Allahabad H.C : On 19th August, 1972, petitioner, Jagannath Prasad Srivastava, made an application seeking to disclose his income for the asst. yrs. 1965-66 to 1972-73, and subsequently filed the requisite returns on 15th December, 1972.

On 19th August, 1972, petitioner, Jagannath Prasad Srivastava, made an application seeking to disclose his income for the asst. yrs. 1965-66 to 1972-73, and subsequently filed the requisite returns on 15th December, 1972. The petitioner also moved the CIT under s. 271(4A) requesting him to waive the amount of penalty imposable on him under ss. 271(1)(a) and 273(b) and interest chargeable under ss. 139 and 217 of the IT Act. The CIT, vide his order dated 16th March, 1978, accepted the plea of the petitioner in so far as the asst. yrs. 1969-70 to 1972-73 were concerned, but he refused to grant relief to him in respect of asst. yrs. 1965-66 to 1967-68. To quote in his own words, reason given by the CIT for refusing relief to the petitioner in respect of the aforementioned years was as follows : “The returns for the asst. yrs. 1965-66 to 1967-68, though filed voluntarily at the time of disposal were actually filed beyond the time permissible under s. 139(1), 139(2) or 139(4). The returns for these years had to be regulated by the issue of notice under s. 148. For these three years, therefore, one of the necessary conditions for waiver, namely, that the returns which form the subject-matter of assessment should have been filed prior to the issue of a notice by the Department is not satisfied. The petition for these three years is, therefore, dismissed ……..”

Aggrieved, the petitioner has approached this Court for relief under Art. 226 of the Constitution in so far as the aforementioned portion of the order of the CIT is concerned.

Learned counsel for the petitioner submitted that the reason given by the learned CIT for refusing to grant relief to him under s. 273A is not at all relevant. The CIT has failed to apply his mind to relevant circumstances on which he was required to exercise his discretion while considering an application for relief under s. 273A of the IT Act.

A perusal of the order of the CIT discloses that after finding that the petitioner had filed his return voluntarily in respect of these three years, he refused relief to him on the ground that the said returns had not been filed by the assessee within the limitation prescribed either under s. 139(1), 139(2) or 139(4) of the IT Act. According to him it was a condition precedent for the assessee to have filed returns within the period of limitation prescribed by either of the three sections mentioned above before he could request the CIT to exercise his discretion under s. 273A, which runs thus: “(1) Notwithstanding anything contained in the Act, the CIT 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 cl. (i) of sub-s. (1) of s. 271 for failure, without reasonable cause, to furnish the return of total income which he was required to furnish under sub-s. (1) of s. 139 ; or (ii) reduce or waive the amount of penalty imposed or imposable on a person under cl. (iii) of subs. (1) of s. 271 ; or (iii) reduce or waive the amount of interest paid or payable under sub-s. (8) of s. 139 or s. 215 or s. 217 or the penalty imposed or imposable under s. 273, if he is satisfied that such person— (a) in the case referred to in cl. (i), has, prior to the issue of a notice to him under sub- s. (2) of s. 139, voluntarily and in good faith made full and true disclosure of his income ; (b) in the case referred to in cl. (ii), has, prior to the detection by the ITO, of the concealment of particulars of income or of the inaccuracy of particulars furnished in respect of such income, voluntarily and in good faith, made full and true disclosure of such particulars ; (c) in the cases referred to in cl. (iii), has, prior to the issue of a notice to him under sub-s. (2) of s. 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 s. 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 cls. (a), (b) and (c), co-operated in any enquiry relating to the assessment of his income and had 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 …… ..”

A perusal of the section shows that under it an exercise of the discretion for reducing or waiving the amount of penalty and interest specified therein is inhibited by the conditions like the CIT being satisfied that the assessee had filed the return voluntarily and that in certain cases the disclosure of the income has been made in a bona fide manner and in good faith and further that in all such cases the assessee had cooperated in any inquiry relating to the assessment of his income and had also paid or made satisfactory arrangements for payment of tax or interest payable in consequence of an order passed under the Act in respect of the relevant assessment year. The section nowhere provides that the discretion of the CIT to waive any amount of penalty or interest under s. 273A is barred merely because the assessee did not file his returns within the period prescribed either under sub-s. (1), (2) or (4) of s. 139 of the IT Act. It appears that although the CIT has recorded a finding that the returns filed by the assessee in respect of the years in question were voluntary, he did not apply his mind to other relevant factors for exercising discretion under s. 273A. The reason for which the CIT refused to exercise discretion is not one which is contemplated by s. 273A of the IT Act. In this view we are fortified by a Division Bench decision of this Court in the case of Jakhodia Brothers vs. CIT 1978 CTR (All) 400 : (1978) 115 ITR 61 (All).

In the result, the petition succeeds and is allowed. The part of the order of the CIT dated 15th March, 1978 (annex. 5 to the writ petition), in so far as it relates to the asst. yrs. 1965-66 to 1967-68 is quashed and the CIT is directed to re-consider the matter afresh in accordance with law and in the light of the observations made above. In the circumstances, costs are made easy.

[Citation : 141 ITR 454]