Gujarat High Court
Durga Cotton Ginning And Pressing ... vs Commissioner Of Income-Tax on 26 October, 1993
Equivalent citations: [1995]217ITR210(GUJ)
JUDGMENT
G.T. Nanavati, Actg.C.J.
1. The petitioner is a partnership-firm. It is an assessee for the last many years. The petitioner could not file the income-tax returns for the assessment year 1975-76, 1976-77, 1977-78 and 1978-79 in time. For the assessment year 1975-76, though the return was filed within time, the tax which was paid by the assessee was less than what was payable by it. Therefore, the Income-tax Officer levied penalty under section 273(b) of the Income-tax Act, for the assessment year 1975-76. He also levied penalty under section 271(1)(a) for late filing of the returns for the assessment years 1976-77, 1977-78 and 1978-79. For all the four assessment years, the Income-tax Officer levied interest under section 139(8) read with section 217 of the Act. The petitioner then approached the Commissioner of Income-tax under section 273A for reduction or waiver of penalty and interest levied by the Income-tax Officer. The Commissioner passed the following order the party granted the petitioner's application :
"2. I have gone through the case records of the assessee vis-a-vis the contents of the petition for reduction. I find from the records that there was a delay of 16 months, 28 months and 12 months in filing the returns of income for the assessment years 1976-77, 1977-78 and 1978-79, respectively, and the assessee has not furnished any explanation for the inordinate delay. Considering this aspect of the case as also the fact that the requisite conditions laid down in section 273A(1) are satisfied, the penalties leviable under section 271(1)(a) of the Act by the Income-tax Officer for each of the assessment years 1976-77 to 1978-79 are, in my discretion, reduced to 50 per cent. of the minimum amount leviable.
3. As regards the penalty levied under section 273(b) of the Act for the assessment year 1975-76 and interest charged under section 139(8)/217 for the assessment years 1975-76 to 1978-79, I find from the records that the requisite pre-condition laid down in clause (c) of sub-section (1) of section 273A has not been satisfied in any of the assessment years, inasmuch as the tax on the income voluntarily disclosed had not been paid by the assessee. In the circumstances, the assessee's prayer in respect of the penalty levied under section 273(b) and the interest charged under section 139(8)/217 for the assessment years 1975-76 to 1978-79 is rejected."
2. Dissatisfied with that order, the petitioner has filed this petition under article 226 of the Constitution of India.
3. What is submitted by the learned advocate for the petitioner is that as regards late filing of the returns and levy of penalty on that ground the Commissioner had really misdirected himself by proceeding on the basis that he assessee had not furnished any explanation for the delay and, therefore, he reduced the penalty only by 50 per cent. and not in toto. It is now not in dispute that the conditions contemplated by section 273A were complied with by the assessee, inasmuch as the assessee had voluntarily and in good faith made full and true disclosure of its income and had co-operated in the inquiry relating to the assessment of fixed income and had also paid tax and interest payable in consequence of the orders passed by the authorities under the Act. The learned advocate for the petitioner pointed out that in his application made on February 6, 1980, the petitioner had in terms stated that the returns could not be filed within time as the person who was maintaining the account books was suffering at the relevant time from heart disease and was unable to work and that was the cause for the late filing of the returns. From the said application it becomes apparent that the assessee had furnished an explanation for the delay in filing the returns and, therefore, it is not correct to say that no explanation was furnished by the assessee. Apparently, the order passed by the Commissioner appears to be wrong for this reason but if we read the order carefully then it can be said that what he meant was that as all the conditions were satisfied, the assessee had made out a case for some reduction and considering the explanation, which was not accepted as correct by the authorities, the proper thing to do was to reduce the penalty to 50 per cent. and not in toto. Whether the explanation furnished by the assessee was acceptable or not was obviously a relevant consideration and considering the nature of the explanation given by the assessee, the Commissioner had thought it fit to reduce the penalty by 50 per cent, only. Thus, this part of the order passed by the Commissioner cannot be said to be wrong or erroneous.
4. As regards the penalty levied under section 273(b) and interest charged under section 139(8) read with section 217, it must be said that the Commissioner has proceed on a totally wrong basis. He had earlier in paragraph 2 observed that all the conditions required by section 273A were satisfied. It was, therefore, improper on his part to reject the application of the petitioner for waiver of penalty and interest under section 273(b) and sections 139(8) and 217 on the ground that the conditions under section 273A were not satisfied. That is the only ground give by the Commissioner for rejecting the application of the petitioner. As we find that the only grounds given by the Commissioner in this behalf is bad, that part of the order passed by the Commissioner will have to be quashed and set aside.
5. In such cases we ordinarily direct the authorities to pass a fresh order after proper application of mind and, for that reason, in this case also we would have directed the Commissioner to reconsider the application of the petitioner on the basis that all the conditions of section 273A were satisfied and to pass a fresh order. But now as 13 years have elapsed and we find that there is no other objection to the granting of the petitioner's application, we have thought it fit to quash that part of the order an grant the application of the petitioner with respect to the penalty levied under section 273(b) and interest charged under section 139(8) and section 217 of the Act.
6. In the result, this petition is partly allowed. The order passed by the Commissioner with respect to the penalty levied under section 271(1)(a) is confirmed but the order passed by him respect to the penalty levied under section 273(b) and interest charged under section 139(8) and section 217 of the Act is quashed and set aside and we grant the application of the petitioner made for waiver of penalty levied under section 273(b) and interest charged under section 139(8) and section 217 of the Act. Rule is made absolute accordingly. No order as to costs.