Madras High Court
Sivaram Textiles vs Commissioner Of Income-Tax And Anr. on 18 February, 2000
Equivalent citations: [2000]244ITR136(MAD)
Author: P. Sathasivam
Bench: P. Sathasivam
JUDGMENT P. Sathasivam, J.
1. Aggrieved by the order of the first respondent dated January 20, 1992, rejecting the request for waiver of interest and penalty for the assessment year 1988-89, the petitioner has filed the above writ petition for quashing the said order and for direction to the first respondent to grant waiver of the same as prayed for in their application dated June 29, 1991 under Section 273A of the Income-tax Act, 1961.
2. The facts which are necessary for disposal of the present writ petition are stated hereunder :
The petitioner is a registered partnership firm carrying on business in textile goods. The petitioner is an assessee on the file of the second respondent. According to them, they voluntarily filed returns of income before the second-respondent for the assessment year 1987-88 on January 1, 1990, and, for the assessment year 1988-89 on September 26, 1990. The taxes due as per the returns were duly paid along with the return. The due dates for filing of the returns for the assessment years 1987-88 and 1988-89 were July 31, 1987, and August 31, 1988, respectively. The income returned for the assessment year 1987-88 was Rs. 1,73,730 and the income returned for the assessment year 1988-89 was Rs. 1,12,612. It is further stated that there was a change in the constitution of the firm on January 25, 1986, resulting in the retirement of partners and on the same date three other partners were admitted to the partnership. At that time there were differences of opinion among the partners. It is further stated that due to various business pre-occupations and export commitments, the returns for the two assessment years were filed belatedly. However, the petitioner has paid the entire tax at the time of filing of the returns for the assessment years 1987-88 and 1988-89. The petitioner filed returns voluntarily on January 1, 1990, for 1987-88 and on September 26, 1990 for 1988-89 in good faith and made a full and true disclosure of their income before a notice under Section 139(2) or 148 of the Income-tax Act (hereinafter referred to as "the Act"), was issued to them. The second respondent imposed penalties and interest for the above two assessment years. By invoking the powers of waiver vested under Section 273A of the Act on the part of the first respondent herein, the petitioner filed application dated June 29, 1991 for waiver of the penalties and interest for the above two assessment years 1987-88 and 1988-89. The first respondent, by a common proceeding dated January 20, 1992, waived the levies of interest and penalty only in respect of the assessment year 1987-88, but rejected the request for waiver of interest and penalty for the assessment year 1988-89 by holding that the return of the income for the assessment year 1988-89 was filed on the subsequent date and that it could only be considered to be a separate disclosure. In such circumstance, having no other effective remedy the petitioner has filed the present writ petition questioning the impugned order in so far as it relates to the assessment year 1988-89.
3. Heard learned counsel for the petitioner as well as respondents.
4. Mr. R. Venkataraman, learned senior counsel appearing for the petitioner, after pointing out the provisions, i.e., Section 273A of the Act and various judicial decisions, would contend that, inasmuch as the petitioner has complied with the conditions prescribed in that Section in toto, there is no justification on the part of the first respondent to summarily reject the prayer for waiver of penalty and interest for the assessment year 1988-89 especially when the grounds for waiver prevailing for both the assessment years 1987-88 and 1988-89 were identical.
5. On the other hand, learned counsel appearing for the Revenue would contend that, inasmuch as the Commissioner has exercised her discretion judiciously, there is no ground for interference by this court, accordingly he prayed for dismissal of the writ petition.
6. I have carefully considered the rival submissions.
7. There is no dispute that the first-respondent Commissioner of Income-tax, Coimbatore, after accepting the case of the petitioner and after holding that the petitioner satisfied the conditions set out for waiver, waived the interest and penalties for the year 1987-88. Now we are concerned with the order of the first respondent rejecting the request for waiver for the assessment year 1988-89. The only reason given by the first respondent in the order impugned is that, for the assessment year 1988-89 the return of income has been filed on the subsequent date, hence, according to her, this is considered to be a separate disclosure and after holding so rejected the request for waiver. Now, the only question for consideration in this writ petition is whether the first respondent is justified in rejecting the request for waiver for the assessment year 1988-89.
8. It is seen from the particulars furnished that the petitioner had voluntarily filed returns of income before the second respondent for the assessment year 1987-88 on January 1, 1990, and for the assessment year 1988-89 on September 26, 1990. It is also stated that the taxes due as per the returns were duly paid along with the return. There is no dispute that the due dates for filing of the returns for the assessment years 1987-88 and 1988-89 were July 31, 1987, and August 31, 1988, respectively. There is no need to go into the reason for the delay, in this writ petition. When the grounds for waiver for both the assessment years were identical, the first respondent has accepted the request for waiver for 1987-88 only. In order to appreciate the rival contentions, it is useful to refer to Section 273A of the Act.
"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,--. . . .
(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--. . .
(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 ;
and also has, in the cases referred to in Clause (b), co-operated 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. . . .
(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 subjection (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 enquiry 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 b.e, while dealing with such case."
9. Among other sub-sections we are concerned with Sub-section (3) which shows that when an order has been made under Sub-section (1), 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 making of such order. I have already stated that the first-respondent has rejected the request for waiver for the assessment year 1988-89 on the ground that the return of income had been filed on the subsequent date which is considered to be a separate disclosure.
10. The very same provision has been interpreted by various courts. Mr. R. Venkataraman, learned senior counsel appearing for the petitioner, has very much relied on a Division Bench decision of the Karnataka High Court in CIT v. Mansaram Sukhdev Gunj [1993] 201 ITR 1. While considering a similar question, their Lordships after referring to Sub-section (3) of Section 273A have concluded (headnote) :
"Therefore, in one application, the assessee can seek waiver of penalty for more than one year and such application can be considered. The words contained in Sub-section (3) of Section 273A do not in any way, prohibit consideration of such application for several years."
11. Learned senior counsel for the petitioner has referred to another decision of the Karnataka High Court in C. Subramani v. Asst. CIT [1993] 202 ITR 347. In the case before the learned judge, the assessee filed applications as contemplated under Section 273A on May 14, 1990, and May 1, 1990, seeking exemption or waiver of interest leviable under Sections 139(8), 215 and 217. All those applications were taken together for consideration by the Commissioner and by a common order dated March 8, 1981, he disposed of the applications. For the year 1985-86, the Commissioner found that the assessee satisfied the conditions and, therefore, granted waiver of interest as enumerated therein. Thereafter, for the year 1986-87, the Commissioner took the view that only the first disclosure was eligible for waiver and those applications were not considered. After referring to Section 273A(3) of the Act, the learned judge has observed (page 349) :
"Although, in the case referred to by learned counsel, the facts were as stated by him, the principle upon which the whole decision is based is that once the power is exercised by the Commissioner, that power cannot again be exercised as available under Section 273A. Here the power had not been exercised prior to the impugned order. Therefore, in the impugned order itself, he could have considered the relief sought for by the petitioner in the two different applications. There is no particular significance in filing a common application. Even if a common application is filed for different years, that can be taken to be different applications and even when different applications are filed, when they are considered together by a common order, no particular distinction can be made on that basis. In that view of the matter, the distinction sought to be made by learned counsel for the Department has no bearing on the case."
12. After holding so, the learned judge directed the second respondent therein to consider the application filed by the petitioner for the assessment year 1986-87 also.
13. The next decision referred to by learned senior counsel for the petitioner is in Smt. Harbans Kaur v. CWT . With reference to the power of the Commissioner under Section 273A of the Act, the Supreme Court has expressed thus (page 421) :
"It is understood in clear terms that the said discretion in the Income-tax Act is to be exercised in a reasonable and fair manner."
14. The other decision referred to is in Peston Padamji Ginwalla v. CIT , wherein the learned single judge of the Calcutta High Court has held that the Commissioner of Income-tax after granting relief for one year, rejected the claim for waiver for the subsequent year. The learned judge after setting aside the order of the Commissioner remitted the matter to the Commissioner with a direction to consider the same in respect of claim for waiver for the subsequent year.
15. Learned counsel for the Revenue has also very much relied on the decision of the Supreme Court referred to by Mr. R. Venkataraman, learned senior counsel for the petitioner, viz., Smt. Harbans Kaur v. CWT wherein their Lordships have expressed that the discretion in the Income-tax Act is to be exercised in a reasonable and fair manner by the Commissioner. He also referred to a Division Bench decision of this court in Dr. V. M. Sivaprakasam v. CIT [1999] 236 ITR 820. In that decision the Division Bench has observed that (page 825) :
"Under Section 273A of the Act, the first respondent/Commissioner has a discretion in the matter. In exercise of that discretion, the first respondent can either reduce the amount of penalty or he may even waive the entire penalty. It is for the first respondent to decide on the facts of a particular case whether the waiver in entirety or reduction alone is warranted."
16. In the light of the language used in the statute, particularly in Clause (b) of Sub-section (1) of Section 273A of the Act and in the light of the various judicial decisions, it is clear that if the assessee is able to satisfy the conditions he can ask for waiver of penalty even in one application for more than one year and such application can be considered. It is also clear that the discretion vested on the Commissioner under the said provision has to be exercised in a reasonable and fair manner and while rejecting the claim for waiver he has to indicate his reason or reasons. In the light of the particulars furnished by the petitioner for filing return for the assessment year 1988-89 and of the fact that the petitioner has complied with the conditions prescribed under Section 273A of the Act, I am of the view that there is no justification on the part of the first respondent to summarily reject the request for waiver of interest and penalties levied for the year 1988-89, particularly when the grounds for waiver prevailing for both the assessment years 1987-88 and 1988-89 were identical. It is also clear from the particulars furnished that the petitioner has voluntarily and in good faith made true and full disclosure of particulars before the second respondent and also co-operated with the respondent in the assessment proceedings. In other words, the petitioner has satisfied the conditions in Clause (b) of Sub-section (1) of Section 273A. The courts have taken a view that the provisions of Section 273A have to be liberally construed. Further, when the conditions laid down under Section 273A of the Act have been satisfied, the first respondent is statutorily bound to exercise all the powers vested in him/her and hence the order of the first respondent wherein he/ she refused to exercise power of discretion is not valid in law.
17. Under these circumstances, the writ petition is allowed and the first respondent is directed to consider the application filed by the petitioner for the assessment year 1988-89. The order impugned with reference to the waiver of interest and penalty for the assessment year 1988-89 only shall stand quashed, and the matter is remitted to the Commissioner of Income-tax--first respondent herein for fresh consideration in accordance with law. No costs. Consequently, connected W. M. P. is closed.