SONEPAT COOPERATIVE MARKETING SOCIETY LTD. VS INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH, 1998 PTD-PUNJAB-AND-HARYANA-HIGH-COURT-INDIA 3261 (1996)

Income-tax---

---Penalty---Reduction or waiver ---Commtsstoers--Conditi6nsprecedent for exercise of power ---Assessee not making satisfactory arrangement for payment of tax---Application for waiver liable to be dismissed---Indian Income Tax Act, 1961, S.273-A.

Section 273-A of the Income Tax Act, 1961, lays down five conditions fundamental to the exercise of discretion by the Commissioner to reduce or waive penalty in certain cases. They are: (1) that the returns were filed by the assessee prior to the issue of a notice under section 139(2) or section 148; (2) that these were filed voluntarily and in good faith; (3) that the assessee had made a full and true disclosure of his income; (4) that he had cooperated in the inquiry relating to the assessment of his income; and (5) that he had paid or made satisfactory arrangements for the payment of the tax or interest. The five conditions laid down in section 273-A of the Act are conditions precedent before the Commissioner is clothed with jurisdiction under section 273-A of the Act to either waive or reduce the amount of penalty.

Where the assessee filed returns voluntarily and in good faith, making full and true disclosure of his income, but not satisfy the condition regarding payment or making satisfactory arrangements for the payment of the tax or interest payable in consequence of the order passed under the Act by the assessing authority:

Held, accordingly, that no case was made out for either waiver or reduction in the amount of penalty or interest.

J.S. Virk for Petitioner.

R.P. Sawhney and Sanjay Goel for Respondents.

JUDGMENT

The petitioner has impugned Annexures "P-4" and "P-5", whereby the application filed by him under section 273-A of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), has been dismissed by the Commissioner of Income-tax, Jalandhar, for the assessment years 1987-88 and 1988-89.

The petitioner-assessee filed income-tax returns for the assessment years 1987-88 and 1988-89 under the voluntary scheme prior' to the issuance of notices under section 148 of the Act. The assessing authority imposed the tax for the assessment years 1987-88 and 1988-89. It also imposed a penalty at the rate of 10 per cent. of the tax, i.e., Rs.6,375 for the assessment year 1987-88 and Rs.5,962 for the assessment year 1988-89. Interest undersections 139(8) and 215/217 of the Act was also imposed.

The petitioner filed an application under section 273-A of the Act before the Commissioner of Income-tax Jalandhar, for waiver and reduction in the amount of penalty, challenging the levy of penalty. The application under section 273-A. of the Act was dismissed by the Commissioner of Income-tax, Jalandhar, on the ground that the petitioner did not satisfy the conditions laid down in section 273-A of the Act for waiver or reduction in the amount of penalty. It was held that the assessee had not paid made satisfactory arrangements for the payment of tax and interest under sections 139(8) and 215/217 of the Act for the assessment years 1987-88 and 1988-89, aggrieved against which, the present petition has been filed.

Section 273-A as it existed at the relevant time, reads as under:

"273-A. Power to reduce or waive penalty, etc., in certain cases.-- (1) Notwithstanding anything contained in this Act, the Commissioner may, in his discretion, whether on his own motion or otherwise,---

(i) reduce or waive the amount of penalty imposed or imposable on a person under clause (i) of subsection (1) of section 271 for failure, without reasonable cause, to failure the return of total income which he was required to furnish the under subsection (1) of section 139; or

(ii) reduce or waive the amount of penalty imposed or imposable on a person under clause (iii) of subsection (1) of section 271; or

(iii) reduce or waive the amount of interest paid or payable under subsection (8) of section 139 or section 215 or section 217 or the penalty imposed or imposable under section 273,

if he is satisfied that such person---

(a) in the case referred to in clause (i), has, prior to the issue of a notice to him under subsection (2) of section 139, voluntarily and in good faith made full and true disclosure of his income;

(b) in the case referred to in clause (ii), has, prior to the detection by the Assessing Officer, 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) in the cases referred to in clause (iii), has, prior to the issue of a notice to him under subsection (2) of section 139, or where no such notice has been issued and the period for the issue of such notice has expired, prior to the issue of notice to him under section 148, voluntarily and in good faith made full and true disclosure of his income and has paid the tax on the income so disclosed,

and also has, in all the cases referred to in clauses (a), (b) and (c), 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 subsection, 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 clause (c) of subsection (1) of section 271. "

Section 273-A of the Act lays down five conditions fundamental to the exercise of discretion by the Commissioner to reduce or waive penalty in certain cases. The same are:---

(i) that the returns were filed by the assessee prior to the issue of a notice under section 14(2)/139(12);

(ii) that these were filed voluntarily and in good faith;

(iii) that the assessee had made a full and true disclosure of this net wealth (income);

(iv) that he had cooperated in the inquiry relating to the assessment of his net wealth (income); and

(v) that he had paid or made satisfactory arrangements for the payment of the tax.

The petitioner had filed the returns voluntarily and in good faith, making full and true disclosure of his income but did not satisfy the condition regarding payment/making satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under the Act. In the petition, there is no averment that the petitioner had either paid or made satisfactory arrangements for the payment of tax or interest payable under the Act. The five conditions laid down in section 273-A of the Act are conditions precedent before the Commissioner is clothed with jurisdiction under section 273-A of the Act to either waive or reduce the amount of penalty. Since, the petitioner did not satisfy one of the conditions laid down in section 273-A of the Act, no case was made out for either waiver or reduction in the amount of penalty and interest.

There is no infirmity in the orders, Annexures "P-4" and "P-5". The same are in conformity with the provisions of the Act and the law laid down in various judgments of this Court.

Dismissed. No costs.

M.B.A./1632/FC Order accordingly.