2013 (10) TMI 11 - HC - Income Tax

Waiver / Reduction of penalty u/s 273A - CIT rejected the application for failure to secure the interest of the revenue - CIT observed that, the assessee has neither paid nor made any satisfactory arrangement of payment of taxes, petition of the assessee cannot be accepted as all the conditions for application of provisions of Section 273A are not satisfied Held that - Application was dismissed for failure to secure the interest of the revenue and as the petitioner does not fulfil the conditions laid down in Section 273-A of the 1961 Act, but without pointing out the conditions the petitioner does not fulfil. The impugned order is, therefore, non-speaking. However, as the petitioner has during pendency of the writ petition furnished a bank guarantee, it would be appropriate and in the interest of justice that the Commissioner of Income Tax is directed to consider the matter afresh and in accordance with parameters set out in Section 273-A of the 1961 Act Decided in favor of Assessee.

Summary

Issues: Scope and ambit of Section 273-A of the Income Tax Act, 1961; Application for reduction/waiver of penalty and interest; Dismissal of application for failure to secure interest of revenue; Opportunity of hearing; Legality of impugned order

In this case, the main issue for adjudication was the scope and ambit of Section 273-A of the Income Tax Act, 1961. The petitioner received compensation for land acquisition and voluntarily disclosed it in the income tax return. However, penalty and interest were imposed for certain assessment years. The petitioner applied under Section 273-A for reduction/waiver of penalty and interest, but the proceedings for penalty imposition were dropped during the application's pendency. The Commissioner of Income Tax then asked the petitioner to furnish a bond or bank guarantee to secure the revenue's interest, which the petitioner failed to do. The impugned order dismissed the application due to the failure to secure the revenue's interest, citing a case precedent. The petitioner argued that the order was illegal as it did not consider the application for reduction/waiver of interest and lacked an opportunity for a hearing. The petitioner had provided a bank guarantee during the writ petition, requesting a fresh consideration based on Section 273-A factors.

The counsel for the petitioner contended that the impugned order was flawed due to the lack of a hearing opportunity and an illegal exercise of jurisdiction. On the other hand, the revenue's counsel argued that the petitioner did not secure the revenue's interest despite opportunities, justifying the dismissal of the application. The High Court noted that the impugned order did not specify the conditions under Section 273-A that the petitioner failed to fulfill, deeming it non-speaking. However, since the petitioner had provided a bank guarantee during the writ petition, the Court directed the Commissioner of Income Tax to reconsider the matter according to Section 273-A guidelines.

Ultimately, the High Court allowed the writ petition, setting aside the impugned order and remitting the matter to the Commissioner of Income Tax for fresh consideration within three months. This decision aimed to ensure a fair assessment based on the provisions of Section 273-A of the Income Tax Act, 1961, emphasizing the importance of securing the revenue's interest while providing adequate opportunities for the petitioner to present their case.