Mohanlal V. Nakum vs Commissioner of Income Tax and Another

M. B. Shah, C.J.—Heard learned counsel for the parties.

Rule.

At the request of learned counsel for the parties, the matter is fixed for hearing.

The petition is filed challenging the order dated March 25, 1996, passed by the Commissioner of Income Tax u/s 273A(1) of the Income-lax Act, 1961. By the impugned order, the Commissioner of Income Tax rejected the prayer of the petitioner to waive penalty as well as interest by holding that the petitioner has not made any satisfactory arrangement for the payment of unpaid amount.

In the present case, it is undisputed that on July 31, 1989, the petitioner filed a revised return for the accounting period ending up to March 31, 1985, by contending that he had previously filed the return for the accounting period 1985-86 (?) wherein it has been specifically mentioned that the petitioner has received a share of profit by sale of plot amounting to Rs. 3,60,000. At that time, he claimed exemption with regard to the payment of tax u/s 54F. The tax liability at that time, according to him, was Rs. 83,720 but he claimed exemption u/s 54F. Subsequently as he was not in a position to invest the said amount, he filed the revised return. Notice u/s 148 was issued to regularise the income and an order was passed assessing the capital gains of Rs. 2,99,000. It was also ordered to initiate penalty proceedings u/s 271(1)(c) of the Income Tax Act separately.

Thereafter, the petitioner filed an application u/s 273A(1) of the Income Tax Act for waiver of interest charges.

From the facts stated above, it is apparent that before detection of the income undisclosed, the petitioner himself has approached and pointed out to the Income Tax Officer that the petitioner was not in a position to invest as provided u/s 54F and furnished particulars in respect of such income voluntarily and in good faith. Therefore, this is a fit case for waiving the penalty. In regard to interest, the order passed by the Commissioner of Income Tax is justified.

In this view of the matter, this petition is partly allowed. The impugned order passed by the Commissioner of Income Tax with regard to penalty is set aside.

The respondents are directed to waive penalty only and to that extent the order dated March 25, 1996 (exhibit "C" to the petition), passed by the Commissioner of Income Tax is modified.

Rule is made absolute in the aforesaid terms with no order as to costs.