ANWAR ALI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) OF the Income-tax Act was issued and that the made a full and true disclosure OF his income and fully co-operated with the Department and paid the entire tax on the income returned and assessed by the second respondent. The first respondent waived 50 per cent. OF the penalty and interest for the assessment years 1983-84 to 1986-87 by his order dated 21/09/1988. This order is assailed in the writ petition. It is submitted that the petitioner has complied with all the requirements OF section 273A OF the act and is entitled to relief OF waiver OF penalty and interest. It is contended that as the pre-conditions for the exercise OF discretion by the first respondent, a quasi-judicial authority, are satisfied, the exercise OF discretion has to be judicious and objective, not arbitrary or capricious. It is stated that the first respondent misdirected himself in granting partial relief when the petitioner satisfied all the conditions mentioned in section 273A OF the Act. Therefore, the impugned order is arbitrary and amounts to failure to exercise the judicial discretion. On these facts and circumstances, the writ petitioner prays that the writ prayed for may be issued. The first respondent filed a counter-affidavit denying the allegation that the Commissioner OF Income-tax failed to exercise properly the judicial discretion vested in him. It is stated that, after going through the records, he exercised the jurisdiction under section 273A OF the Income-tax Act keeping in view the nature OF powers and waived 50 per cent. OF penalty and interest for the assessment years in question. Without exercising the discretion, the petitioner could not have got the relief by way OF reduction OF interest and penalty by 50 per cent. It is stated that, for reduction or waiver OF interest, satisfaction OF the conditions mentioned in section 273A is prerequisite. After the conditions are satisfied, it is for the Commissioner to order for reduction or waiver OF interest/penalty and the petitioner is not entitled to waiver OF fully interest and penalty on the ground that the conditions are satisfied. It is stated that the Commissioner has exercised the jurisdiction under section 273A in the peculiar circumstances OF the case, severity OF the fault and loss occasioned to revenue and ordered reduction OF interest/penalty as was appropriate in the circumstances OF the case. For these reasons, it is prayed that the writ petition be dismissed. Sri Manmohan, learned counsel for the petitioner-assessee, submits that once the conditions mentioned in section 273A are satisfied, the petitioner is entitled to the waiver OF interest/penalty unless some good grounds are shown by the first respondent for not doing so and that the impugned order does not give any reason for granting only limited relief OF 50 per cent. reduction OF interest/penalty. For these reasons submits learned counsel, the impugned order is liable to be quashed and the petitioner is entitled to the writ prayed for, Sri Suryanarayana Murthy, learned standing counsel for the Revenue, on the other hand, contends that it is only when the conditions mentioned in section 273A are satisfied that the first respondent, Commissioner OF Income-tax, get jurisdiction to grant relief which is discretionary and that the petitioner cannot claim the same as a matter OF right; the very fact that 50 per cent. penalty/interest is waived by the impugned order shows that the Commissioner applied his mind and exercised his jurisdiction and that, in an order OF this nature, the Commissioner is not bound to give reasons. In view the submissions OF learned counsel for the parties, two questions arise : 1. What is the scope OF section 273A OF the Income-tax Act, 1961 ?

(2.) IS the Commissioner bound to give reasons in an order passed under section 273A; if so, whether the impugned order is bad in law ? It would be apt to read section 273A of the Income-tax Act, 1961, which is in the following terms :