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Issues: Failure to provide sufficient reasons in a quasi-judicial order under s. 18(2A) of the Wealth-tax Act, 1957.
The judgment delivered by the High Court of Gujarat pertained to three special civil applications where the petitioner had been assessed for income-tax and wealth-tax over several years. The petitioner had initially filed a wealth-tax return for the assessment year 1971-72, showing a fixed deposit amount with a specific firm. Subsequently, a revised return was filed for the same year due to a discrepancy in the certificate issued by the firm. The petitioner sought condonation of the mistake and waiver of penalty under s. 18(2A) of the Wealth-tax Act. The Commissioner of Wealth Tax (CWT) reduced the minimum penalty leviable under s. 18(1)(a) to Rs. 7,500, citing satisfaction of conditions under s. 18(2A). However, the CWT's order lacked explicit reasons for the decision, which led to the challenge by the petitioner based on the requirement of providing sufficient reasons in quasi-judicial orders. The High Court highlighted the legal framework under s. 18 of the Wealth-tax Act, emphasizing the discretionary power of the Commissioner to reduce or waive penalties under s. 18(2A) based on specific conditions being met. The court referenced previous Supreme Court decisions emphasizing the necessity of recording reasons in quasi-judicial orders to ensure fairness, transparency, and compliance with natural justice principles. The court cited cases such as Woolcombers of India Ltd. v. Woolcombers Workers' Union and Siemens Engineering and Manufacturing Co. of India Ltd. v. Union of India to underscore the importance of providing explicit reasons to support quasi-judicial decisions. The court noted that the CWT's order in the present case lacked detailed reasoning beyond a general statement of satisfaction with the conditions under s. 18(2A), failing to meet the standard of providing substantive reasons as required by law. In light of the principles outlined by the Supreme Court regarding the necessity of giving substantial reasons in quasi-judicial orders, the High Court found the CWT's order deficient in providing adequate justification for the decision to reduce the penalty. As a result, the court held that the failure to supply sufficient reasons constituted a breach of the rule of natural justice embodied in the principle of audi alteram partem. Consequently, the High Court allowed the special civil applications, striking down the CWT's orders in each case due to the absence of proper reasons. The court directed the respondent-Commissioner to bear the costs of the petitioners and granted the Commissioner the opportunity to reconsider the matter and issue a new order taking into account the observations made in the judgment.
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