2004 (2) TMI 26 - HC - Income Tax

CIT, declining to consider the application of the petitioner filed under section 273A, seeking waiver of penalty and interest levied against the petitioner - it is not in dispute that on the date on which returns were filed, no notice was issued to the assessee regarding non-filing of returns for the assessment years in question. It is also not in dispute that the disclosure of income made by the assessee has been accepted by the income-tax authorities as full disclosure of income and the assessments have been made as per the returns filed by the assessee - It is not the case of the Revenue that the assessee had suppressed the fact - We quash and set aside the order of the Commissioner of Income-tax passed under section 273A, and remand the matter back to the Commissioner of Income-tax to decide the application regarding reduction or waiver of penalty and interest on the merits on the footing that all the pre-conditions for grant of waiver of penalty and interest contemplated under section 273A of the Income-tax Act are complied with by the assessee.

Summary

Issues involved:
Challenge to order declining waiver of penalty and interest under section 273A of the Income-tax Act for assessment years 1981-82, 1984-85, and 1988-89.

Analysis:
The petitioner challenged the Commissioner of Income-tax's order rejecting the application for waiver of penalty and interest under section 273A of the Income-tax Act. The petitioner, as the legal heir of the late assessee, filed the application seeking relief after the assessee's demise. The initial application was disposed of ex parte, but upon a writ petition, it was set aside for fresh consideration. The Commissioner rejected the claim citing non-compliance with section 273A requirements, stating the returns were not voluntary or in good faith. The petitioner contended that full disclosure was made voluntarily, meeting all conditions of section 273A, emphasizing the nature of amnesty provisions to encourage taxpayers to disclose unassessed income. The petitioner argued that the returns were voluntary, despite an audit query in the firm where the assessee was a partner, as it did not compel the returns' filing.

The court noted that the returns were filed without notice regarding non-filing, and the disclosure was accepted as full and true by the authorities. It highlighted that the audit query to the firm was not communicated to the assessee, indicating voluntary disclosure. The court found that the disclosure was made in good faith, and taxes were paid, even though penalty and interest were pending. It differentiated a previous case where returns were filed post a notice under section 148, emphasizing the voluntary nature of disclosure in belated returns for section 273A consideration. It relied on the apex court's decision that disclosure could be through returns or a petition to the Commissioner, emphasizing the voluntary and good faith disclosure for relief under section 273A.

The court quashed the Commissioner's order and remanded the matter for reconsideration, emphasizing that all pre-conditions for penalty and interest waiver under section 273A were met by the assessee. The petition was allowed, with no costs awarded, in light of the circumstances.

This detailed analysis covers the challenge to the order declining waiver of penalty and interest under section 273A of the Income-tax Act for specific assessment years, emphasizing the voluntary and good faith nature of disclosure for relief consideration.