1974 (9) TMI 14 - HC - Income Tax

Summary

Issues:
- Penalty imposed for delay in filing income tax return under section 139(1)
- Application for waiving the penalty under sub-section (4A) of section 271 rejected by Commissioner
- Interpretation of "full disclosure of income" under sub-section (4A) of section 271
- Incorrect application of the test by the Commissioner
- Quashing of the impugned order and remand for fresh decision by the Commissioner

Detailed Analysis:
The judgment pertains to a case where the assessee-petitioner was penalized for filing the income tax return for the assessment year 1968-69 after the due date. The Income-tax Officer imposed a penalty of Rs. 17,749 due to the delay in filing. Subsequently, the assessee applied to the Commissioner under sub-section (4A) of section 271 of the Income-tax Act, 1961, seeking a waiver of the penalty. However, the Commissioner rejected the application based on the grounds that the return filed by the assessee did not constitute full disclosure of income as required by the statute.

The Commissioner's decision was based on the discrepancy between the income declared by the assessee in the return and the income assessed by the Income-tax Officer. The Commissioner noted that there was a difference of Rs. 7,500 between the returned income and the assessed income, primarily due to inadmissible items on the expenditure side. The Commissioner held that the additions made to the income by the final fact-finding authority constituted a violation of the provisions of section 271(4A) as the return was not considered full or complete.

The Court analyzed the statutory provisions under sub-section (4A) of section 271, emphasizing the requirement of "full disclosure of income" by the assessee. It highlighted the distinction in the language used for defaults under clause (a) and clause (c) of sub-section (1) of section 271, where the former necessitates full disclosure of income, while the latter mandates full and true disclosure of particulars of income. The Court found that the Commissioner erred in applying the incorrect test to determine compliance with the statute.

Consequently, the Court allowed the petition, quashed the impugned orders, and remanded the matter back to the Commissioner for a fresh decision. The Commissioner was directed to reevaluate the application considering the correct statutory tests and requirements for determining full disclosure of income. No costs were awarded in the circumstances of the case.