1987 (10) TMI 30 - HC - Income Tax

Summary

Issues:
1. Delay in filing income tax return for assessment year 1973-74.
2. Imposition of interest and penalty by Income-tax Officer.
3. Application for waiver of penalty and interest under section 273A of the Income-tax Act.
4. Dismissal of the application by the Commissioner of Income-tax.
5. Interpretation of section 273A regarding waiver/reduction of interest.
6. Challenge to the Commissioner's decision in a writ petition.

Analysis:

1. Delay in filing income tax return for assessment year 1973-74:
The petitioner, a registered firm, filed its return for the assessment year 1973-74 with a delay of nearly two years. The return was filed on August 7, 1975, while it was originally due by June 30, 1973. The delay in filing the return led to interest charges and penalty imposed by the Income-tax Officer.

2. Imposition of interest and penalty by Income-tax Officer:
The Income-tax Officer charged interest for late filing of the return under section 139(8) of the Income-tax Act, 1961, amounting to Rs. 38,650. On appeal, this amount was reduced to Rs. 37,015. Additionally, a penalty was imposed on the petitioner.

3. Application for waiver of penalty and interest under section 273A of the Income-tax Act:
The petitioner applied for waiver of penalty and interest under section 273A of the Act, which was partly allowed. The penalty was waived, but the waiver or reduction of interest was dismissed by the Commissioner of Income-tax.

4. Dismissal of the application by the Commissioner of Income-tax:
The Commissioner dismissed the application for waiver/reduction of interest citing non-compliance with the requirement of section 273A(1)(iii)(c) of the Act, as the tax payment was made after the assessment was completed.

5. Interpretation of section 273A regarding waiver/reduction of interest:
The court analyzed the provisions of section 273A and emphasized that the application for waiver/reduction of interest was maintainable as the tax payment was made after the date of assessment, which was after the insertion of section 273A.

6. Challenge to the Commissioner's decision in a writ petition:
The court held that the Commissioner erred in law by taking a hyper-technical view and quashed the order dismissing the application for waiver/reduction of interest. The court directed the Commissioner to reconsider the application on its merits.

In conclusion, the court found that the petitioner had made a full and true disclosure of income and had paid the tax, although there was a clerical error in mentioning the assessment year in the challan. The court criticized the Commissioner's technical approach and ruled in favor of the petitioner, allowing the writ petition and directing a fresh consideration of the application for waiver/reduction of interest.