1988 (7) TMI 32 - HC - Income Tax

Summary

Issues Involved:
1. Voluntary nature of income disclosure.
2. Full and true disclosure of income in good faith.
3. Co-operation in assessment proceedings.
4. Payment or satisfactory arrangement for tax or interest.

Summary:

1. Voluntary Nature of Income Disclosure:
The petitioner, a clerk at Savatram Mills, filed income returns for assessment years 1968-69 to 1975-76 before any notice u/s 139(2) of the Income-tax Act, 1961 ("the Act") was issued. The Commissioner refused to exercise discretion u/s 273A on the grounds that the returns were not filed "voluntarily" but due to fear of detection following an Inspector's visit. The court found no material evidence of such a visit and concluded that even if an Inspector had visited, it did not constitute compulsion. The court referenced cases like Jakhodia Bros. v. CIT and Sarvaria v. CWT to support that returns filed without notice are considered voluntary.

2. Full and True Disclosure of Income in Good Faith:
The petitioner showed additional income from "Bhikshuki" and agriculture and paid taxes on the returned income. The court noted that the Explanation to section 273A(1) deems full and true disclosure if section 271(1)(c) is not attracted. The court held that the petitioner's disclosure was honest and in good faith, as all returns were accepted with minor variations, mainly in the valuation of new construction.

3. Co-operation in Assessment Proceedings:
The petitioner fully co-operated with the Department during the assessment proceedings. This was undisputed and fulfilled one of the conditions precedent for the exercise of discretion u/s 273A.

4. Payment or Satisfactory Arrangement for Tax or Interest:
The petitioner paid income-tax u/s 140A on the returned income and made satisfactory arrangements for the payment of any tax or interest payable. This condition was also undisputed.

Conclusion:
The court found that the Commissioner misdirected himself regarding the scope of the conditions precedent for the exercise of jurisdiction u/s 273A. The refusal to exercise discretion was based on a misconception of the scope of power. The court quashed the impugned order and remanded the matter to the Commissioner to decide the application u/s 273A on merits, holding that the conditions for the exercise of discretion do exist. The petition was allowed with no order as to costs.