Ram Lal Roshan Lal (HUF) vs Commissioner of Income Tax

By means of the present writ petition filed under Article 226 of the Constitution of India the petitioner seeks a writ, order or direction in the nature of certiorari for quashing the order dated December 15, 1989, passed by the Commissioner of Income Tax, Meerut, u/s 273A of the Income Tax Act, 1961, hereinafter referred to as the "Act".

The facts giving rise to the present writ petition are as follows:

The petitioner is a Hindu undivided family. A search was conducted by the Income Tax Department in the residential premises of Roshan Lal, a member of the Hindu undivided family on March 15, 1983, when certain incriminating materials and documents were found in the search. The petitioner filed returns of income for the assessment years 1980-81 to 1983-84 voluntarily under the amnesty scheme which was in force at the time when the return was filed. The income disclosed after discussion was accepted. However, the assessing authority levied interest under Sections 139(8), 215 and 217 as also penalty under Sections 271(1)(c) and 273(2)(a) of the Act.

The petitioner made an application for waiving the interest as also the penalty imposed upon it. The said application has been rejected by the Commissioner of Income Tax, Meerut, by the impugned order.

We have heard Shri Rithik Upadhyaya, learned Counsel for the petitioner, and Shri Shamboo Chopra, learned standing Counsel appearing for the respondent.

Learned Counsel for the petitioner submitted that the karta of the petitioner, Shri Ram Lal, prior to his death on December 8, 1988, and Roshan Lal, the present karta, were living separately and the search operation was carried on at the residence of Shri Roshan Lal and, therefore, return filed by the Hindu undivided family under the amnesty scheme should be considered to have been filed voluntarily. The petitioner had co-operated with the assessment proceedings and had also deposited the entire amount of tax and, therefore, had fulfilled the requirement of Sub-section (1) of Section 273A of the Act. The Commissioner of Income Tax, therefore, ought to have waived the entire amount of interest and penalty so imposed. He further submitted that in the alternative, a claim was also made under Sub-section (4) of Section 273A of the Act, which ought to have been considered and taking into consideration the genuine hardships the petitioner was facing, the amount of interest and penalty should have been waived. The Commissioner of Income Tax had not at all considered the question of genuine hardship being faced by the petitioner while rejecting the prayer for waiving the amount of interest and penalty under Sub-section (4) of Section 273A of the Act.

Shri Shamboo Chopra, learned standing Counsel, submitted that the Commissioner of Income Tax, has recorded a finding of fact that both the persons, namely, Ram Lal and Roshan Lal, according to the submission of the petitioner in the application u/s 273A, were living and messing jointly and it is not correct to say that the two persons were living separately. The return which have been filed after the search operation were carried on at the residence of Roshan Lal and Ram Lal cannot be said to have been filed voluntarily and, therefore, the Commissioner had rightly rejected the application seeking waiver of penalty and interest vide order dated December 15, 1989. So far as the claim under Sub-section (4) is concerned, he submitted that the petitioner had failed to establish that it would suffer genuine hardship because of deposit of the amount of interest and penalty.

We have heard learned Counsel for the parties and find that in the documents filed along with application seeking waiver of penalty and interest u/s 273A of the Act, the petitioner has enclosed a copy of the application in which certain offer was given to the Income Tax Officer at the time of assessment. In that application, the petitioner has mentioned as follows:

Both the coparceners of the Hindu undivided family namely, Shri Ram Lal and Roshan Lal, are enjoying share income from the different partnership firms and are regular assessees since long at present in central circle Ghaziabad. They are living and messing jointly and are making regular withdrawals from their capital account in the firm for the household expenses.

The Commissioner of Income Tax had relied upon the said averment made by the petitioner while deciding the application u/s 273A of the Act and had come to the conclusion that as both the persons were living jointly and also messing jointly, the return have been filed after the search was carried out, cannot be termed as voluntary.

We are of the opinion that the Commissioner (Income Tax) in passing the order has not committed any illegality as the return having been filed after the search was carried out cannot be termed as voluntary under Sub-section (1) of Section 273A of the Act. So far as the claim under Sub-section (4) is concerned, the Commissioner of Income Tax while rejecting the petition has held as follows:

As regards the request that the matter may be considered u/s 273A(4) concerning hardship, the facts and circumstances;

(i) non-disclosure of income, and (ii) being search case do not justify waiver of penalties and interest.

From the reading of the aforesaid portion of the order, we find that the Commissioner has been swayed away with the fact that the disclosure was on account of the search having been conducted. He has not considered the question of genuine hardship which the petitioner may face if it is required to deposit the amount of interest and penalty.

In this view of the matter, the order of the Commissioner of Income Tax, in so far as it rejected the claim under Sub-section (4) of Section 273A of the Income Tax Act, 1961, cannot be sustained and is set aside. The Commissioner of Income Tax is directed to decide that matter afresh in view of the observations made above. The writ petition succeeds and is allowed in part.