2010 (8) TMI 121 - HC - Income Tax

-Revised return - Income Tax Officer passed assessment order accepting the revised return - issued notice for penalty under Section 271 (1) (c) of the Income Tax Act - application for waiver of penalty under Section 273-A of the Act - Chief Commissioner of Income Tax ( The CCIT) had observed that this is not a fit case for waiver of penalty under Section 273-A. Hence present writ petition - assessee has cooperated in the assessment proceedings and the perusal of records show that the taxes and interest determined on the completion of assessment have been paid - mentioned in section 273-A (1) (b) for waiving the penalty were satisfied yet the application was rejected on the observation of the CCIT that it was not a fit case for waiver of penalty Held that - under Section 271 (1) (b) are satisfied than mere saying that the CCIT has observed that it is not a fit case to waive the penalty is not sufficient - matter remanded.

Summary

Issues:
1. Rejection of waiver application for penalty under Section 273-A of the Income Tax Act.
2. Lack of reasons provided for rejecting the waiver application.
3. Failure to produce the order of the Chief Commissioner of Income Tax (CCIT).
4. Legal validity of the impugned order.

Analysis:
1. The petitioner filed a revised return for the assessment year 2002-03, which was accepted by the Income Tax Officer. However, a penalty notice was issued under Section 271(1)(c) of the Income Tax Act. The petitioner applied for waiver of penalty under Section 273-A, but the application was rejected by the respondent no. 2, citing the CCIT's observation that it was not a fit case for waiver.

2. The assessing officer's report favored the petitioner, stating that the conditions for waiving the penalty under Section 273-A were satisfied. Despite this, the CCIT's decision lacked reasons for deeming it not a fit case for waiver. The impugned order was deemed illegal for failing to provide adequate justification for the rejection of the waiver application.

3. The order of the CCIT, crucial for understanding the reasoning behind the rejection of the waiver application, was not produced by the respondents. The absence of this order hindered a comprehensive review of the decision-making process, raising concerns about transparency and procedural fairness.

4. Citing a similar case precedent, the court allowed the writ petition and remanded the case back to the Commissioner of Income Tax for reconsideration in accordance with the law. The lack of proper reasoning and failure to produce essential documents led to the decision to send the case back for a lawful review and decision-making process.