2004 (7) TMI 23 - HC - Income Tax

Petition under article 226 of the Constitution of India challenges the order passed by the respondent on March 11, 1991, rejecting the application for waiver made by the petitioner under section 273A(1) held order under section 273A(1) of the Act dated March 11, 1991, passed by the Commissioner of Income-tax, Gujarat III, Ahmedabad, is hereby quashed and set aside and the waiver application filed by the petitioner for the assessment year 1987-88 shall now be heard and decided by the Commissioner on the merits after giving necessary opportunity to the petitioner.

Summary

Issues:
Challenge to order rejecting waiver application under section 273A(1) of the Income-tax Act, 1961 for assessment years 1986-87 and 1987-88.

Analysis:
The petitioner filed a petition under article 226 challenging the order rejecting the waiver application made under section 273A(1) of the Income-tax Act, 1961 for the assessment years 1986-87 and 1987-88. The case involved the deceased petitioner, represented by legal heirs, who disclosed income and assets following searches conducted by the Enforcement Directorate and the Income-tax Department. The deceased petitioner voluntarily disclosed income for the assessment years 1980-81 to 1985-86, and further disclosures were made for subsequent years. The assessment for the years in question resulted in penalty and interest proceedings initiated by the Assessing Officer, which were later deleted by the Commissioner of Income-tax (Appeals) and the Tribunal. The deceased petitioner filed a waiver petition under section 273A(1) of the Act, which was rejected by the Commissioner of Income-tax, leading to the present challenge for the assessment year 1987-88.

The petitioner's senior advocate argued that subsequent events and orders by the Tribunal and appellate authorities for the assessment year 1986-87 supported the voluntary disclosure made by the deceased petitioner, and thus, the rejection of the waiver application for the assessment year 1987-88 was unwarranted. The respondent's standing counsel contended that the rejection was justified based on the circumstances surrounding the initial disclosures following the searches conducted by the Enforcement Directorate and the presence of Income-tax Department inspectors during those searches.

The court noted that subsequent developments, including acceptance of the petitioner's case for the assessment year 1986-87 under the amnesty scheme, deletion of interest and penalty, and confirmation of returned income by the Tribunal for the assessment year 1987-88, supported a reconsideration of the waiver application. In light of these facts and circumstances, the court quashed the order rejecting the waiver application for the assessment year 1987-88 and remanded the matter to the Commissioner for a fresh decision considering the subsequent developments. The petition was allowed, and no costs were awarded.