1999 P T D 186
[225 I T R 113]
[Allababad High Court (India)]
Before P. K. Mukherjee and M.C. Agarwal, JJ
NEERAJ DYEING
Versus
COMMISSIONER OF INCOME-TAX and another
Civil Miscellaneous Writ Petition No.432 of 1986, decided on 22/08/1996.
Income-tax---
----Penalty---Interest---Waiver of---Search under S.132---In pursuance of settlement with Department, assessee offering additional amounts of income to tax and agreeing to imposition of minimum amount of penalty-- Application filed before Commissioner for waiver or reduction of penalty-- Revenue not deviating from terms of settlement or levying penalty exceeding minimum amount of penalty---Settlement entered into
to buy peace with Department---Settlement not entered into under some mistake of fact or law---Commissioner declining to interfere---Justified---Indian Income Tax Act, 1961, S.273-A.
There was a search of the residential premises of the partners of the assessee-firm and their family members under section 132 of the Income Tax Act, 1961. Since the assessee-firm wanted an amicable settlement with the Department, it moved an application before the Commissioner offering additional amounts of income to tax for the assessment years 1981-82 to: 984-85 and also agreed to the imposition of minimum penalty leviable under sections 271(1)(c) and 273 of the Income Tax Act, 1961. The assessments were completed accordingly and the penalties were also levied. In pursuance of the assessment interest under sections 215/217 has also been charged. Thereafter, the assessee-firm moved an application before the Commissioner under section 273-A of the Act praying for reduction or waiver of the penalties under section 271(1)(c) and section 273 and contended that under section 273-A(4), since the assessee had cooperated in the assessment proceedings, the Commissioner had an overriding power to reduce or waive the penalty. The Commissioner rejected the application for waiver/reduction of penalties on the ground that the same were levied according to the settlement arrived at between the assessee and the Revenue. On a writ petition for quashing the order passed by the Commissioner:
Held, (i) that it was not the assessee's contention that the Revenue had, in any manner, deviated from the terms of settlement and levied penalty exceeding the amount of minimum penalty leviable under the law;
(ii) that the parties having come to a settlement and the penalties having been levied at the minimum amount in pursuance of the settlement, the assessee could not claim a waiver or further reduction of the amount of penalty levied in terms of the settlement;
(iii) that under section 273-A, the power to waive or reduce the penalty can be exercised before or after the penalties were levied. In the instant case, the assessee approached the Commissioner before penalty was levied and when the Commissioner agreed that the penalty to be levied would be the minimum amount leviable under the Act, he was only exercising his powers to reduce or waive the penalty conferred upon him by section 273-A of the Act and an assessee who accepted the settlement and enjoyed the benefits conferred thereby could not be allowed to claim a further waiver or reduction;
(iv) that since the assessee wanted to buy peace with the Department and having bought the same through the settlement, it was trying to wriggle out of the price for purchase of peace, i.e., the minimum amount of penalties levied in terms of the settlement. This could not be permitted to be done particularly when there were no circumstances justifying such a course of action;
(v) that it was not the assessee's case that it entered into the settlement under some mistake of fact or law or that any such other thing had happened after the settlement that he should be allowed to disown the settlement and the penalties be further reduced or waived completely;
(vi) that, therefore, the Commissioner rightly declined to entertain the assessee's application under section 273-A of the Act.
D. Halappa Sons v. CIT (1974) 95 ITR 542 (Mys.); Garden Silk Weaving Factory v. CIT (1995) 213 ITR 10 (Guj.); Kherunissa Allibhai (Sint.) v. CIT (1978) 113 ITR 443 (Guj.); Padgilwar Brothers v. CIT (1971) 81 ITR 258 (Bom.) and Shital Prasad v. CIT (1986) 161 ITR 259 (All.) ref.
Vikram Gulati for the Assessee.
Bharati Agrawal, R. Agrawal, Ashok and Sekhar Srivastava for the Commissioner.
JUDGMENT
M.C. AGRAWAL, J.---By this petition under Article 226 of the Constitution of India the petitioner, a partnership-firm seeks the quashing of an order, dated January 20, 1986, passed by the Commissioner of Income Tax, Agra, whereby he rejected the petitioner's application under section 273-A of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), for the waiver or reduction of penalties levied under section 271(1)(c) and section 273 of the Act.
I have heard Sri Vikram Gulati, learned counsel for the petitioner, and Sri Shekhar Srivastava, learned standing counsel for the respondents. N. counter-affidavit has been filed on behalf of the respondents.
The facts are that a search under section 132 of the Act was conducted on the residential premises of the partners of the assessee firm and their family members on September 8 and 9, 1983. The petitioner and its partners wanted an amicable settlement and, therefore, they met the Commissioner of Income-tax who visited Farrukhabad shortly after the search, Ultimately, it was agreed that the petitioner would offer the
following additional amounts of income:
| | Rs. |
| 1981-82 | 75,000 |
| 1982-83 | 88,000 |
| 1983-84 | 80,000 |
| 1984-85 | 12,000 |
| | 2,55,000 |
The petitioner moved an application offering the aforesaid amount to tax and agreeing to imposition of the minimum penalty leviable under section 271(1)(c) and section 273 of the Act. The assessments were accordingly completed and penalties were levied. It is claimed that the petitioner fully cooperated with the Department in settling its cases. It is alleged that in pursuance of the assessment interest under section 215/217 has been charged and for the assessment years 1981-82, 1982-83 and 1983-84 penalties under section 271(1)(c) in the sums of Rs.41,845, Rs,51,280 and Rs.46,292, respectively, have been levied.
After the completion of the assessments and the levy of penalty the petitioner moved an application under section 273-A before the Commissioner of Income-tax praying for the waiver/reduction of amounts of penalties under section 271(1)(c) and section 273. It is claimed that under section 273-A(4), the Commissioner has an overriding power to reduce or waive the penalty. Section 273-A(4) reads as under:
"(4) Without prejudice to the powers conferred on him by any other provisions of this Act, the Commissioner 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 cooperated in any enquiry relating to the assessment or any proceeding for the recovery of any amount due from him. "
The Commissioner, by the impugned order, rejected the prayer of the petitioner for waiver/reduction of the penalties on the ground that the same were levied according to the settlement arrived at between the assessee and the Revenue. The petitioner's contention is that the petitioner having cooperated in the assessment proceedings, it was entitled to waiver of the penalties in the exercise of overriding powers under subsection (4) aforesaid and that the Commissioner erred in rejecting the application on the short ground that the penalties were levied in accordance with the settlement with the petitioner.
Admittedly, after the search there was a settlement between the petitioner and the Commissioner of Income-tax under which it was settled that the petitioner would offer the amounts referred to above as its additional income for the various years and that the minimum penalty leviable under the Act would be levied. It is not the petitioner's contention that the Revenue has in any manner deviated from the terms of settlement and levied penalty exceeding the amount of minimum penalty leviable under the law. Therefore, the parties having come to a settlement and the penalties having been levied at the minimum amount in pursuance of the settlement, we are of the view that the assessee cannot any longer claim a waiver or further reduction of the amount of penalty levied in terms of the settlement. Under section 273-A, the power to waive or reduce the penalty can be exercised before or after the penalties are levied. In the present case, the petitioner approached the Commissioner before penalty was levied and when the Commissioner agreed that the penalty to be levied would be the minimum amount leviable under the Act, he was only exercising his powers to reduce or waive the penalty conferred upon him by section 273-A of the Act and an assessee who accepts the settlement and enjoys the benefits conferred thereby cannot be allowed to turn around subsequently and claim a further waiver or reduction. ,
Learned counsel for the petitioner placed reliance on a Division Bench judgment of this Court in Shital Prasad v. CIT (1986) 161 ITR 259 in which one of the judges held that the Commissioner has the power to review his order passed under section 273-A of the Act while the other Judge held that he had no such power of review but in spite of having that power he retains that power to be exercised at any subsequent stage up to the recovery proceedings. There was, thus, no unanimity on the point but both the judges agreed that in the extraordinary circumstances of the case, the Commissioner should reconsider the petitioner's subsequent application for waiver. In that case, the Commissioner had declined application for waiver. In that case, the Commissioner had declined to waive the interest and penalty under section 139(8) and section 271(l)(c), respectively, but subsequently the Income-tax Appellate Tribunal had passed an order in the quantum appeal deleting all the additions made by the Income-tax Officer which would automatically affect the amount of interest and penalty. It was in these circumstances that the assessee moved the subsequent application and this Court directed the Commissioner of Income-tax to reconsider the matter. In the case before us, no such extraordinary circumstance justifying a reconsideration of the settlement in exercise' of the powers under section 273-A(1) or (4) has been set up. As the petition states, the petitioner wanted to buy peace and having brought the same through the settlement, he is trying to wriggle out of the price for purchase, of peace, i.e., the minimum amount of penalties levied in terms of the settlement. This cannot be permitted to be done particularly when there is no circumstance justifying such a course of action. It is not the assessee's case that he entered into the settlement under some mistake of fact or law or that any such other thing has happened after the settlement that he should be allowed to disown the settlement and the penalties be further reduced or waived completely.
Learned counsel for the petitioner, Sri Vikram Gulati, also placed reliance on Smt. Kherunissa Allibhai v. CIT (1978) 113 ITR 443 (Guj.); Garden Silk Weaving Factory v. CIT (1995) 213 ITR 10 (Guj.); D. Halappa
Sons v. CIT (1974) 95 ITR 542 (Mys) and Padgilwar Brothers v. CIT (1971) 81 ITR 258 (Bom.) There is nothing in any of these judgments that is relevant to the point in issue and is of any help to the assessee.
For the above reasons, we are of the view that the Commissioner rightly declined to entertain the petitioner's application under section 273-A of the Act and there are no reasons for the exercise of this Court's extraordinary jurisdiction under Article 226-F of the Constitution of India.
The writ petition is accordingly dismissed with costs to the respondents.
M.B.A./1661/FCOrder accordingly.