V M SIVAPRAKASAM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS writ appeal is filed under clause 15 of the Letters Patent against the order of K. Venkataswami J., as he then was, in W. P. No. 3333 of 1992, dated December 20, 1993, dismissing the writ petition filed by the appellant herein The appellant is a doctor by profession. For the assessment years 197273 to 1979-80, he filed returns on March 31, 1980, voluntarily. No notice under section 139(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), was served on the appellant prior to his filing of the returns. According to the appellant, he was not maintaining regular books of account and therefore, had to estimate his professional income taking into consideration the acquisition he had made and on the basis of a cash flow chart prepared on May 4, 1981, the appellant filed a petition under section 273A of the Act for waiver of interest and penalties for the assessment years 1972-73 to 1979-80 to the first respondent. In that petition, the appellant has prayed that he may be granted all the reliefs and benefits available to him under the provisions of section 273A of the Act, and, in particular, the interest of Rs. 10, 855 charged under section 139(8) of the Act and Rs. 13, 661 charged under section 217(IA) of the Act may be waived, and the various penal proceedings initiated under section 274 of the Act read with sections 271 and 273 of the Act may also be dropped. It is, therefore, seen that the appellant has submitted his petition dated May 4, 1981, under section 273A of the Act for the waiver of various interests charged in the assessment and the penal proceedings initiated under the various provisions of the Act, viz., for failure to file the return within the time allowed under the Act, failure to furnish estimates of advance tax and concealment of incomeThe first respondent by his order dated November 23, 1981, has observed that the Income-tax Officer examined the case and framed the assessment orders, however, recomputing the professional income in consequence of disbeliving certain credits taken for agricultural income, low drawings, etc., in the cash flow statements. He also observed that there is huge variation between the income returned and the income finally assessed by the Income-tax Officer in each of the years and the appellant did not contest the additions on appeal. However, considering the fact that certain agreed additions have been made and the assessee has paid all the resultant taxes, the first respondent was of the view that the case calls for a liberal treatment.

(2.) THEREFORE, he reduced the interest charged and the penalty imposable to the extent noted in a tabular statement at page 3 of his order. 'The first respondent has partly allowed the petition filed under section 273A of the Act. Aggrieved by the said order, the appellant filed the above writ petition to quash the order passed by the first respondent dated November 23, 1981It was contended by the appellant that the first respondent has made an order under an assumption under sections 271(1)(a), 271(1)(c) and 273(b) of the Act regarding the reduction of minimum penalties imposable, while, in fact, no penalty was levied on the date of the petition and the imposed the penalties giving effect to the order impugned. According to him, without, in order for imposing the penalties by the Income-tax Officer, and which fact of penalty did not even exist, the reduction with the consequential order by the Income-tax Officer giving effect to the impugned order has, in fact, become an order of assessment, for which the power under section 273A of the Act cannot be exercisedThe writ petition was dismissed by the learned single judge by observing as follows5. A fair reading of the sections will show that the Commissioner can invoke the provisions of section 273A of the Act where the penalty is imposed or imposable and, therefore the contention of learned counsel for the petitioner that the Commissioner can invoke the provisions of section 273A of the Act only where penalty was already levied, cannot be accepted6.

(3.) THAT judgment was rendered by a learned single judge of the Delhi High Court. On the facts and circumstances of that case, the learned judge held that under section 18(2A) of the Wealth-tax Act, 1957, the discretion to waive or reduce penalty has to be exercised by the Commissioner judicially and if the conditions laid down in the section were fulfilled, the Commissioner was bound to waive or reduce penalty and that the mere failure to file returns within the time allowed did not make the assessee liable to penalty and that there had to be a contumacious or deliberate default. In the instant case, we have already noticed that the appellant has not fulfilled that the conditions laid down in the section and even as admitted by the appellant himself, he has not complied with the various provisions of the Act and therefore, he sought the aid of the first respondent under section 273A of the Act for the waiver of the various interests charged in the assessment and the penal proceedings initiated under the provisions of the Act for the failure to file the return within the time allowed under the Act and also the failure to furnish estimates of advance tax and concealment of income.