1980 (2) TMI 53 - HC - Income Tax

Summary

Issues:
1. Application for waiving penalty under section 271(4A) of the Income Tax Act.
2. Rejection of the application by the Commissioner.
3. Consideration of irrelevant matters in deciding the application.
4. Interpretation of section 271(4A) of the Income Tax Act.
5. Comparison with similar provisions in other tax laws.
6. Quashing of the Commissioner's order and directions for reconsideration.

Analysis:
The petitioner, an assessee under the Income Tax Act, voluntarily filed income tax returns for the assessment years 1970-71 and 1971-72 after the due dates, seeking waiver of penalty under section 271(4A). The Commissioner rejected the application, citing that the petitioner's prior assessment history precluded him from benefiting under the provision, as it required a disclosure to avoid penalty for late filing.

The petitioner contended that the Commissioner considered irrelevant factors, such as the petitioner's prior assessment status, in rejecting the application. The High Court analyzed section 271(4A), emphasizing that the provision allows for penalty waiver if the assessee voluntarily discloses income before notice under section 139(2), cooperates in assessments, and pays due taxes. Notably, the Act does not exclude prior assesses from availing the provision, necessitating a strict construction of the taxing statute.

Drawing parallels with a similar provision in the Wealth Tax Act, the Court referenced a judgment highlighting that existing assesses are not precluded from seeking penalty waiver under such provisions. Further, a decision from the Mysore High Court emphasized that if the conditions of section 271(4A) are met, the Commissioner cannot arbitrarily deny penalty reduction or waiver.

Consequently, the High Court held that the Commissioner erred in considering irrelevant factors and quashed the order, directing a fresh consideration in line with the relevant criteria of section 271(4A). The Court allowed the writ petition, with costs imposed on the respondent, and instructed a reassessment of the application while adhering to the statutory requirements for penalty waiver under the Act.