NAVNITLAL K ZAVERI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner herein challenges the order, Ex. 'L', to the petition passed by the respondent, CIT of IT under S. 273A of the IT Act. 1961. The order was passed on March 27, 1979. The facts leading to this litigation are as follows : The petitioner before us is the Karta of an HUF and the assessee in the income tax proceedings is that HUF. The HUF is known as Navnitlal K. Zaveri and the Karta of the HUF as Dwarkadas N. Zaveri. The HUF submitted return of income for the asst. year 1972 73 for the accounting year ending on March 31, 1972, showing Rs. 12,160 as income from immovable property. It appears that a new building was constructed and part of the cost of construction was incurred in the year under consideration, namely, the year ending on March 31, 1972. The cost of construction was estimated by the ITO and from the estimated cost the ITO deducted an amount which was shown to have been actually spent by the petitioner for the construction of the building and the difference was treated by the ITO as unexplained investment and was treated as income of the petitioner. The cost of construction was estimated at Rs. 14,25,000 and the actual expenditure of Rs. 5,42,975 was deducted by the ITO. The petitioner went in appeal to the AAC and before the AAC the estimate of the cost of construction was reduced from Rs. 14,25,000 to Rs. 9,68,100. Thus, the deemed income on the ground of unexplained investment was reduced to Rs. 4,50,125 from the figure of Rs. 8,82,925, which was the figure reached by the ITO. Against the decision of the AAC the matter was carried in further appeal to the Tribunal by the assessee and the Tribunal reduced the estimated cost to Rs. 7,07,000 and the figure of cost was spread over a number of years. Thereafter , the petitioner filed a miscellaneous civil application before the Tribunal and by its order dated March 21, 1977, the Tribunal reduced the cost of the construction to Rs. 6,54,669. Yet another application was filed by the assessee before the Tribunal for rectification and the Tribunal passed a clarificatory order on August 12, 1977. By virtue of this clarificatory order the deemed income by virtue of unexplained investment was fixed at Rs. 96,200 for the asst. year 1972 73. In the order which was passed in consequence of the Tribunal's order dated August 12, 1977 the ITO mentioned about interest under S. 139(8) and S. 217 of the IT Act. Thereafter, the petitioner applied under S. 273A to the respondent praying for waiver of interest chargeable under s. 139(8)(a) and S. 217 and his contention in the application was that the difference in the income returned and the income assessed arose only on account of the estimate of cost made by the ITO. The assessee pointed out in the application that the petitioner had applied for extension of time for filing the return and no reply was received from the ITO. It was also pointed out that the return was filed, on November 29, 1972, and yet the assessment was completed on March 20, 1975, but the delay was not attributable to the petitioner. In those proceedings under S. 273A finally the order was passed on March 27, 1979 ; in that order the respondent stated as follows :

(2.) THE order Ex. 'L' to the petition on the face of it shows non application of mind on the part of the respondent. Though the application was for waiver of interest both under S. 139(8) and under s. 217 of the IT Act, yet the respondent seems to have treated the application only for waiver of interest charged under S. 139(8) for the asst. year 1972 73. Hence, on the face of it, the order discloses non application of mind.

(3.) THE Expln. to S. 273A, Sub S. (1), states :