1997 (4) TMI 24 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Commissioner under Section 273A of the Income-tax Act, 1961.
2. Compliance with conditions for waiver of penalties and interest under Section 273A.
3. Discretionary power of the Commissioner in reducing or waiving penalties and interest.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commissioner under Section 273A of the Income-tax Act, 1961:

The appellant contended that the first respondent (Commissioner) made an order under an assumption regarding the reduction of minimum penalties imposable under sections 271(1)(a), 271(1)(c), and 273(b) of the Act, even though no penalty was levied on the date of the petition. The appellant argued that the Commissioner could not invoke Section 273A unless penalties were already imposed. However, the court clarified that the Commissioner could invoke Section 273A where the penalty is "imposed or imposable." The court cited precedents, including Jakhodia Brothers v. CIT and India and Co. v. CIT, to support the view that Section 273A can be invoked before or after the penalty is imposed. Thus, the contention that the Commissioner lacked jurisdiction was rejected.

2. Compliance with conditions for waiver of penalties and interest under Section 273A:

The appellant argued that he complied with all the conditions laid down under the Act for a full waiver of penalties and interest. However, the court found that the appellant did not comply with the conditions in full. The appellant admitted in his application that he failed to file the return within the time allowed under the Act, failed to furnish estimates of advance tax, and concealed income. The court noted that Section 273A requires full and true disclosure of income and cooperation in any inquiry related to the assessment. Since the appellant did not meet these conditions, he was not entitled to a full waiver.

3. Discretionary power of the Commissioner in reducing or waiving penalties and interest:

The court emphasized that the Commissioner has discretionary power under Section 273A to either reduce or waive the penalty. This discretion must be exercised fairly and justly. The court referred to the Supreme Court's judgment in Harbans Kaur v. CWT, which interpreted similar provisions in the Wealth-tax Act, stating that the Commissioner could choose between entire waiver or reduction in any proportion. The court found that the Commissioner had exercised this discretion judicially by reducing the penalty based on the facts of the case. The reasons for not granting a full waiver were deemed relevant and justified. The court held that the Commissioner's order was not arbitrary and upheld the decision to reduce the penalties.

Conclusion:

The court dismissed the writ appeal, holding that the Commissioner had jurisdiction to invoke Section 273A even before penalties were actually levied. The appellant did not fully comply with the conditions required for a full waiver of penalties and interest. The Commissioner exercised his discretionary power appropriately in reducing the penalties, and the court found no grounds to interfere with this decision.