Kailash Mills vs Commissioner of Income Tax

Heard Sri Vikram Gulati, learned counsel for the petitioner, and Sri Pra-kash Krishna for the department.

The petitioner has challenged the impugned order of the Commissioner of Income Tax u/s 273A of the Income Tax Act, 1961, dated July 19, 1984, annexure 2 to the petition. In this petition we are only concerned with the claim of waiver of interest u/s 139(8) which has been denied by the Commissioner.

The Commissioner has stated in his order that the Income Tax Officer has stated in his report that the disclosure by the assessee was voluntary prior to the issue of any notice and it was done in good faith. The assessee also cooperated during the assessment proceedings.

It is well settled that if the conditions in Clause (c) of Section 273A(1) of the Income Tax Act are fulfilled, the Commissioner must give some relief to the petitioner, though he has discretion in granting either total waiver or partial waiver depending on the facts of the case, but he cannot reject the application u/s 273A in toto when the conditions mentioned u/s 273A(1)(c) are fulfilled vide Jaswant Rai and Another Vs. Central Board of Direct Taxes and Revenue and Others, . In this case it has been observed by the Supreme Court that in deciding the application u/s 273A, the Commissioner has to take into consideration the conditions mentioned in that provision, but he cannot take into account factors or reasons which are extraneous to those conditions specified in the provision. In the present case the reasons given for rejecting the petitioner''s application for waiver of interest u/s 139(8) are not those mentioned in Clause (c) of Section 273A(1).

Learned counsel for the Department has relied on the decision of the Supreme Court in Smt. Harbans Kaur etc. Vs. Commissioner of Wealth-tax, Jullundur, . In that decision it was held that the Commissioner has discretion in granting relief u/s 273A. In our opinion, on a reading of both the above decisions together the legal position which emerges is that if the conditions mentioned in Clause (c) of Section 273A(1) are satisfied some relief has to be given to the assessee, though that relief may either be total waiver of interest or reduction of interest depending upon the facts of the case. However, the Commissioner cannot totally reject the waiver application if the conditions mentioned in Clause (c) of Section 273A(1) are satisfied.

For the reasons given above this writ petition is allowed, the impugned order dated July 19, 1984, to the extent that it rejected the petitioner''s application for waiver of interest u/s 139(8) is set aside, and the matter is remanded to the Commissioner to pass a fresh order in the light of the observations made above.