(a) Income-tax---

----Return---Advance tax---Interest---Waiver of interest---Power of CIT to waive interest is a discretionary power---Finding by CIT that revised return had been filed when investigations against assessee were in progress-- Refusal to waive interest under Ss.139(8) & 215/217 was justified---Income Tax Act, .1961, Ss. 139; 215, 217 & 273-A.

Section 273-A of the Income Tax Act, 1961, starts with a non obstante clause and, therefore, has an overriding effect on other revisions in the Act. It vests in the Commissioner of Income-tax the power to reduce or waive the amount of. penalty imposed or imposable on a person under section 271(1)(i) or section 271(1)(iii) or the amount of interest paid or payable under sections 136(8) and 215/217 of the Act. The power conferred upon the Commissioner of Income-tax is a discretionary power and such power has to be exercised by him on recognised principles which govern the exercise of such powers. In other words, the discretion vested in the Commissioner of Income-tax to reduce or waive or not to reduce or waive the penalty levied or leviable or interest paid or payable is to be exercised in a judicial and not in an arbitrary manner. Such power vested in the Commissioner of Income-tax being quasi judicial in nature affecting the liability of the citizen, he is required to state the reasons in support of his conclusions. Submitting the return of income without waiting for issuance of notice under section, 139 or under section 148 is indicative of law abiding conduct of a duty conscious assessee and generally the return so filed is characterised as a voluntary return. After having filed the return at particular income, an assessee has a right to revise it upwardly or downwardly by filing a revised return. If the income has been so revised in good faith and disclosure of additional income has been made in all fairness, the assessee may be said to have acted honestly. But if the income is seen to have been upwardly revised after filing the original return under constraint of exposure or likelihood of adverse action by the Department the return so filed subsequently shall be devoid of its voluntary character as having been filed in good faith.

No enquiry into disputed facts can be and should be made in the exercise of the extraordinary jurisdiction of the Court under Article 226 of the Constitution: The Court will also not ordinarily interfere with the decision of a question the determination of which is within the jurisdiction of the income-tax authorities and such decision is not found to be violative of the fundamental right of the citizen, against principles of natural justice, apparently wrong, in law and on the facts on the face of record or made without jurisdiction.

The petitioner was an individual whose main source of income was from his share in a firm dealing in precious and semi-precious stones at Jaipur. The petitioner derived some income from interest and other sources and was also one of the trustees of a charitable trust D. The petitioner filed the return of his income for the assessment year 1986-87, relevant to previous year ending on March 31, 1986, on September 29, 1986, declaring his income at Rs.12,000 only. The D trust filed a loss return. The case of the trust was taken up for scrutiny. It was noted that donations amounting to Rs.5,07,507 had been received towards its corpus fund. Enquiries made a number of alleged donors, mainly bank employees, disclosed that they had received cash from the trustees in exchange for the cheques issued by them in respect of the donations made. On examination of the bank accounts of about 25 donors it was noticed that cash totalling Rs.87,400 was deposited by them in their accounts either on the same day they had issued the cheques or a day or two before that. While the investigation in the case of the trust was in progress in the above manner in the month of June, 1988, the petitioner came forward with an offer to surrender Rs.1,90,000, representing a part of donations received by the trust, as his income for the assessment year 1986-87. The petitioner, therefore, filed a "revised return" on March 7, 1989, declaring his revised income at Rs.1,95,640 as against Rs.12.000 originally declared. The Income-tax Officer completed the assessment charging interest under sections 139(8) and 215/217. The assessee filed a petition for waiver of interest which was rejected. On a writ petite against the order:

Held, dismissing the petition that reading of the order made by the Commissioner of Income-tax in this case clearly showed that he had not only mentioned all the relevant facts of the case of the petitioner-assessee but also those of the case of the trust whereof the petitioner was a trustee. The Commissioner of Income-tax had also given the petitioner an opportunity of being heard. The existence of an agreement or assurance regarding waiver of interest paid or payable had been denied by the respondents in the reply filed by them. It was, therefore, a disputed issue of fact which could not be decided without entering into the question of the existence of the relevant fact. This could not be done in writ proceedings. The Commissioner of Income-tax had exercised the discretion vested in him under section 273-A in a judicial and judicious manner. There was thus absolutely no occasion for the Court to issue any kind of writ or make any sort of order or direction for the benefit of the petitioner.

(b) Writ--

----Power of High Court---Enquiry into disputed facts cannot be made---High Court will not ordinarily interfere with decision of I.T. Authorities Constitution of India, Art. 226

Brij Mohan Bhargava (Dr.) v. CIT (1984) 150 ITR 300 (P&H); Hakam Singh v. CIT (1980) 124 ITR 228 (All.); IC. Ramulu & Bros. v. CIT (1990) 185 ITR 517 (AP); Jayappan (P.) v. Perumal (S.K.), ITO (First) (1984) 149 ITR 696 (SC); Laxman v. CIT (1988) 174 ITR 465 (Bom:;; Mohammed (P.K.P.) (Dr.) v. CBDT (1993) 203 ITR 479 (Ker.); Ramjanki Devi (Smt.) v. CIT (1991) 188 ITR 63 (Raj.) and Rohitkumar & Co v Bahadur (F.J.), CIT (199-1) 190 ITR 93 (Bom.) ref-

Anant Kasliwal for Petitioner.

P.C. Jain for Respondents.

JUDGMENT

This is a petition under Article 226 of the Constitution of India for the issue of a writ, direction or order in the nature of mandamus, certiorari or prohibition or any other writ, direction or order quashing and setting aside the order, dated November 7, 1990, passed by the Commissioner of Income -tax, Jaipur, under section 273-A of the Income Tax Act, 1961 (for. short "the Act"). By his said order, the learned Commissioner, in his discretion, refused to waive interest charged by the Income-tax Officer under sections 139(8) and 215/217 of the Act for the assessment year 1986-87 relevant to the previous year ended on March 31, 1986.

The petitioner is an income-tax assessee being assessed in individual status. The main source of his income is from the share in K.S. Durlajabhji, a partnership firm, dealing in precious and semi-precious stones at Jaipur. The petitioner derives some income from interest and other sources and is also one of the trustees of a charitable trust known as "Durlabhji Trust-for Development, Jaipur" settled on August 28, 1985, by Sri Khail Shankar Durlabhji, the late father of the petitioner. The said trust is duly registered under section 12-A of the Act with the Commissioner of Income-tax and its income is exempt from tax raider section 11 of the Act. It is assessed in the status of association of persons (AOP).

The petitioner filed the return of his income for the assessment year 1986-87, relevant to the previous year ending on March 31, 1986, on September 29, 1986, declaring his income at Rs.12,000 only. Prior to that the return on income, in the case of the trust, for the same assessment year had been filed on August 29, 1985, declaring a deficit income of Rs.1,169. The only income from interest received from the bank had been shown at Rs.207 only against which office expenses had been claimed at Rs.1,365. However, the balance-sheet showed receipt of donation to the corpus of the trust at Rs.5,58,507. The case of the trust was, therefore, taken up for scrutiny. On scrutiny it was noted that donation of Rs.5,07,507 was shown to have been received towards the corpus fund of the trust. Notice under section 143(2) of the Act was accordingly issued on April 20, 1988. Enquiries made from a number of alleged donors, mainly bank employees, disclosed that they had received cash from the trustees in exchange for the cheques issued by them in respect of the donations made. On examination of bank accounts, of about 25 donors it was noticed that cash totalling to Rs.87,400 was deposited by them in their accounts either on the same day they had issued the cheques or a day or two before that. While the investigation in the case of the trust was in progress in the above manner in tire month of June, 1988, the petitioner came forward with an offer to surrender Rs.1,90,000, representing a part of the donations received by the trust, as his income for the assessment year 1986-87. The petitioner, therefore, filed a "revised return" on March 7, 1989, declaring his revised income as Rs.1,95,640 as. against Rs.12,000 originally declared in the statement of the revised income share income was shown at Rs.12,891 as against Rs.14,890 declared in the original return. A sum of Rs.1,90,000 was declared as income from other sources and claim for section 80-G deduction for donation of Rs.10,000 the trust was enhanced to Rs.5,000 from Rs.631 as claimed in the original return. Interest payable at Rs.805 under section 139(8) and at Rs.27,370 under section 215/217 of the Act was shown but only Rs.7,045 being 25 percent. of the aforesaid two amounts were offered for taxation. Immunity from taxation of 75 percent. of the rest of the balance was sought. The Income-tax Officer completed the assessment under section 143(1) of the Act on March 29, 1989, charging interest of Rs.962 under section 139(8), and 'of Rs.33,688 under section 215/217 totalling to Rs.34,650. A demand of Rs.77,070 was raised against which the petitioner had already paid tax at Rs.4,484 as TDS Rs.8,294 by way of advance tax paid and the balance on March 3, 1989, on self-assessment basis. It may be mentioned that the assessment. in the case of the trust had already been made at "nil" income on March 15, 1989.

Though the assessment in the case of the petition for the assessment year 1986-87 was completed on March 29, 1989, yet he had already moved a petition under section 273-A of the Act on February 27, 1989, for waiver of the interest leviable. On April 17, 1989. further similar petitions for the assessment years 1982-83, 1985-86 and 1986-87 were filed. A supplementary petition under section 273-A for the assessment year 1986-87 was also made on June 7, 1989. The learned Commissioner took up the petition as filed by the petitioner on February 27, 1989, for consideration and relying on the Allahabad High Court decision in Hakam Singh v. CIT (1980) 124 ITR 228, held that the disclosure made by the petitioner was not voluntary. Accordingly; he rejected the petitioner's petition under section 273-A on October 31, 1990.

The main contention of Mr. Anat Kasliwal, learned counsel for the petitioner, is that on coming to know of the investigations and enquiries being made in the case of the trust behind the back of the trustees with regard to the genuineness of the donations, alleged to have been received towards the corpus fund of the trust during the year under consideration, the petitioner, in view of his ill health and in order to avoid litigation and purchase peace, voluntarily offered a sum of Rs.1,90,000 to be taxed as his income in his personal case, to cover all such donations the genuineness of which might be disputed. It was further submitted by Mr. Kasliwal that the aforesaid amount was agreed to between the parties after discussion on or about February 14, 1989, with S/Sri Ii. L. Gupta, the then Assistant Commissioner of Income-tax, Ward (1), Jaipur, Girish Dave, the then Deputy Commissioner of Income-tax and O.N. Tripathi, the then Commissioner of Income-tax. Learned counsel further submitted that after discussion it had been agreed that neither penalties under section 271(1)(a) or 271(1)(c) or 273 would be levied or if levied would be waived under section 273-A nor interest under sections 139(8), 215 and/or 217 exceeding 25 percent. would be charged and if charged would be waived. It was submitted by learned counsel that pursuant to, such an agreement the petitioner voluntarily surrendered a sum of Rs.1,90,000 for taxation in good faith and cooperated with the Department in his assessment. Mr. Kasliwal pointed out to the affidavit of Mr. T.C. Jain Chartered Accountant, and a partner in the firm of Shah Patni & Co., Chartered Accountants, who attended to the income-tax and wealth tax case of petitioner and the trust and submitted that the deposition of Mr. T. C. Jain in his affidavit must have been given due weight by the learned Commissioner before rejecting the petitioner's petition under section 273-A.- The order passed by the learned Commissioner was thus claimed to be erroneous in law and on facts and the discretion exercised by him in the matter was stated to have been arbitrarily and capriciously exercised. Mr. Kashliwal supported his oral arguments by filing written arguments as well wherein reliance was placed on several decisions, namely, Jayappan (P.) v. Perumal (S.K.), ITO (First) (1984) 149 ITR 696 (SC); K. Ramulu & 13ros. CIT (1990) 185 ITR 517 (AP); Mohammed (P.K.P'.) (Dr.) v. CBDT (1993) 203 ITR 479 (Ker:); Brij Mohan Bhargava (Dr.) v. CIT (1984) 150 ITR 300 (P & H); Laxman v. CIT (1988) 174 ITR 465 (Bom.); Rohitkumar & Co. v. Bhahdur (F.J.), CIT (1991) 100 ITR 93 (Bom.) and Ranjanki Devi (Smt.) v. CIT (1991) 188 ITR 63 (Raj.).

Mr. P.C. Jain, learned counsel for the Revenue, however, emphasised that the learned Commissioner, after having considered all the facts and circumstances of the case of the petitioner and taken into account the relevant evidence including that contained in the affidavit of Mr. T. C. Jain, C.A., arrived at the clear and unambiguous conclusion that the disclosure made by the petitioner of his income' at Rs.1,90,000 was not voluntary. Mr. Jain stressed that the finding recorded by the learned Commissioner was a finding of fact and the same should not be disturbed in exercise of writ jurisdiction of this Court as in the exercise of its said exceptional and extraordinary jurisdiction this Court is not .to act as an appellate or revisional Court in a matter. Mr: Jain further submitted that in their reply, which was duly supported by the, affidavit of Mr. G. C. Bansal, Income-tax Officer, Ward (1), Jaipur, the respondents had clearly denied the entering into by the Department of any sort of agreement with the petitioner regarding the levy of penalties and/or charge of interest. Mr. Jain summed up by stating that the learned Commissioner had exercised the discretion vested in him under section 273-A in a judicial and judicious manner and the impugned order was valid in law.

After having thoughtfully considered the arguments advanced by learned counsel for the parties before me and on consideration of the facts and circumstances of the case I am of the opinion that this petition under Article 226 of the Constitution of India is totally misconceived and hence deserves to be dismissed as such.

Section 273-A of the Act, as is relevant for our purpose, ran as under at the relevant time:--

Section 273-A. Power to reduce or waive penalty. etc., in certain case.---(1)

Notwithstanding anything contained in this Act, the Commissioner may, in his discretion, whether on his own motion or otherwise,-- .....

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

if he is satisfied that such person--...

(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; ...

and also has, in the case referred to in clause (b), cooperated 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 1.---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.

(2)Notwithstanding anything contained in subsection (1),--...

(b)if in a case falling under clause (c) of subsection (1) of section 271, the amount of income in respect of which the penalty is imposed or imposable for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the aggregate amount of such income for those years, exceeds a sum of five hundred thousand rupees, no order reducing or waiving the penalty under subsection (1) shall be made by the Commissioner except with the previous approval of the Chief Commissioner or Director-General, as the case may be.

(3)Where an order has been made under subsection (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section in relation to any other assessment year at any time after the making of such order:

Provided that-where an order has been made in favour of any person under subsection (1) on or before the 24th day of July, 1991 such person shall be entitled to further relief only once in relation to the other assessment year-or years if he makes an application to the income-tax authority referred to in subsection (4) at any time before the 1st day of April, 1992.

(4)Without prejudice to the powers conferred on him by any other provision 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 proceedings 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 proceedings for the recovery of any amount due from him:

Provided that where the amount of any penalty payable under this Act or, where such application relates to more than one penalty, the aggregate amount of such penalties exceeds one hundred thousand rupees, no order reducing or waiving the amount or compounding any proceedings, for its recovery under this subsection shall be made by the Commissioner except with the previous approval of the Chief Commissioner or Director-General, as the case may be

(5)Every order made tinder this section shall be final and shall not be called into question by any Court or any other authority.

(6)The provisions of this section (as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1989), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.

(7)Notwithstanding anything contained in subsection (6), the provisions of subsection (1), subsection (2) or, as the case may be, subsection (4) (as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act; 1989 (3 of 1989)), shall apply in the case of reduction or waiver of penalty or interest in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or an earlier assessment year, with the modifications that the power under the said subsection (1) shall be exercisable only by the Commissioner and instead of the previous approval of the Board, the Commissioner shall obtain the previous approval of the Chief Commissioner or Director-General, as the case may be, while dealing with such case."

Section 273-A starts with a non obstante clause and, therefore, has an overriding effect on other provisions in the Act. It vests in the Commissioner of Income-tax the power to reduce or waive the amount of penalty imposed or imposable on a person under section 271(1)(i) or 271(1)(iii) or the amount of interest paid or payable under sections 139(8), 215/217 of the Act. The power conferred upon the Commissioner is a discretionary power and such power has to be exercised by him on recognised principles which govern the exercise of such powers. In other words, the discretion vested in the Commissioner to reduce or waive or not to reduce or waive the penalty levied or leviable or interest paid or payable is to be exercised in a, judicial and not in an arbitrary manner. Such power vested in the Commissioner being quasi; judicial in nature affecting the liability of the citizen, he is required to state the reasons in support of his conclusions. Keeping in mind that the main objects of sections 273-A(1) is to encourage and facilitate voluntary disclosure of their concealed incomes by the assessee by throwing a temptation of giving reliefs against penalties, prosecutions, and charge of interest the Commissioner is required to feet satisfied of the fulfilment of the requirements for the application of the provisions contained in section 273-A. If it is found that the assessee has made true disclosure of his concealed income in good faith and has also cooperated with the Department in his assessment and had also not otherwise disentitled himself to the grant of the discretionary relief, the relief prayed for be ordinarily granted to him. Submitting the return of income without waiting for the issuance of notice under section 139 or 148 is indicative of law abiding conduct of a duty conscious assessee and generally the return so filed is characterised as a voluntary return. After having filed the return at a particular income, an assessee has a right to revise it upwardly or downwardly by filing a revised return. If the income has been so revised in good faith and disclosure of additional income has been made in all fairness the assessee may be said to have acted honestly. But, if the income it seen to have been upwardly revised after filing the original return under constraint of exposure or likelihood of adverse action by the Department the return so filed subsequently shall be devoid of its voluntary character as having been filed in good faith. Thus, if in the decision of a petition under section 273-A the Commissioner is seen to have directed his attention on these relevant aspects of the case, viz. i.e., whether the return submitted without notice could be termed as voluntary and whether the disclosure made was in good faith he can be said to have exercised his discretionary power` under section 273-A judicially on recognised lines governing the exercise of such powers.

A reading of the order made by the learned Commissioner in this case clearly shows that he had not only mentioned all the relevant facts of the case of the petitioner-assessee but also those of the case of the trust whereof the petitioner was a trustee. He had specifically directed his attention to the main arid relevant aspect of the case, whether the revised return filed by the petitioner was voluntarily filed and had specifically referred to the affidavit filed by Mr. T. C. Jain, C. A., before him. He has held in para. 7 of his order that the assertion made by Mr. Jain regarding the assurance allegedly given by the officers of the department to the petitioner were not supported by any evidence on his record. The learned Commissioner had then turned to the facts of the case and particularly pointed out that the record showed that investigations to ascertain the genuineness of the donations made to the trust were started as far back as in June, 1988, that donations to the tune of Rs.5,07,507 were shows to have been received from 121 persons out of whom ten were examined and six persons out of those ten examined admitted to have received cash in exchange for the cheque amounts issued by them. The learned Commissioner took note of the fact that the donors were salaried employees having no connection with the trust and the level of their incomes did not justify the extent of the donations made by them. It was on such facts and for such reasons that the learned Commissioner had finally concluded that the disclosure made by the petitioner of his further income at Rs.1,90,000 was not voluntary. It is thus clear that before exercising his discretionary power under section 273-A in the way he did the learned Commissioner had not only given a fair opportunity of being heard to the petitioner but had also considered all the relevant facts and circumstances of the case attending upon the disclosure made by the petitioner in the revised return. The finding recorded by him in regard to the voluntary character of the return filed subsequently and the good faith of the petitioner in making disclosure of his income from other sources at Rs.1,90,000 are, therefore, essentially findings of facts and since such findings are based on reasonable and fair appreciation of the evidence on the record of the Commissioner and. the circumstances of the case, those can hardly be made the subject-matter of the writ jurisdiction of this Court under Article 226 of the Constitution.

The existence of an agreement or assurance regarding waiver of interest paid or payable has been denied by the respondents in the reply filed by them. It is, therefore, a disputed issue of fact which cannot be decided t without entering into the question of the existence of the relevant facts. No such enquiry into disputed facts can be and should be made in the exercise of the extraordinary jurisdiction of the Court under Article 226. The facts of the case too do not justify such an investigation into the disputed facts. It is true that since assessment of tax is a quasi-judicial procedure, certiorari or prohibition may issue in appropriate cases against orders of or proceedings for assessment. But in the exercise of its jurisdiction under Article 226, this Court is not to ordinarily interfere where disputed facts are to be investigated before giving relief. It shall also not ordinarily interfere with the decision of a question the determination of which is within the jurisdiction of the income-tax authorities and such decision is not found to be violative of the fundamental right of the citizen, against principles of natural justice, apparently wrong in law and on facts on the face of record or made without jurisdiction. The order passed by the Commissioner in the present case suffers from no such vices. In fact the conduct of the assessee of having declared his income at Rs.12,000 in 1986 and then-revising it to Rs.1,95,640 on March 7, 1989, when investigations made in the case of the trust. had disclosed to the income-tax authorities that in the very first year of its creation on August 28, 1985, with settlement of Rs.51,000 only by the settlor, the trust had attracted donations to the tune of Rs.5,07,507 and the donations so shown to have been received by the trustees appeared to be non- genuine, disentitled the petitioner to the relief of waiver of interest under section 273-A of the Act. The learned Commissioner is thus found to have exercised the discretion vested in him under section 273-A in a judicial and judicious manner. There is thus absolutely no occasion for this Court to issue any kind of writ or make any sort of order or direction for the benefit of the petitioner. The petition is totally misconceived and without any merit whatsoever and deserves to be dismissed as such.

In the result, the petition fails and is hereby dismissed with costs at Rs.2,500

M.B.A./26/FC

Petition dismissed