1982 (5) TMI 26 - HC - Income Tax

Summary

Issues:
1. Validity of disclosure petition for assessment years 1970-71 and 1971-72.
2. Interpretation of Section 273A of the Income Tax Act.
3. Authority of the Commissioner to waive penalties and interest.
4. Requirement of full and true disclosure for penalty waiver.

Detailed Analysis:
1. The petitioner filed a disclosure petition under s. 271(1)(a) of the Income Tax Act for the assessment years 1970-71 to 1973-74. The Commissioner accepted the disclosure as voluntary and in good faith for all years except 1970-71 and 1971-72, deeming the returns for these years invalid due to late filing beyond the prescribed time limit under s. 139. The petitioner sought relief for these years, challenging the Commissioner's decision.

2. Section 273A of the Income Tax Act empowers the Commissioner to reduce or waive penalties and interest if the taxpayer makes full and true disclosure voluntarily and in good faith before the issuance of certain notices. The provision does not specify that disclosure must be made through a valid return. In a previous case, the court held that disclosure can be made through a petition, emphasizing the intent to encourage voluntary disclosure of concealed income by offering relief from penalties and interest.

3. The Commissioner's authority to waive penalties and interest is based on the taxpayer's compliance with the conditions set out in s. 273A, including full and true disclosure of income, cooperation in assessment inquiries, and payment of taxes. The court clarified that the Commissioner can reduce or waive penalties already imposed or liable to be imposed, as well as interest that may not have been levied but could be imposed in the future.

4. The court found that the petitioner had indeed made a full and true disclosure of income voluntarily and in good faith, meeting the requirements of s. 273A. Therefore, the Commissioner's insistence on a valid return for waiver of penalties and interest was deemed incorrect. The court allowed the writ petition, quashing the order related to the assessment years 1970-71 and 1971-72, and directing the Commissioner to reconsider the disclosure application for those years in accordance with the law.