VYPIN LIQUORS Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The question involved in this Writ Petition relates to the refusal to waive the interest levied under S.139(8) and 217 of the Income tax Act (for short 'the Act'). The material facts which require for the decision of the above point are thus: For the assessment year 1984-1985 petitioner has filed a return on 27.3.1987, though normally it should have been filed on 31.7.1984. There was a delay of 31 months in submitting the return. The first respondent completed the assessment of the petitioner -firm by order dated 24.2.1988. Ext. P1 is a copy of the assessment order as per which income was fixed at Rs. 4,72,750/-. However, by Ext. P3 order Ext. P1 order was rectified and the correct interest payable under S.139(8) of the Act was determined as Rs. 1,06,395/- as against Rs. 37,086/- demanded originally. The petitioner filed a petition before the Commissioner under S.273A of the Act for waiver of interest levied under S.139(8) and 217 for the assessment year 1984-85. That revision petition was dismissed by the Commissioner as per Ext. P5 order dated 1.3.1991. Again the petitioner filed Ext. P6 petition to review the order passed by the Commissioner evidenced by Ext. P5. That petition was rejected by Ext. P7 holding that there was no mistake apparent on the face of the record. Ext. P5 order is mainly challenged in this writ petition.

(2.) Ext. P5 order has been passed by the Commissioner under S.273A of the Act, which confers power on the Commissioner to reduce or waive the penalty in certain cases. S.273A as it stood at the relevant time, is as follows:

(3.) The case of the assessee is that he had voluntarily and in good faith made full true disclosure of his income prior to the issue of notice to him under S.148 and that he had cooperated with the department in finalising the assessment. However, the Commissioner had refused to waive the interest on the ground that there was an enhancement of income in the assessment and therefore the return had been filed not in good faith making full and true disclosure of income. In this context, it is necessary to examine the impact of the Explanation to sub-s. (i) which says that 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 sub-s. (1) of S.271. It could be seen from Ext. P1 order of assessment that an amount of Rs. 18,000/- was added on an estimate basis on the ground that the assessee was not keeping proper bills and vouchers. Thus, in view of this addition the officer could have levied penalty under clause (c) of sub-s. (1) of S.271. But it is pertinent to note that the officer had not levied any penalty as contemplated in clause (c) of sub-s. (1) of S.271 of the Act. That means the excess income assessed over the income returned by the assessee is of such a nature as not to attract the provisions of clause (c) of sub-s. (1) of S.271. The result is that the assessee shall be deemed to have made full and true disclosure of his income in respect of the year 1984-85. But the Commissioner while passing Ext P5 did not examine the applicability of the above Explanation to sub-s. (1) of S.273A in the facts of the present case. This appears to be a serious omission on the part of the Commissioner.