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Issues: Application of section 273A of the Income-tax Act, 1961 for reduction or waiver of penalty imposed by the Assessing Officer.
Analysis: The judgment in question pertains to a writ filed under articles 226 and 227 of the Constitution to challenge the rejection of an application made by the petitioner (assessee) under section 273A of the Income-tax Act, 1961 by the Commissioner of Income-tax. The petitioner was assessed for the years 1981-82 to 1986-87, and penalties were imposed by the Assessing Officer. The petitioner then applied under section 273A seeking a reduction or waiver of the penalties. The Commissioner rejected this application, leading to the filing of the writ petition. The key issue was whether the Commissioner was justified in rejecting the application under section 273A. The relevant section, 273A of the Act, empowers the Commissioner to reduce or waive penalties if certain conditions are met. These conditions include the assessee making a full and true disclosure of particulars of income voluntarily and in good faith before detection by the Assessing Officer, cooperating in any inquiry related to income assessment, and paying any tax or interest due. The Explanation to the section clarifies the meaning of "full and true disclosure of income" and provides deeming provisions for certain situations. The judgment highlighted that the Commissioner failed to consider the requirements of the Explanation appended to section 273A while rejecting the petitioner's application. It was emphasized that the Commissioner must assess whether the assessee satisfies the conditions of the Explanation in addition to other requirements. The court noted that the legislative intent was to provide benefits to the assessee through deeming provisions, which could lead to a reduction or waiver of penalties. Since the Commissioner did not evaluate the case in light of the Explanation, the court set aside the impugned order and remanded the case to the Commissioner for a fresh decision within four months. In conclusion, the court allowed the petition, set aside the impugned order, and directed the Commissioner to reconsider the application under section 273A based on the observations made in the judgment. The petitioner was granted a hearing opportunity, and no costs were awarded. If any security amount was deposited by the petitioner, it was ordered to be refunded.
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