Madhya Pradesh H.C : The petitioner, who is an assessee under the IT Act, 1961 (hereinafter referred to as ” the Act”), made an application in respect of the years 1968-69 and 1969-70 for waiver of penalty leviable under s. 271(1)(a), interest charged under ss. 139(8) and 217 and penalty leviable under s. 273 (b).

Counsel Appeared

B.L. Nema, for the Assessee : B.K. Rawat, for the Revenue

N.D. OJHA, C.J.:

The petitioner, who is an assessee under the IT Act, 1961 (hereinafter referred to as ” the Act”), made an application in respect of the years 1968-69 and 1969-70 for waiver of penalty leviable under s. 271(1)(a), interest charged under ss. 139(8) and 217 and penalty leviable under s. 273 (b).

The CIT, by his order dated February 23, 1981, a copy whereof has been filed as annexure-B to the writ petition, waived the penalty leviable under s. 271(1)(a) of the Act. He, however, dismissed the application in so far as the prayer for waiver of interest charged under ss. 139(8) and 217 and penalty leviable under s. 273(b) was concerned on the ground that the petitioner had not complied with the condition precedent contained in cl. (c) of sub-s. (1) of s. 273A of the Act. Aggrieved by that order, the petitioner made an application for rectification under s. 154 of the Act which was dismissed by the CIT by his order dated September 10, 1981, on the ground that s. 273A was outside the purview of s. 154 of the Act. It is these orders which are sought to be quashed in the present petition.

The basic question which falls for consideration is as to whether the CIT committed an error of law or an error of jurisdiction in taking the view that the penalty under s. 273(b) and interest charged under ss. 139(8) and 217 of the Act could not be waived inasmuch as the petitioner had not complied with the requirement of s. 273A(1)(c) of the Act.

Having heard counsel for the parties, we are of the opinion that the impugned order passed by the CIT does not suffer from any such error which could justify interference under Art. 226/227 of the Constitution. The provision which is relevant for purposes of the present writ petition is s. 273A(1)(iii)(c) of the Act. It reads as hereunder :

” 273A. Power to reduce or waiver penalty, etc., in certain cases.—(1) Notwithstanding anything contained in this Act, the CIT may, in his discretion, whether on his own motion or otherwise,–… (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 … (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…”

4. The case of the petitioner is that no notice was issued to him under sub-s. (2) of s. 139 of the Act. However, it is not disputed as has been stated in para 3 of the return that a notice under s. 148 of the Act was issued to the petitioner on July 2, 1975, and was served on the petitioner on July 9, 1975. In this view of the matter, on a plain reading of sub-cl. (c) referred to above, the petitioner would be entitled to the waiver of interest payable under subs. (8) of s. 139 and s. 217 and penalty imposed or imposable under s. 273(b) of the Act only if he had prior to the issue of notice to him under s. 148 of the Act voluntarily and in good faith made a full and true disclosure of his income and paid the tax on the income so disclosed.

In para 8 of the return, it has been stated that the requisite amount of tax was deposited by the petitioner only on February 8, 1980. This fact has not been disputed on behalf of the petitioner and it is not the case of the petitioner that the tax was paid prior to July 2, 1975, when the notice under s. 148 of the Act was issued. Apparently, therefore, the condition precedent for grant of waiver under s. 273A(1)(c) in so far as interest payable under s. 139(8) or s. 217 and penalty imposed or imposable under s. 273(b) of the Act are concerned, was not fulfilled.

It has been urged by counsel for the petitioner that since the order under s. 273A of the Act was passed by the CIT on February 23, 1981, and the amount of tax had been deposited on February 8, 1980, that is, prior to the passing of the order, the petitioner had made substantial compliance with the requirement of cl. (c) of s. 273A(1) and consequently was entitled to the relief of waiver even in regard to interest and penalty referred to above. Suffice it to say, so far as this submission is concerned, that it is settled law that equitable considerations have no place in tax matters and the petitioner could be granted relief of waiver only if he had complied with the requirement of cl. (c). Waiver obviously could not be granted on the basis of substantial compliance.

In the result, we find no merit in this writ petition which is accordingly dismissed. There shall be no order as to costs. Outstanding security amount be refunded to the petitioner.

[Citation : 170 ITR 93]