1984 (11) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Rejection of waiver application under Section 273A of the Income-tax Act.
2. Competence of the Commissioner to review the previous order.
3. Legal interpretation of Section 273A of the Income-tax Act.
4. Relief under Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Rejection of Waiver Application under Section 273A:
The petitioner's application for waiver of penalty and penal interest for the assessment years 1971-72, 1972-73, and 1973-74 was initially rejected by the Commissioner of Income-tax, Lucknow, on February 13, 1979. The reason for rejection was that the additions made for undisclosed investments for these years had been upheld by the Appellate Assistant Commissioner, thereby attracting penalty under Section 271(1)(c). Consequently, the disclosure for these years was not considered full, true, and in good faith.

2. Competence of the Commissioner to Review the Previous Order:
The Commissioner refused to reconsider the order of his predecessor in light of subsequent developments, citing lack of power to review quasi-judicial orders. The Central Government's Ministry of Finance, supported by the Central Law Ministry, advised that the power under Section 273A is quasi-judicial and does not include the power of review unless explicitly conferred by the Act.

3. Legal Interpretation of Section 273A:
The court examined the scheme of Section 273A, which allows the Commissioner to waive penalties and interest if certain conditions are met, including voluntary and good faith disclosure of income, cooperation in assessment inquiries, and payment of tax. The court opined that the power to waive penalties could be exercised until the penalty amount is finally recovered, implying that the Commissioner could review his order under the scheme of Section 273A.

4. Relief under Article 226 of the Constitution:
The court held that even if the Commissioner lacked the power to review, the petitioner was entitled to relief under Article 226 of the Constitution. The court quashed the Commissioner's orders dated February 13, 1979, and February 19, 1981, and directed the Commissioner to reconsider the waiver application based on the Tribunal's order that had removed the stigma of concealment of income.

Conclusion:
The writ petition was allowed, and the Commissioner was directed to reconsider the petitioner's application for waiver of penalty and interest for the assessment years 1971-72, 1972-73, and 1973-74, taking into account the observations made in the judgment. The costs of the petition were to be easy.