1991 (5) TMI 54 - HC - Income Tax

Summary

Issues:
Late filing of income tax returns, imposition of penalty and interest, waiver of penalty and interest under section 273A, exercise of discretion by the Commissioner of Income-tax.

Analysis:
The petitioner filed income tax returns late for the assessment years 1980-81 and 1981-82, resulting in the imposition of penalty and interest by the assessing authority. Subsequently, the petitioner applied to the Commissioner of Income-tax under section 273A seeking waiver of penalty and interest. The Commissioner, in an order dated November 6, 1990, exercised discretion under section 273A and reduced the penalty and interest by 50% for both years. The petitioner contended that the discretion was not exercised judicially, arguing for a total waiver of penalty and interest since the conditions specified in section 273A were met.

Section 273A empowers the Commissioner of Income-tax to reduce or waive penalty and interest subject to certain conditions being fulfilled. The court emphasized that the mere satisfaction of these conditions does not automatically mandate total waiver of penalty and interest. The discretion vested in the Commissioner must be exercised judiciously, taking into account the facts and circumstances of each case. In this instance, the Commissioner considered factors such as the extent of delay in filing returns and the taxpayer's high income before deciding to reduce the penalty and interest by 50%.

The court highlighted that the discretion of the Commissioner should not be interfered with unless there is clear evidence of improper exercise. It was noted that the Commissioner had duly considered relevant factors in making the decision, indicating a proper exercise of discretion. The court concluded that unless there is a demonstration of improper exercise of discretion, interference by the court through writ jurisdiction should be avoided. Consequently, the writ petition was dismissed, upholding the Commissioner's decision regarding the reduction of penalty and interest under section 273A.

Overall, the judgment underscores the importance of the Commissioner's discretionary powers under section 273A, emphasizing the need for a judicious exercise of such powers based on the specific circumstances of each case.