1998 (6) TMI 65 - HC - Income Tax

Issues Involved:
1. Validity of the orders passed by the first respondent.
2. Compliance with conditions under Section 273A of the Income-tax Act.
3. Exercise of discretionary power by the first respondent.
4. Alleged violation of Articles 14, 19(1)(g), and 300A of the Constitution of India.

Detailed Analysis:

1. Validity of the Orders Passed by the First Respondent:
The petitioners filed writ petitions seeking a writ of certiorarified mandamus to quash the orders of the first respondent dated March 29, 1989, February 27, 1989, and March 17, 1989, respectively, and to direct the first respondent to waive the balance interest levied under sections 139(8) and 217 of the Income-tax Act for the assessment years 1978-79 to 1984-85 under section 273A of the Act. The petitioners contended that the impugned orders were arbitrary, contrary to the provisions of the Act, and violative of their rights under Articles 14, 19(1)(g), and 300A of the Constitution of India.

2. Compliance with Conditions Under Section 273A of the Income-tax Act:
The petitioners argued that they had voluntarily filed their returns for the assessment years 1978-79 to 1984-85 and paid the entire tax under self-assessment. The second respondent completed the assessments accepting the returned income but levied interest under sections 139(8) and 217 for the delay in filing the return and non-filing of the estimate of advance tax. The petitioners sought relief under section 273A of the Act, which prescribes certain conditions for the waiver of interest. The first respondent accepted that the petitioners had satisfied all the conditions under section 273A but did not grant full relief, which the petitioners argued was arbitrary and contrary to the provisions of the Act.

3. Exercise of Discretionary Power by the First Respondent:
The first respondent granted only a 25% waiver of the interest levied under sections 139(8) and 217, citing the delay in filing the returns as the reason. The petitioners contended that the first respondent did not exercise his discretion judiciously. They argued that the section does not specify that the return should be filed by a particular date to get the benefit of the section and that the first respondent's reason for not granting full relief was arbitrary and opposed to the provisions of section 273A. The court observed that the first respondent had used his discretionary power arbitrarily without any valid reason, defeating the main object of section 273A, which is to induce taxpayers to come forward voluntarily and in good faith.

4. Alleged Violation of Articles 14, 19(1)(g), and 300A of the Constitution of India:
The petitioners argued that the impugned orders violated their rights under Articles 14, 19(1)(g), and 300A of the Constitution of India. They contended that the reasons given by the first respondent for restricting the relief to 25% were irrelevant and invented, and that the first respondent did not want to grant the benefits of section 273A to the petitioners on an irrelevant consideration. The court found that the first respondent's action of granting only a 25% waiver was arbitrary and unjustified, thus violating the petitioners' rights under the aforementioned articles.

Conclusion:
The court concluded that the petitioners had made out a clear case in their favor and that the orders impugned in the writ petitions were liable to be quashed insofar as they were against the petitioners. The court allowed the writ petitions, quashed the impugned orders, and directed the first respondent to waive the balance interest of Rs. 5,957.25, Rs. 10,558, and Rs. 8,880, respectively, levied under sections 139(8) and 217 of the Act for the assessment years 1978-79 to 1984-85 under section 273A of the Act.

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