1983 (9) TMI 38 - HC - Income Tax

Summary

Issues:
Challenge to the order of the Commissioner of Income-tax under section 273A of the Income Tax Act, 1961 for not fully waiving the penalty or interest. Interpretation of section 273A regarding the Commissioner's discretion to reduce or waive penalties or interest. Requirement of the Commissioner to provide reasons for not granting full relief under section 273A.

Analysis:
The petitioner, an income-tax assessee, challenged the order of the Commissioner of Income-tax under section 273A of the Income Tax Act, 1961, alleging that the Commissioner did not provide reasons for not completely waiving the penalty or interest under sections 271(1)(a) and 217 of the Act, despite being satisfied that the case fell within the scope of section 273A. Section 273A grants the Commissioner discretion to reduce or waive penalties or interest under specific circumstances outlined in the provision. The provision states that the Commissioner may exercise this discretion if certain conditions are met, such as full and true disclosure of income, cooperation in the assessment process, and payment of taxes as required. However, the Commissioner is not obligated to provide reasons when declining relief or granting partial relief under section 273A. It is only necessary for the Commissioner to provide reasons when exercising discretion to grant relief.

The judgment highlighted that the Commissioner's discretion under section 273A allows for the possibility of not granting relief at all or providing only partial relief, without the need to justify the extent of relief granted. The judgment referenced a Supreme Court decision in Travancore Rayons Ltd. v. Union of India, AIR 1971 SC 862, which was cited by the petitioner's counsel to argue that the Commissioner should have provided reasons for not granting full relief. However, the court distinguished this case, stating that the discretion under section 273A does not require the Commissioner to justify the extent of relief provided. The court emphasized that some arbitrariness is inherent in exercising discretion under section 273A, and the Commissioner is not expected to justify the specific percentage of relief granted in each case.

In conclusion, the court found no merit in the petitioner's challenge and dismissed the petition, stating that the Commissioner is not required to provide reasons for granting partial relief under section 273A. The judgment clarified that the Commissioner's discretion in granting relief under section 273A does not necessitate detailed justifications for the extent of relief provided, as some level of arbitrariness is inherent in such decisions.