1990 (5) TMI 20 - HC - Income Tax

Summary

Issues Involved:

1. Rejection of waiver petition u/s 273A.
2. Launching of prosecution against the petitioners.

Summary:

1. Rejection of Waiver Petition u/s 273A:

The petitioners filed a writ petition u/ss 226 and 227 of the Constitution to quash the order dated May 31, 1988, rejecting their waiver petition u/s 273A and 273A(4) of the Income-tax Act, 1961, and sought reconsideration or waiver of the penalty imposed u/s 271(1)(c). The petitioners contended that the Commissioner of Income-tax had assured them that if they deposited the tax due, their penalty would be waived or substantially reduced. They acted on this assurance and deposited the tax on March 30, 1988. However, the waiver petition was dismissed without providing reasons, which the petitioners argued was a non-speaking order. The court found that while some form of assurance was given, it was not a firm or specific assurance. Therefore, the principle of promissory estoppel could not be applied to bind the Commissioner to waive or reduce the penalty. The court upheld the rejection of the waiver petition, noting that it was a speaking order with proper application of mind.

2. Launching of Prosecution Against the Petitioners:

The petitioners also sought to quash the prosecution launched against them for offences u/ss 276C(1) and 277 read with section 278B of the Act. They argued that the prosecution was initiated without affording them an opportunity of hearing, violating the principles of natural justice. The court noted that the prosecution was launched at the instance of the Commissioner, which was in accordance with the law as it stood before April 1, 1989. However, the court found that no notice was given to petitioners Nos. 2 and 3, and petitioner No. 1 was not granted a further opportunity of hearing after an adjournment. The court held that the principles of natural justice required that the petitioners be given an opportunity of hearing before launching the prosecution. Consequently, the court quashed the order for prosecution and the complaint filed before the Chief Judicial Magistrate (Economic Offences), Jaipur, along with the consequential proceedings.

Conclusion:

The writ petition was partly allowed. The court upheld the rejection of the waiver petition and the penalty imposed but quashed the prosecution order and the related complaint and proceedings.