High Court Of Madhya Pradesh : Indore Bench
Shrinath Ceramics vs. CIT
Section 271(1)(c), 273A,
Asst. Year 1992-93, 1993-94, 1994-95, 1995-96
A.K. Patnaik, C.J. & A.M. Sapre, J.
Writ Petn No. 1874 of 2002
17th March, 2009
Counsel Appeared :
Satish Chandra Bagadia & Ajay Bagadia, for the Appellant : R.L. Jain & Miss. Venna Mandlik, for the Respondent
ORDER
A.K. Patnaik, C.J. :
This writ petition has been filed by the petitioner under Art. 226/227 of the Constitution challenging the order passed by the CIT-II, Indore rejecting the application of the petitioner for waiver of the penalty under s. 273A of the IT Act, 1961 (for short, ‘the Act’).
2. The relevant facts briefly are that the petitioner is a registered partnership firm carrying on the business of trading in sanitary goods. There was a survey of the business premises of the petitioner under s. 133A of the Act on 6th Oct., 1994 and pursuant to survey, the petitioner filed revised returns of income for the asst. yrs. 1992-93, 1993-94 and 1994-95. Thereafter the petitioner also filed a return for the asst. yr. 1995-96 on 31st Oct., 1995 declaring an income of Rs. 3,96,130. The AO made an addition of Rs. 1,40,690 under the head of unaccounted income from sales outside the books in the assessment order dt. 31st March, 1998 and initiated penalty proceedings under s. 271 (1)(c) of the Act for concealment of income and thereafter imposed penalty of Rs.56,360 by order dt. 25th Sept., 1998. The petitioner, thereafter filed an application under s. 273A of the Act before the CIT for waiver of the penalty but by impugned order dt. 17th Sept., 2002, the CIT rejected the application after holding that the returns of income of the petitioner have been upwardly revised by the assessee only after survey and special audit and, hence, the revised return filed by the petitioner can not be said to be voluntary and in good faith and since the requirement of s. 273A of the Act for waiver of penalty have not been met, the application was liable to be rejected. Aggrieved, the petitioner has filed this petition under Art. 226/227 of the Constitution of India.
Mr. Satish Chandra Bagadia, senior counsel appearing for the petitioner submitted that for the asst. yr. 1995-96, the petitioner has not filed any revised return for the asst. yrs. 1992-93, 199394, and 1994-95 the petitioner had filed revised returns on the survey of the business premises of the petitioner on 6th Oct., 1995 and the CIT has erroneously held that the petitioner had revised its return for the asst. yr. 1995-96 only after survey of special audit report and hence the return was not voluntary and in good faith and did not satisfy the requirements under s. 273A of the Act. He further submitted that in the impugned order, the CIT has recorded the submissions of the AO in its report dt. 18th Dec., 1998 for the asst. yr. 1995-96 and from the said report of the AO, it is clear that the AO has taken a view that the return has been filed voluntarily and the disclosure has been made by the petitioner in good faith and the disclosure was full and true. He submitted that the CIT had not taken these relevant facts into consideration and proceeded on an erroneous assumption that the petitioner had filed a revised return for the asst. yr. 1995-96 on the basis of survey and special audit which took place on 6th Oct.,1994.
Mr. Bagadia, cited the decision of Karnataka High Court in Mrs. P.V. Athanimath vs. CWT (1984) 39 CTR (Kar) 8 : (1984) 147 ITR 9 (Kar) in which a learned Single Judge of the High Court has quashed the order passed by the CIT rejecting the application for reduction or waiver of penalty on the ground that he had failed to exercise judicial discretion vested in it by taking into account relevant considerations. He also cited the decision of a Single Judge of the Madras High Court in K.M. Radha Krishna Chettiar & Co. vs. CIT & Anr. (2001) 166 CTR (Mad) 31 : (2000) 244 ITR 374 (Mad) in which a learned Single Judge of the High Court found that the CIT had not applied his mind and not recorded any no finding as to the compliance or otherwise of the conditions imposed under s. 273A of the Act and he had not assigned any reason whatsoever for refusing the relief sought for by the petitioner under s. 273A while exercising his discretion and held that the order passed by the CIT was not valid and was liable to be quashed. He submitted that considering the aforesaid authorities, this is a fit case in which High Court exercises its discretion under Art. 226/227 of the Constitution should quash the impugned order and remand the matter to the CIT for fresh consideration in accordance with the provisions of s. 273A of the Act.
Mr. R.L. Jain, senior counsel appearing for the respondent Department, on the other hand, submitted that an alternative remedy of an appeal was available to the petitioner against the order of penalty under s. 246(1) of the Act. He further submitted that a reading of the application of the petitioner would go to show that the petitioner had taken a stand in the application that pursuant to survey under s. 133A of the Act conducted at its business premises the returns were voluntarily revised in good faith making full and true disclosure of income and it is perhaps for this reason that the CIT had come to the conclusion in the impugned order that returns of income have been upwardly revised by the assessee only after survey and special audit, and the filing of revised return cannot be said to be voluntary and in good faith and hence requirement laid down in s. 273A of the Act for waiver of the penalty have not been met. He cited the decision of Calcutta High Court in Satish Kapoor vs. CIT & Ors. (2002) 175 CTR (Cal) 12 : (2002) 255 ITR 93 (Cal) in which a learned Single judge of the High Court after having found that the petitioner in that case had a right to prefer an appeal from the order passed by the authorities held that the petitioner has no right to file the writ petition and the remedy is to prefer an appeal before the appropriate forum and not by way of this writ petition.
We have considered the submissions of learned counsel for the parties and we are unable to accept the submission of Mr. Jain, that we should not entertain this petition under Art. 226/227 of the Constitution of India because a remedy of appeal was available to the petitioner. Against the order of penalty imposed under s. 271(1)(c) of the Act if is true the petitioner had remedy of appeal under s. 246(1)(L) of the Act but he also had a remedy of an application under s. 273A of the Act under which the CIT has a discretion whether on his own notion or otherwise to reduce or waive the amount of penalty imposed on a person under cl. (3) of sub-s. 1 of s. 273A of the Act, if he was satisfied that prior to the detection by the AO, of the concealment of particulars of income or of the inaccuracy of particulars furnished in respect of such income, the assessee voluntarily and in good faith, made full and true disclosure of such particulars. This application under s. 273A of the Act was also ordinary statutory remedy which was’ available to the petitioner and the petitioner availed this statutory remedy but the CIT rejected the application of the petitioner on the ground that the petitioner had revised return only after survey and special audit and hence the revision of the return could hot be said to be voluntary or in good faith. Since the petitioner had not filed any revised return for the asst. yr. 1995-96 in respect of which the application under s. 273A of the Act was filed, the rejection of the application on the ground that the petitioner had revised returns only after survey and special audit and had thus not disclosed his income voluntarily and in good faith was not legally justified. It is true that in certain paragraphs of the application filed by the petitioner under s. 273A of the Act the petitioner had stated that it had revised its returns after survey under s. 123A of the Act conducted in the business premises of the petitioner but revision of return by the petitioner was for the asst. yrs. 1992-93; 1993-94, and 1994-95 and not for the asst. yr. 1995-96. The order passed by the CIT, therefore suffers from non-application of mind and a grave error.
7. Since there was no appeal available under the Act against impugned order passed by the CIT under s. 273A of me Act, we quash the impugned order and remand the matter to the CIT, to reconsider the application of the petitioner under s. 273A of the Act and pass fresh orders in accordance with law.
[Citation : 327 ITR 452]
