1978 (4) TMI 65 - HC - Income Tax

Summary

Issues involved: Petition under article 226 for quashing orders of Commissioner of Income-tax dated 17th September, 1976 and 4th September, 1975.

Assessment Years 1969-1974:
The petitioner, a partnership concern, filed a disclosure petition on April 24, 1974, disclosing an amount to be assessed over 5 years. The Commissioner rejected the application for waiver of penalties on the grounds that it was filed after detection by the department. Subsequent applications were made for waiver of penalties and interest. The Commissioner rejected the application on September 17, 1976, leading to the filing of a writ petition.

Section 273A - Power to Reduce or Waive Penalty:
Section 273A allows the Commissioner to reduce or waive penalties and interest. The Commissioner's power is not limited to cases where penalties have already been imposed but extends to cases where liability has been incurred. The Commissioner's rejection of the petitioner's application based on the timing of the penalty imposition was deemed untenable.

Waiver of Interest and Good Faith Disclosure:
The Commissioner questioned whether waiver could be allowed when assessment followed a notice under section 148 and if the disclosure was made in good faith. The petitioner's disclosure was voluntary, made before reassessment notices were issued, and in conformity with the returns subsequently filed. The Commissioner erred in finding the disclosure not made in good faith, as the petitioner acted honestly in making the disclosure to avail the benefits under section 273A(1)(iii).

Conclusion:
The Commissioner's rejection of the application lacked consideration of all relevant facts. The writ petition was allowed, quashing the Commissioner's orders and directing a fresh decision on the petitioner's application in accordance with law. The petitioner was awarded costs.