2002 (2) TMI 15 - HC - Income Tax

Petition is directed against the order passed by the Commissioner of Income-tax, Central-II, Mumbai, u/s 273A r.w.s. 18B of the Wealth-tax Act, 1957 as being arbitrary, perverse and self-contradictory perusal of the order passed on the application under section 18B of the Wealth-tax Act would show that for some of the years, penalty has been sustained for 18 per cent and for other years penalty has not been waived. No reasons are to be found in the order as to why penalty for some years was sustained totally and for some years was reduced to 18 per cent, while exercising power, under the Act Giving reasons is an essential element of administration of justice - Held that impugned order passed on the application under section 18B of the Wealth-tax Act was not sustainable

Summary

Issues:
Challenge against the order dated September 4, 1986 passed by the Commissioner of Income-tax under section 273A of the Income-tax Act, 1961 and section 18B of the Wealth-tax Act, 1957.

Analysis:
The petitioner, as the karta of a Hindu undivided family carrying on a proprietary business, underwent a search operation in November 1978. Subsequently, the petitioner moved applications for settlement under section 273A of the Income-tax Act and section 18B of the Wealth-tax Act in good faith to avoid tax litigation. A settlement was reached in July 1981, adding a specific amount to the petitioner's income for certain assessment years. However, the petitioner challenged the order dated September 4, 1986, invoking the writ jurisdiction of the High Court, alleging arbitrariness and self-contradiction in the order.

Upon examination, the High Court noted that the settlement between the parties was not disputed, as evidenced by a document dated July 24, 1981, signed by three officers of the Income-tax Department. Despite the settlement, the Commissioner of Income-tax did not seek approval from the Board as required, leading to the rejection of the petition under section 273A. The Court emphasized the importance of providing reasons in administrative decisions, highlighting that the absence of reasons in the order under section 18B of the Wealth-tax Act necessitated quashing the order and remanding the proceedings for fresh consideration.

Consequently, the High Court made the rule absolute, remanding the matter to the Commissioner of Income-tax for a fresh decision in accordance with the law. The Court clarified that a reasoned decision with adequate reasons is essential for the administration of justice, ensuring transparency and accountability in the decision-making process. The absence of reasons in the impugned order necessitated setting it aside and directing a reevaluation of the matter by the tax authorities.

In conclusion, the High Court's judgment focused on upholding the principles of justice, emphasizing the need for transparency, accountability, and adherence to legal procedures in administrative decisions related to tax matters. The Court's decision to remand the case for fresh consideration underscored the significance of providing reasoned justifications for decisions affecting taxpayers' rights and obligations under the tax laws.