LAXMAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner, Laxman Joshi, was a clerk in Savatram Mills, Akola. On September 9, 1974, he filed returns of his income for the asst. yrs. 1968 69 to 1975 76, prior to the issuance of a notice to him under S. 139(2) of the IT Act, 1961 ("the Act"). The assessment for the asst. year 1974 75 was completed on April 24, 1977, and for the rest of the years on March 10, 1978. All the returns excepting for the asst. yrs. 1972 73 and 1973 74 were accepted by the ITO. For the asst. yrs. 1972 73 and 1973 74, the valuation of the building then under construction shown in the returns was not accepted due to the different valuation made by the authorised surveyor. Some additions were made only on that basis. In appeals, some relief was granted. No penalty proceedings for concealment of income were initiated under S. 271(1)(c) of the Act. But, for late filing of the return and for not filing the estimate of advance tax, penalty proceedings, respectively, under ss. 271(1) (a) and 273(l)(b) of the Act were initiated. The petitioner made an application to the CIT (respondent) under S. 271(4A) on September 15, 1974. After S. 273A replaced S. 271, another application under the new provision was made on November 27, 1978. These applications were made for exercise of discretion to reduce or waive the penalty imposed or imposable under S. 273A (1)(i) and to reduce or waive the amount of interest paid or payable under S. 139(8) of the Act, for late filing of the income tax returns and under S. 217 for not filing estimates of advance tax. The CIT, by order dated December 30, 1978 (Annexure 3), refused to exercise the discretion vested in him by S. 273A on the ground that the income tax returns were not flied "voluntarily" as contemplated by S. 273A(a) and (c) and as a result, the conditions precedent for exercise of discretion were not satisfied. The substance of the order is that the Inspector had visited the new building in the course of survey operations and the returns were filed as a consequence of fear of detection and follow up action, which were bound to follow. By this petition, the said order is impugned on the ground that the CIT has misdirected himself with regard to the scope of the conditions precedent for the exercise of jurisdiction.

(2.) SOME basic facts may be stated. The petitioner was drawing an annual salary of Rs. 5,327 from the S. R. Mills. On March 18, 1968, he purchased a plot of land in Akola for a consideration of Rs. 7,000 and thereafter gradually started construction of a house thereon which continued till the end of March 1975, the major portion having been constructed during the asst. yrs. 1972 73 and 1973 74. In the returns, he showed additional income from "Bhikshuki" and agriculture. He paid income tax to the tune of Rs. 31,821 under S. 140A of the Act on the returned income and fully co operated with the Department in the assessment proceedings. According to him, the reason for the late filing of the returns was his mistaken but bona fide impression that the obligation to file a return arises only when a notice is received from the IT Department.

(3.) IT was vehemently contended by Shri Thakkar, learned counsel for the petitioner, that under the circumstances, the CIT had mixed up the issues and that the concept of detection is altogether foreign to cases governed by cls. (a) or (c). The submission is too specious to be accepted, for, in our view, though the said expression is not used in the two clauses, it can have some relevance to the expression "voluntarily and in good faith, made full and true disclosure of his income" used in those clauses. Dissection of S. 273A(1) will indicate that the following are the conditions precedent for the exercise of the discretion :