Punjab & Haryana H.C : While accepting or rejecting an application under section 273A, a Commissioner is required to confine his consideration to factors enumerated in section 273A only

High Court Of Punjab And Haryana

Kahan Chand VS. CIT, Amritsar

Assessment Years : 1985-86 To 1987

Section : 273A

Rajive Bhalla And , Jj.

C.W.P. Nos. 11 To 13 & 12904 Of 1990 & 3952 Of 1992

August  1, 2013

ORDER

Rajive Bhalla, J. – By way of this order, we shall dispose of CWP Nos.11, 12, 13, 12904 of 1990 and CWP No.3952 of 1992 as they involve adjudication of similar questions of law. Facts in controversy being identical, have been taken from CWP No.11 of 1990.

2. The petitioner, who is an income tax assessee, was asked to pay various amounts as interest under Sections 139 (1), 215 and 217, and penalty under Sections 271(1)(a) and 273(2(c) of the Income Tax Act, 1961 (in short to be referred as the Act) for assessment years 1985-86, 1986-87 and 1987-88. The petitioner filed a petition under Section 273A of the Act, before the Commissioner, to reduce or waive the amount of penalty imposed, by pleading that he had filed returns voluntarily, without issuance of any notice under Section 139 (2) or Section 148 of the Act and had always cooperated with the Department. The Commissioner of Income Tax, Amritsar considered the application and rejected the same by holding as under:—

“5. I have carefully considered the facts of the case, arguments of the assessee’s counsel and have also perused the assessment records. I do not find any merit in the application of the assessee and reject the same. In rejecting the petition of the assessee, I am influenced by the following considerations amongst others:—

(i)   The assessee is an old assessee. He was being assessed to tax for more than a decade having substantial income. A perusal of the assessment order for assessment year 1978-79 shows that he was assessed at an income for the said year at Rs.51240/- and the return for the said year was filed on 7.9.1978. He was thus fully aware of the statutory liability in furnishing the returns of income on time.

(ii)   The income of the assessee for all the assessment years i.e. 1985-86 to 1987-88 was far in excess of the minimum liable to tax. (Assessment year 1985-86 Rs.59710/-, 1986-87 Rs.127660/- and 1987-88 Rs.145260/-.)

(iii)   The main source of income of the assessee was share from M/s Gopi Nath Kahan Chand. This firm had filed its returns of income for various assessment years as under:-

Assessment year Return when filed
1985-86 30.8.1985
1986-87 20.8.1986
1987-88 24.8.1987

Even after the firm had filed returns of its income, the assessee failed to file his own returns of income. By delaying the filing of returns, the assessee thus withheld the payment of government revenue for a very considerable period of time.

(iv) The assessee is a habitual defaulter. Following are the details in respect of returns pertaining to the earlier assessment years:-

Assessment year Return when due Return when filed
1982-83 31.7.1982 26.3.1984
1983-84 31.7.1983 6.3.1984
1984-85 31.7.1984 31.3.1987

(v) For the assessment year 1984-85 the assessee availed the benefit of Amnesty Scheme. Even after availing the said benefit, the assessee continued to file delayed returns of income for the assessment years 1985-86 upto 1987-88. No leniency can be shown to such habitual defaulter.”

3. Counsel for the petitioner is not present but as we have perused the paper book as well as the impugned order and have heard counsel for the respondent, are inclined to decide the petition on merits.

4. The petitioner has pleaded that while adjudicating an application under Section 273A of the Act, a Commissioner of Income Tax exercises powers specially conferred by the various sub-sections, clauses and sub-clauses of Section 273A of the Act and not the powers of an Assessing Officer and, therefore, while accepting or rejecting an application under Section 273A of the Act, a Commissioner is required to confine his consideration to factors referred to in the sub-sections, clauses and sub-clauses of Section 273A of the Act. The Commissioner of Income Tax has, however, rejected the application by assigning reasons that fall within the domain of an Assessing Officer, without taking into consideration factors set out in Section 273-A of the Act.

5. Counsel for the respondent, submits that an order under Section 273-A of the Act is discretionary and even otherwise administrative in nature. The discretion exercised by the Commissioner while dismissing the application filed by the petitioner, is legal and valid and does not call for interference. It is further submitted that the Commissioner is only required to assign reasons if he accepts the prayer for reduction or waiver of penalty, as in such a situation, the Commissioner is required to obtain permission from a higher authority. It is argued that even if reasons assigned by the Commissioner are held to be incorrect, the writ petition should be dismissed as the petitioner has not been able to place his case for grant of reduction or waiver of penalty and interest within parameters of sub-sections or clauses etc. of Section 273-A of the Act.

6. We have heard counsel for the respondent, considered the pleadings, the impugned order and Section 273-A of the Act which reads as follows:—

“273A. Power to reduce or waive penalty, etc., in certain cases.— (1) Notwithstanding anything contained in this Act, the Commissioner may, in his discretion, whether on his own motion or otherwise,-

(i) ***

(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

if he is satisfied that such person— (a) ***

(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, no order reducing or waiving the penalty under sub-section (1) shall be made by 82 the Commissioner except with the previous approval of the Chief Commissioner or Director General, as the case may be.and also has, in the case referred to in clause (b), co-operated77 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.

Explanation.—For the purposes of this sub-section, a person shall be deemed to have made full and true disclosure of his income or of the particulars relating thereto in any case where the excess of income assessed over the income returned is of such a nature as not to attract the provisions of clause (c) of sub-section (1) of section 271.

(2) Notwithstanding anything contained in sub-section (1),—

(b)   if in a case falling under clause (c) of sub-section (1) of section 271, the amount of income in respect of which the penalty is imposed or 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,

(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 :

Provided that where an order has been made in favour of any person under sub-section (1) on or before the 24th day of July, 1991, such person shall be entitled to further relief only once in relation to other assessment year or years if he makes an application to the income-tax authority referred to in sub-section (4) at any time before the 1st day of April, 1992.

(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:

Provided that where the amount of any penalty payable under this Act or, where such application relates to more than one penalty, the aggregate amount of such penalties exceeds one hundred thousand rupees, no order reducing or waiving the amount or compounding any proceeding for its recovery under this sub-section shall be made by the Commissioner except with the previous approval of the Chief Commissioner or Director General, as the case may be.

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

(6) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1989 shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.

(7) Notwithstanding anything contained in sub-section (6), the provisions of sub-section (1), sub-section (2), or, as the case may be, sub-section (4) as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1989 (3 of 1989), shall apply in the case of reduction or waiver of penalty or interest in relation to any assessment for the assessment year commencing on the 1st day of April, 1988 or any earlier assessment year, with the modifications that the power under the said sub-section (1) shall be exercisable only by the Commissioner and instead of the previous approval of the Board, the Commissioner shall obtain the previous approval of the Chief Commissioner or Director General, as the case may be, while dealing with such case.”

7. Section 273A of the Act enacts a non obstante clause which empowers the Commissioner of Income Tax, whether on his own motion or otherwise, to reduce or waive penalty imposed or imposable. The discretion so conferred has to be exercised within the informed parameters set out in sub-clauses (a), (b), and (c) read along with Explanation I, as prevalent on the date of the application. The non-obstante clause indicates that the power so exercised would take colour from the sub-sections and sub-clauses of Section 273-A of the Act, and from no other provision of the Act. The opening words of Section 273-A of the Act, i.e., “Notwithstanding anything contained in this Act…”, confine consideration by the Commissioner of Income Tax to factors enumerated in Section 273-A of the Act. An adjudication based on grounds, other than grounds referred to in Section 273-A, would necessarily invite a valid charge that the order is null and void for an illegal exercise of jurisdiction, or a failure to exercise jurisdiction in accordance with statutory parameters set out in Section 273-A of the Act.

8. A perusal of the impugned order reveals that the assessee had, prior to issuance of notice under sub-section 2 of Section 139 of the Act, voluntary made full disclosure of his income prior to any detection of the concealed income or the inadequacy of the particulars furnished. A perusal of the impugned order reveals that the Commissioner of Income Tax has assumed the role of an Assessing Officer and while dismissing the petition and rejecting the plea for reduction/waiver of the amount of penalty imposed has referred to the very same factors that led the Assessing Officer to impose penalty.

9. In this view of the matter, the writ petition is allowed, the impugned order is set aside and the matter is remitted to the Commissioner of Income Tax, Bhatinda (erstwhile Commissioner of Income Tax, Jalandhar) to decide the application, in accordance with law, within three months from the date of receipt of a certified copy of this order.

10. CWP No.12904 of 1990 (Inderjeet Mehta v. CWT) has been filed to challenge order dated 26.3.1990 passed under Section 18-B of the Wealth Tax Act, 1957. Section 18-B of the Wealth Tax is pari materia to Section 273-A of the Income Tax Act, 1961 and, requires the Commissioner, while considering a prayer for reduction/waiver of penalty etc., to consider parameters set out in Section 18-B of the Act. The ratio recorded while deciding CWP No.11 of 1990, relating to Section 273-A of the Income Tax Act, 1961 would necessarily apply to Section 18-B of the Wealth Tax Act. A perusal of the impugned order reveals that the Commissioner has committed the same error as has been noticed in cases, referred to in the preceding paragraphs, relating to Section 273-A of the Income Tax Act, 1961. In this view of the matter, the impugned order is set aside and the matter is remitted to the Commissioner of Wealth Tax, Bathinda to decide the matter afresh, in accordance with law.

[Citation : 362 ITR 476]