2007 (3) TMI 195 - HC - Income Tax

Incriminating materials found in search (march 1983) returns for A.Ys 1980-81 to 1983-84 filed (under amnesty scheme) after search, can t be termed as voluntarily return u/s 273(1) income disclosed after discussion was accepted Comm(A) hasn t considered the question of genuine hardship which the petitioner may face if it is required to deposit the amount of interest & penalty so order of comm.(A) rejecting prayer for waiver of penalty & interest u/s 273(4) is set aside matter remanded

Summary

Issues:
1. Application for quashing order under section 273A of the Income-tax Act, 1961.

Analysis:
The petitioner, a Hindu undivided family, filed a writ petition under article 226 of the Constitution of India seeking to quash an order passed by the Commissioner of Income-tax under section 273A of the Income-tax Act, 1961. The petitioner voluntarily filed returns of income for certain assessment years under an amnesty scheme. However, the assessing authority imposed interest and penalties. The petitioner applied for waiving the interest and penalties, which was rejected by the Commissioner. The petitioner argued that the return was voluntarily filed as the karta of the family and the present karta were living separately. The Commissioner, on the other hand, found that both individuals were living jointly and rejected the waiver application based on this finding.

The petitioner contended that the Commissioner did not consider the genuine hardship faced by them and should have waived the interest and penalties. The Commissioner, however, maintained that the return filed after a search operation cannot be considered voluntary. The Commissioner also rejected the claim under sub-section (4) of section 273A, citing non-disclosure of income and the search case as reasons for not waiving penalties and interest. The court found that the Commissioner did not consider the genuine hardship aspect while making this decision.

The court held that the Commissioner did not commit any illegality in rejecting the claim under sub-section (1) of section 273A. However, the court set aside the decision on the claim under sub-section (4) and directed the Commissioner to reconsider the matter, emphasizing the importance of considering genuine hardships faced by the petitioner. Consequently, the writ petition was partially allowed, with the order under sub-section (4) of section 273A being set aside for fresh consideration by the Commissioner.