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Judgment
Rajive Bhalla, J.—By way of this order, we shall dispose of Civil Writ Petn. Nos. 11, 12, 13, 12904 of 1990 and Civil Writ Petn. No. 3952 of 1992 as they involve adjudication of similar questions of law. Facts in controversy being identical, have been taken from Civil Writ Petn. No. 11 of 1990. The petitioner, who is an income tax assessee, was asked to pay various amounts as interest under ss. 139(1), 215 and 217, and penalty under ss. 271(1)(a) and 273(2)(c) of the IT Act, 1961 (in short to be referred as the Act) for asst. yrs. 1985-86, 1986-87 and 1987-88. The petitioner filed a petition under s. 273A of the Act, before the CIT, to reduce or waive the amount of penalty imposed, by pleading that he had filed returns voluntarily, without issuance of any notice under s. 139(2) or s. 148 of the Act and had always co-operated with the Department. The CIT, Amritsar considered the application and rejected the same by holding as under:
I have carefully considered the facts of the case, arguments of the assessee''s counsel and have also perused the assessment records. I do not find any merit in the application of the assessee and reject the same. In rejecting the petition of the assessee, I am influenced by the following considerations amongst others:
(i) The assessee is an old assessee. He was being assessed to tax for more than a decade having substantial income. A perusal of the assessment order for asst. yr. 1978-79 shows that he was assessed at an income for the said year at Rs. 51,240 and the return for the said year was filed on 7th Sept., 1978. He was thus fully aware of the statutory liability in furnishing the returns of income on time.
(ii) The income of the assessee for all the assessment years i.e. 1985-86 to 1987-88 was far in excess of the minimum liable to tax (Asst. yr. 1985-86--Rs. 59,710, 1986-87--Rs. 1,27,660 and 1987-88--Rs. 1,45,260)
(iii) The main source of income of the assessee was share from M/s. Gopi Nath Kahan Chand. This firm had filed its returns of income for various assessment years as under:
Even after the firm had filed returns of its income, the assessee failed to file his own returns of income. By delaying the filing of returns, the assessee thus withheld the payment of Government revenue for a very considerable period of time.
(iv) The assessee is a habitual defaulter. Following are the details in respect of returns pertaining to the earlier assessment years:
(v) For the asst. yr. 1984-85 the assessee availed the benefit of Amnesty Scheme. Even after availing the said benefit, the assessee continued to file delayed returns of income for the asst. yrs. 1985-86 upto 1987-88. No leniency can be shown to such habitual defaulter.
Counsel for the petitioner is not present but as we have perused the paper book as well as the impugned order and have heard counsel for the respondent, are inclined to decide the petition on merits.
The petitioner has pleaded that while adjudicating an application under s. 273A of the Act, a CIT exercises powers specially conferred by the various sub-sections, clauses and sub-clauses of s. 273A of the Act and not the powers of an AO and, therefore, while accepting or rejecting an application under s. 273A of the Act, a CIT is required to confine his consideration to factors referred to in the sub-sections, clauses and sub-clauses of s. 273A of the Act. The CIT has, however, rejected the application by assigning reasons that fall within the domain of an AO, without taking into consideration factors set out in s. 273A of the Act.
Counsel for the respondent submits that an order under s. 273A of the Act is discretionary and even otherwise administrative in nature. The discretion exercised by the CIT while dismissing the application filed by the petitioner, is legal and valid and does not call for interference. It is further submitted that the CIT is only required to assign reasons if he accepts the prayer for reduction or waiver of penalty, as in such a situation, the CIT is required to obtain permission from a higher authority. It is argued that even if reasons assigned by the CIT are held to be incorrect, the writ petition should be dismissed as the petitioner has not been able to place his case for grant of reduction or waiver of penalty and interest within parameters of sub-sections or clauses etc. of s. 273A of the Act.
We have heard counsel for the respondent, considered the pleadings, the impugned order and s. 273A of the Act which reads as follows:
273A. Power to reduce or waive penalty, etc., in certain cases.--(1) Notwithstanding anything contained in this Act, the CIT may, in his discretion, whether on his own motion or otherwise,--
(i) ***
(ii) reduce or waive the amount of penalty imposed or imposable on a person under cl. (iii) of sub-s. (1) of s. 271; or
(iii) (***)
if he is satisfied that such person--
(a) (***)
(b) in the case referred to in cl. (ii), has, prior to the detection by the AO, of the concealment of particulars of income or of the inaccuracy of particulars furnished in respect of such income, voluntarily and in good faith, made full and true disclosure of such particulars,
(c) (***)
and also has, in the case referred to in cl. (b), co-operated in any enquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year.
Explanation.--For the purposes of this sub-section a person shall be deemed to have made full and true disclosure of his income or of the particulars relating thereto in any case where the excess of income assessed over the income returned is of such a nature as not to attract the provisions of cl. (c) of sub-s. (1) of s. 271.
(2) Notwithstanding anything contained in sub-s. (1).--
(b) if in a case falling under cl. (c) of sub-s. (1) of s. 271, the amount of income in respect of which the penalty is imposed or imposable for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the aggregate amount of such income for those years, exceeds a sum of five hundred thousand rupees, no order reducing or waiving the penalty under sub-s. (1) shall be made by the CIT except with the previous approval of the Chief CIT or Director General, as the case may be.
(3) Where an order has been made under sub-s. (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section in relation to any other assessment year at any time after the making of such order:
Provided that where an order has been made in favour of any person under sub-s. (1) on or before the 24th day of July, 1991, such person shall be entitled to further relief only once in relation to other assessment year or years if he makes an application to the IT authority referred to in sub-s. (4) at any time before the 1st day of April, 1992.
(4) Without prejudice to the powers conferred on him by any other provision of this Act, the [(***) CIT] may, on an application made in this behalf by an assessee, and after recording his reasons for so doing, reduce or waive the amount of any penalty payable by the assessee under this Act or stay or compound any proceeding for the recovery of any such amount, if he is satisfied that--
(i) to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case; and
(ii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him:
Provided that where the amount of any penalty payable under this Act or, where such application relates to more than one penalty, the aggregate amount of such penalties exceeds one hundred thousand rupees, no order reducing or waiving the amount or compounding any proceeding for its recovery under this sub-section shall be made by the CIT except with the previous approval of the Chief CIT or Director General, as the case may be.
(5) Every order made under this section shall be final and shall not be called into question by any Court or any other authority.
(6) The provisions of this section [as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1989] shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.
(7) Notwithstanding anything contained in sub-s. (6), the provisions of sub-s. (1), sub-s. (2), or as the case may be, sub-s. (4) [as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1989 (3 of 1989)], shall apply in the case of reduction or waiver of penalty or interest in relation to any assessment for the assessment year commencing on the 1st day of April. 1988 or any earlier assessment year, with the modifications that the power under the said sub-s. (1) shall be exercisable only by the CIT and instead of the previous approval of the Board, the CIT shall obtain the previous approval of the Chief CIT or Director General, as the case may be, while dealing with such case.
Sec. 273A of the Act enacts a non obstante clause which empowers the CIT, whether on his own motion or otherwise, to reduce or waive penalty imposed or imposable. The discretion so conferred has to be exercised within the informed parameters set out in sub-cls. (a), (b), and (c) read along with Expln. 1, as prevalent on the date of the application. The non obstante clause indicates that the power so exercised would take colour from the sub-sections and sub-clauses of s. 273A of the Act, and from no other provision of the Act. The opening words of s. 273A of the Act, i.e. "Notwithstanding anything contained in this Act...", confine consideration by the CIT to factors enumerated in s. 273A of the Act. An adjudication based on grounds, other than grounds referred to in s. 273A, would necessarily invite a valid charge that the order is null and void for an illegal exercise of jurisdiction, or a failure to exercise jurisdiction in accordance with statutory parameters set out in s. 273A of the Act.
A perusal of the impugned order reveals that the assessee had, prior to issuance of notice under sub-s. (2) of s. 139 of the Act, voluntarily made full disclosure of his income prior to any detection of the concealed income or the inadequacy of the particulars furnished. A perusal of the impugned order reveals that the CIT has assumed the role of an AO and while dismissing the petition and rejecting the plea for reduction/waiver of the amount of penalty imposed has referred to the very same factors that led the AO to impose penalty.
In this view of the matter, the writ petition is allowed, the impugned order is set aside and the matter is remitted to the CIT, Bhatinda (erstwhile CIT, Jalandhar) to decide the application, in accordance with law, within three months from the date of receipt of a certified copy of this order. Civil Writ Petn. No. 12904 of 1990 (Inderjeet Mehta vs. CWT) has been filed to challenge order dt. 26th March, 1990 passed under s. 18B of the WT Act, 1957. Sec. 18B of the WT Act, 1957 is pari materia to s. 273A of the IT Act, 1961 and, requires the CWT, while considering a prayer for reduction/waiver of penalty etc., to consider parameters set out in s. 18B of the Act. The ratio recorded while deciding Civil Writ Petn. No. 11 of 1990, relating to s. 273A of the IT Act, 1961 would necessarily apply to s. 18B of the WT Act. A perusal of the impugned order reveals that the CWT has committed the same error as has been noticed in cases, referred to in the preceding paras, relating to s. 273A of the IT Act, 1961. In this view of the matter, the impugned order is set aside and the matter is remitted to the CWT, Bhatinda to decide the matter afresh, in accordance with law.