Bombay High Court
Dr. (Mrs.) Beena Rahul Mishra vs V.K. Shrivastava, Commissioner Of ... on 29 March, 1990
Equivalent citations: 1990(3)BOMCR154, [1990]185ITR361(BOM)
JUDGMENT
T.D. Sugla J.
1. By this petition under article 226 of the Constitution of India, the petitioner has challenged the validity of the order dated December 26, 1985, passed by the Commissioner of Income-tax, Bombay City II, Bombay, under section 154 of the Income-tax Act, 1961. The petitioner is a medical doctor by profession. Her husband is also in the medical profession. On October 31, 1984, the Income-tax Department conducted a search in their premises and, inter alia, seized some cash and documents relating to immovable properties. Within 14 days thereof, i.e., on November 14, 1984, the petitioner made an application to the Commissioner under section 273A of the Act requesting him to accept her declaration of income for different years as a voluntary declaration made in good faith. She also requested the Commissioner to waive all imposable penalties and interest chargeable under various sections of the Act. The Commissioner accepted the application, vide order dated November 26, 1985, observing that the petitioner had satisfied all the conditions laid down in section 273A.
2. The successor-Commissioner, however, felt that the order passed by his predecessor under section 273A suffered from an apparent mistake rectifiable under section 154 of the Act. After allowing the petitioner opportunity of being heard, he passed the impugned order dated February 3, 1986. The effect of the rectification order is that the petitioner became liable to interest under section 139(8) and under section 215/217 and to penalties under section 271(1)(a) and section 273 of the Act. The successor-Commissioner, it may be mentioned, referred to the note of his predecessor on the file in his impugned order which, according to him, indicated that the petitioner was held to be satisfying all the conditions for the application of section 273A on the basis of the deeming provisions of Explanation 2 to that section but the assumption was wrong as Explanation 2 created a fiction in respect of the conditions under section 273(1)(b) only and not in respect of the conditions in section 273(1)(a) and section 273(1)(c). For waiver of penalties imposable under sections 273(1)(a) and 273 and interest chargeable under section 139(8) and section 215/217, he stated that other conditions, namely, (a) and (c), required to be satisfied.
3. Shri Mistry, learned counsel for the petitioner, raised a number of contentions. Replying on the provisions of section 273A(5), he stated that the order passed by the Commissioner under section 273A was final and could not be rectified and/or revised. The said order did not suffer from any mistake, far less a mistake apparent from the record. The noting of the predecessor-Commissioner in the file referred to and relied upon by the sucessor-Commissioner in the impugned order and did not form part of the record. Even not taking into account the provisions of law while passing the order originally could not constitute a mistake apparent from the record. In any event, when there could conceivably be two views possible about the conclusion arrived at by the predecessor-Commissioner, the order could not be a subject-matter of rectification under section 154 as held by the Supreme Court in the case of T. S. Balaram, ITO v. Volkart Brothers .
4. Shri Jetley, learned counsel for the Department, on the other hand, contended that section 273A(5) did not exclude application of section 154 in appropriate cases. Power under section 154 codifies what is otherwise an inherent power in a court or a Tribunal to rectify mistakes apparent from the record. On merits, he stated that the predecessor-Commissioner has held that all the conditions laid down in section 273A were satisfied in view of Explanation 2. But that assumption was wrong and, therefore, the sucessor-Commissioner was fully justified in rectifying the order under section 154.
5. The first question that requires consideration in this case is whether section 273A(5) excludes the power of the Commissioner under section 154 to rectify an order passed by his predecessor under section 273A. In order to appreciate the rival contentions, it is desirable to refer to the provisions of sub-section (5) of section 273A which reads thus :
"273A(5) Every order made under this section shall be final and shall not be called into question by any court or any authority."
6. It is evident that the Legislature, in its wisdom, has not stopped at making the order passed under section 273A merely final. It has also provided that such an order shall not be called into question by any court or any other authority. Admittedly, an order under section 273A can be passed only by the chief Commissioner or Commissioner. The Commissioner is admittedly not a court. Any other authority will ordinarily mean any authority other than the authority which passed the order. Therefore, the second limb of the sub-section will not apply to the Commissioner who passed the order. His power to rectify the order under section 154 will depend upon the construction of the first limb of the sub-section, namely, any order passed under section 273A shall be final. Having regard to the fact that the Commissioner is empowered to rectify his own order under section 154, it is difficult to hold that if a glaring and/or obvious mistake of fact or law has crept in the order passed by him under section 273A, the order should continue to suffer from that mistake. The effect of rectification is that, after the rectification, there do not exist two orders, one without rectification and the other after the rectification or the rectifying order. There remains only one order, i.e., the rectified order, as if that was the order passed originally itself.
7. Coming to the provisions of section 269UN and section 269UJ referred to and relied upon by Shri Mistry, it is seen that section 269UN is couched in entirely a different language. As against the provisions referred to hereinabove, what is barred under section 269UN is :
"Save as otherwise provided in this Chapter, any order made under sub-section (1) of section 269UD or any order made under sub-section (2) of section 269UF shall be final and conclusive and shall not be called in question in any proceeding under this Act or under any other law for the time being in force."
8. The expression used in section 269UN being materially different, it became necessary to provide for power of rectification in that Chapter, i.e., under section 269UJ itself. There was no such necessity for a specific provision in relation to section 273A.
9. Shri Jetley, for the Department, contended that this petition required to be dismissed on the logic of the petitioner's own submission. But this is not so. The petitioner herein is challenging the order under section 154 rectifying the order under section 273A and not the order under section 273A. For the present, it may be assumed that an order under section 273A cannot be challenged even before this court though it cannot be so as the writ jurisdiction of the High Court can be, if at all, abridged by a constitutional amendment only and not only by merely providing for it in the statute. In any event, so far as this court's jurisdiction against an order passed by the Commissioner under section 154 is concerned, even that question does not arise. Accordingly, it is held that the Commissioner had power to rectify the order under section 154 and that the petitioner was also entitled to challenge the order of the Commissioner passed under section 154 particularly as the order of the Commissioner under that section in respect of the order under section 273A is not appealable and is also not stated to be final.
10. The next question is the main question, namely, whether the order passed by the predecessor-Commissioner under section 273A suffered from a mistake apparent from the record. Assuming for the present that the predecessor-Commissioner's note in the file is correctly reproduced by the successor-Commissioner in the impugned order, the question is whether the Commissioner's conclusion that the petitioner satisfied all the conditions laid down in section 273A was merely on the basis of the applicability of Explanation 2 thereto. Here again, the note quoted earlier speaks for itself.
11. In my judgment, the submission made on behalf of the Department is not tenable in law. No doubt the successor-Commissioner has referred to and relied upon the note in the file to say that the predecessor-Commissioner had come to the conclusion on the basis of Explanation 2. Apart from the fact that the conclusion is that the petitioner satisfied all the conditions laid down in the section, it appears to me that the note refers to two reasons, viz., (i) disclosures filed have been found to be full and true by the Income-tax Officer/Inspecting Assistant Commissioner, and (ii) in the light of Explanation 2 to section 273A, the disclosure is to be deemed to be voluntary and made prior to the detection of concealment of income and in good faith. It is pertinent to mention that the Commissioner was considering the question of waiving the penalties imposable under sections 271(1)(a), 273 and 271(1)(c) and interest chargeable under sections 139(8) and 215/217. So far as penalty imposable under section 271(1)(c) is concerned, the requirement of section 273A was that the full and true disclosure must be made voluntarily before the detection of concealment of income and in good faith. The second reason in the note is referable to penalty under section 271(1)(c) for concealment of income. To say the least, it is possible to read the first part of the note as referring to the provisions of section 273A in entirety and the second part of the note, i.e., Explanation 2, as relating to the conditions required to be satisfied for waiver of penalty under section 271(1)(c) for concealment of income. Morover, when a similar question came up before the Supreme Court in the case of S. A. L Narayan Row v. Ishwarlal Bhagwandas [1965] 57 ITR 149, it was held that if an authority had a discretion and if circumstances prevailed in which the discretion could have been exercised, it was immaterial whether the discretion was, as a matter of fact, not exercised. It should be presumed to have been exercised. Accordingly, I am of the view that what requires to be considered here is not whether the so called reason given by the Commissioner for holding that the conditions laid down in section 273A were satisfied is correct. The pertinent question is whether the conditions laid down in section 273A are or could be satisfied. Since these are rectification proceedings, the pertinent question will be whether, on the basis of facts on record, the Commissioner could have conceivably taken the view that the conditions laid down in section 273A were satisfied. In case there was scope for two conceivable views, the benefit would go to the petitioner and the Commissioner will not be justified in exercising his power of rectification under section 154. There being no dispute about the satisfaction of condition (b), the facts require examination from the point of view of conditions (a) and (c) only.
12. To decide whether the conditions laid down in section 273A (for the purpose of this petition, conditions laid down in clauses (a) and (c) of section 273A(1) are satisfied, it is necessary to refer to certain decisions cited before the court. The Allahabad High Court, in the case of Hakam Singh v. CIT , of course held that the filing of returns was not voluntary since the returns were filed long after the search was carried out and the books of the petitioners were seized and they were prompted by a sense of fear. The court was examining the purpose and scope of the word "voluntary" used in section 273A. This is undoubtedly a decision against the petitioner. On the other hand, the Karnataka High Court, in the case of B. Anjanappa v. CWT [1980] 124 ITR 433, held that the dates of filing of the returns were not very material. If the assesse had made full disclosure of his net wealth in the returns filed, the conditions mentioned in clause (a) would stand satisfied. It is pertinent to mention that the Karnataka High Court took the same view in Shankara Apaya Swami v. WTO [1976] 103 ITR 649, CWT v. C. S. Manvi [1978] 114 ITR 417 (Kar) and Smt. Shantha Devi v. WTO [1980] 121 ITR 703 (Kar). For the sake of brevity, reference to those cases is not considered necessary.
13. A similar question came up before the Punjab and Haryana High Court in the case of Hira Singh v. CWT [1982] 134 ITR 438, Where again it was held that the words "voluntarily and in good faith" occuring in section 18B(1)(i)(a) of the Wealth-tax Act, 1957 (which is identical to the provisions involved herein), qualified the words "made full and true disclosure of the net wealth". Merely because the Wealth-tax Officer had asked the wealth-tax assessee to file the returns, it could not be said that the latter was not entitled to the benefit of section 18B. There are, of course, many other decisions. But it is not necessary to refer to each one of them. Evidently, there is conflict of views among High Courts as to the scope of the conditions in section 273A(1)(a) and (1)(c). The conditions read thus :
"(a) In the case referred to in clause (i), has, prior to the issue of a notice to him under sub-section (2) of section 139, voluntarily and in good faith made full and true disclosure of his income."
"(c) In the case referred to in clause (iii), has, prior to the issue of a notice to him under sub-section (2) of section 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 section 148, voluntarily and in good faith made full and true disclosure of his income and has paid the tax on the income so disclosed."
14. Even on a plain reading of the conditions, it is clear that the common factor in the two conditions is full and true disclosure of income voluntarily and in good faith. While condition (a) requires that such a disclosure should have been before the issue of notice under section 139(2), condition (c) requires that the same should have been not only before the issue of notice under section 139(2) but also before the issue of notice under section 148 and also before the expiry of the period during which section 139(2) notice could be issued. There is then a further requirement in condition (c) regarding payment of taxes.
15. In the above view of the matter, the least that can be said is that the predecessor-Commissioner's finding that the conditions laid down under section 273A were satisfied is supportable and cannot be said to suffer from a mistake of law, far less a mistake apparent from the record.
16. As laid down by the Supreme Court in T. S. Balaram, ITO v. Volkart Brothers and this court in CIT v. K. Subnani Construction Co. [1989] 177 ITR 219, a mistake about which there could conceivably be two opinions cannot be the subject-matter of rectification under section 154. The impugned order thus requires to be and is hereby quashed.
17. In the result, the petition succeeds. The rule is made absolute in terms of prayer (a). No order as to costs.