1994 (9) TMI 47 - HC - Income Tax

Summary

Issues:
1. Petition for quashing order of waiver of penalty under Income-tax Act, 1961.
2. Conditions for waiver of penalty under section 273A.
3. Assessment of disclosure and cooperation by the assessee.
4. Entitlement to waiver under section 273A.
5. Exercise of quasi-judicial power by the Commissioner of Income-tax.
6. Proportionate reduction of penalty.

Analysis:
The judgment pertains to a petition seeking the quashing of an order passed by the Commissioner of Income-tax, Meerut, under section 273A of the Income-tax Act, 1961, for the waiver of penalties imposed under sections 271(1)(a) and 273(2)(b) of the Act. The petitioner contended that the penalty should have been waived based on the facts and circumstances of the case.

Before being entitled to a waiver of penalty under section 273A, the assessee must fulfill specific conditions. These conditions include making a full and true disclosure of income before the issuance of a notice under section 139(2) of the Act, cooperating in any income assessment inquiries, and paying or arranging for the payment of tax as per the Income-tax Act for the relevant assessment year.

The Income-tax Commissioner found that while the petitioner had voluntarily filed the return and made a true disclosure, the disclosure was not made in good faith. The Commissioner noted that the petitioner failed to respond to notices and did not cooperate during the assessment process, indicating a lack of good faith in filing the return.

The Court emphasized that both the conditions of making a good faith disclosure and cooperating in the proceedings are essential before considering a reduction or waiver of penalties. The argument that the Commissioner should have proportionately reduced the penalty even if some conditions were not fulfilled was deemed misconceived, as the authority must adhere to the Act's provisions.

Ultimately, the Court found no merit in the writ petition and dismissed it, upholding the decision of the Income-tax Commissioner to not grant a waiver of penalties under section 273A due to the lack of good faith disclosure and cooperation by the assessee.