1990 (2) TMI 34 - HC - Income Tax

Summary

Issues Involved:
1. Exercise of jurisdiction u/s 273A of the Income-tax Act by the Commissioner of Income-tax.
2. Voluntary and good faith disclosure of income.
3. Waiver of penalties and interest under various sections of the Income-tax Act.

Summary:

1. Exercise of Jurisdiction u/s 273A:
The primary issue in these writ appeals is whether the Commissioner of Income-tax properly exercised jurisdiction u/s 273A of the Income-tax Act. The appellants, who are assessees to income-tax, filed petitions u/s 273A after a search on January 23, 1985, and subsequent seizure of gold ornaments and account books. They sought to settle the matter by making a full disclosure of income within 15 days of the search, as per Explanation 2 to section 273A(1).

2. Voluntary and Good Faith Disclosure:
The court examined whether the revised and original returns filed by the appellants after the search could be considered as voluntary and in good faith. Explanation 2 to section 273A provides that if a full and true disclosure is made within 15 days of a seizure, it is deemed to be voluntary and in good faith. The court referred to various judgments to interpret the terms "voluntarily" and "in good faith," emphasizing that these terms should be understood in the context of the disclosure made in the returns, not merely the act of filing the returns.

3. Waiver of Penalties and Interest:
The Commissioner of Income-tax waived the penalty u/s 271(1)(c) for concealment of income but did not waive penalties u/s 271(1)(a) for late filing of returns and u/s 273(2)(b) for not filing the estimate of advance tax. The Commissioner also refused to waive the entire interest levied u/s 139(8) and u/s 217. The court noted that the Commissioner must exercise discretion in accordance with law and consider whether the disclosure was voluntary and in good faith.

The court concluded that the Commissioner had not adequately considered these aspects and directed a fresh examination of the matter. The impugned orders were set aside, and the Commissioner was instructed to reconsider the penalties u/s 271(1)(a) and 273(2)(b).

Conclusion:
The writ appeals were allowed, and the Commissioner of Income-tax was directed to reconsider the matter afresh, particularly the penalties u/s 271(1)(a) and 273(2)(b). The court emphasized that technicalities should not obstruct justice and that the Commissioner must exercise discretion judiciously.