2001 (4) TMI 69 - HC - Income Tax

Summary

Issues:
Late filing of income tax returns, imposition of interest and penalties, rejection of waiver petition under section 273A of the Income-tax Act, 1961.

Late Filing of Income Tax Returns:
The petitioner, a partnership firm engaged in film distribution and running a cinema theatre, filed returns for assessment years 1986-87 and 1987-88 beyond the due dates without receiving any notice from the Department. The second respondent disallowed certain expenditures claimed by the petitioner and levied interest and penalties for late filing.

Imposition of Interest and Penalties:
The second respondent levied interest under various sections for the assessment years 1986-87 and 1987-88, along with penalties under section 271(1)(a) of the Act. The penalties were partially reduced on appeal, but the petitioner found them oppressive and filed a petition under section 273A for waiver of interest and penalties.

Rejection of Waiver Petition under Section 273A:
The first respondent dismissed the waiver petition based on the interpretation that section 273A(1) does not permit waiver of interest for more than one year. The Commissioner opined that relief could only be granted for one assessment year and rejected the petitioner's application for waiver.

Detailed Analysis:
The High Court analyzed the provisions of section 273A of the Income-tax Act, 1961, and found that the prohibition on relief under sub-section (3) applies to subsequent assessment years not covered by an order made under sub-section (1). The Court held that the Commissioner erred in rejecting the petitioner's application for waiver of interest and penalties for both assessment years, as the petitioner had submitted a common application seeking relief for both years.

The Court also criticized the Commissioner's reasoning that the disclosure of income was not voluntary and not in good faith. It noted that the petitioner had voluntarily made the disclosure, and the delay in filing returns did not necessarily imply lack of good faith. The Court found the Commissioner's conclusions to be without basis and ordered a reconsideration of the petitioner's application by the competent authority.

In conclusion, the High Court allowed the writ petition, quashed the order of the Commissioner, and remitted the proceedings to the competent authority for a fresh consideration of the petitioner's application for waiver of interest and penalties. The Court directed the competent authority to dispose of the application expeditiously and in accordance with the law, preferably within three months from the date of the order.