned advocate for the respondents could not distinguish the decisions cited on behalf of the petitioner. Law appears to be well settled that in passing a quasi-judicial order the reasons therefor must be stated so that the person who is aggrieved thereby can make effective representation against the same, so that the matter can be properly adjudicated by the appellate and revisional authorities if the matter is pursued. In the instant case, it cannot be disputed that the order of the ITO is absolutely silent. No doubt certain reasons are given in the order of the Commissioner in revision but it was not for the Commissioner to apply his mind and exercise his discretion. The matter should have been remanded to the ITO for proper consideration of the same in accordance with law. Further, the admitted delay of 2 1/2 years in completing the assessment on account of investigations can be hardly attributed to the assessee without a proper consideration thereof by the ITO.
14. For the above reasons, the petitioner is entitled to succeed in this application.
15. The impugned orders of the ITO dated the 12th May, 1975, and that of the CIT, West Bengal XIII, dated the 4th March, 1976, cannot be sustained and a writ in the nature of certiorari will issue to quash the same.
16. The respondents, however, will be at liberty and are directed to consider the application of the petitioner under Rule 40 of the I. T. Rules, 1962, in accordance with law and pass appropriate orders.
17. The rule is made absolute to the extent as aforesaid.
18. There will be no order as to costs.