SINGHVI BROTHERS Vs. UNION OF INDIA

JUDGEMENT

(1.) BY this writ petition filed under Arts. 226 and 227 of the Constitution, the petitioners have prayed for quashing the order annexure 13 dt. 31st May, 1988, whereby the waiver petition filed under ss. 273A and 273A(4) of the IT Act, 1961 (hereinafter referred to as "the Act"), has been rejected. A direction has also been sought for reconsideration of the waiver petition by the non-petitioners or, in the alternative, the petitioners have claimed waiver of the penalty amounting to Rs. 29,600 imposed against them under s. 271(1)(c), vide order annexure 6 dt. 12th March, 1987. They have further sought relief by way of quashing of the order, annexure 15, dt. 12th Dec., 1988, the notice annexure 16 dt. 15/24th Feb., 1988, the order annexure 21, dt. 23rd March, 1989, and the complaint annexure 20 pending in the Court of the Chief Judicial Magistrate (Economic Offences), Jaipur.

(2.) THE facts necessary to be noticed for the disposal of this writ petition briefly stated are : that petitioner No. 1, M/s Shree Singhvi Bros. is a registered partnership firm and petitioners Nos. 2 and 3, Shri Kushal Singh and Laxmansingh, are its partners. It is alleged that a search was conducted at the business premises as well as at the residential premises of the partners under the provisions of s. 132(1) of the Act on 6th May, 1981. During the course of the search, 65kgs. of silver was found, out of which 16kgs., of silver/silver ornaments were treated as unexplained by the authorised officers of the IT Department and, therefore, the Department included its value amounting to Rs. 32,000 in their income for the asst. yr. 1982-83 while making the regular assessment. THE petitioners explained that this silver belonged to Shri Mohansingh, Shri Banshilal and Shri Abdul Razid. After an order under s. 132(5) of the Act was made on 1st Aug., 1981, the petitioner firm filed its return on 1st Oct., 1982. However, the learned ITO was not satisfied with this explanation and he included the value of 16kgs. silver amounting to Rs. 32,000 in their income and further imposed a penalty of Rs. 29,600 under s. 271(1)(c) of the Act on the tax amounting to Rs. 14,880. An appeal was filed against this regular assessment and that came to be dismissed by the learned AAC, Udaipur range, Udaipur, vide order annexure 2 dt. 19th Sept., 1985. THEreafter, by order annexure 3 dt. 23rd July, 1987, the learned Tribunal, Jaipur Bench, Jaipur, also sustained the addition in question to the tune of Rs. 28,800. It may be stated here that the addition of Rs. 32,000 was reduced to Rs. 28,800 by the learned AAC and to this extent, the order of learned AAC was sustained by the learned Tribunal. THEreafter, the petitioner filed an application under s. 132(11) of the Act and that too was dismissed by the learned CIT, vide order Annexure 5 dt. 14th June, 1984. According to the petitioners, the maximum amount of penalty has been imposed in this case, vide order annexure 6 dt. 12th March, 1987, under s. 271(1)(c) of the Act, and, therefore, they filed an appeal against this order before the CIT (A), Jaipur, and the same is still pending. No final order has been passed but the written arguments which were submitted before the learned CIT (A) are contained in annexure 7. THEreafter, it is alleged that the petitioners filed an application before the learned CIT, IT Department, under s. 273A of the Act for waiver or substantial reduction in the penalty imposed against them. A copy of the waiver petition has been filed and marked as Annexure 8. THE petitioners have submitted that as per s. 273A of the Act, the CIT has discretion either on his own motion or otherwise to reduce or waive the amount of penalty imposed against the assessee and that discretion has to be exercised judicially and with extra caution because such a right is available to the assessee only once in his lifetime. It was contended on behalf of the petitioners that a hearing on the application under s. 273A of the Act was fixed on 21st March, 1988, in pursuance of a notice dt. 2nd March, 1988. It is alleged that, during the course of the hearing of the petition under s. 273A of the Act, the learned CIT asked the petitioners to deposit the tax found due for the asst. yr. 1982-83 including the tax on the alleged unexplained silver weighing 16kgs., and then he would waive the penalty imposed against the petitioner- firm under s. 271(1)(c) of the Act. Such an assurance was specifically given to the petitioner during the course of hearing of the petition under s. 273A of the Act on 29th March, 1988. It was submitted that, actually acting on the said promise/assurance of the learned CIT, the petitioners agreed to pay the tax found due against the petitioner-firm as per the assessment order dt. 5th Jan., 1988, including tax on the alleged unexplained silver weighing 16kgs., and therefore, on 30th March, 1988, itself, the petitioners managed the funds and deposited the tax, vide challans (Annexure 10). It is alleged that this fact of specific assurance was duly put on record by a handwritten letter dt. 30th March, 1988 (Annexure 11) by counsel for the petitioner-firm which was duly handed over to the learned CIT personally on 30th March, 1988, itself. It was submitted that, if no such categorical and specific assurance was given by the learned CIT, such letter could not have been given to the learned CIT personally, who duly acknowledged the same and did not controvert the same at any time prior to the rejecting of the prayer for waiver. According to the petitioners, if it was otherwise, the learned CIT would certainly have felt rather offended by putting on record such a letter, but nothing of this sort happened and, therefore, the petitioners have contended that such an assurance was given. This fact of assurance was further reiterated in the application annexure 12 dt. 11th April, 1988 filed by the authorised representative of the petitioner-firm to the learned CIT. However, overlooking the said promise/assurance and to the surprise of the petitioners and without giving any further opportunity of hearing to them after 30th March, 1988, the waiver petition filed by the petitioners was dismissed by the learned CIT, vide his order Annexure 13 dt. 31st May, 1988. According to the petitioners, the order Annexure 13 is totally a non-speaking order and it does not contain any reasons whatsoever for rejecting the waiver petition. It is based on the findings of the Tribunal and that is no ground for rejecting the waiver petition. It was submitted that, immediately upon receiving the aforesaid order annexure 13 rejecting the waiver petition, the petitioners moved an application under s. 154 of the Act and that too came to be rejected by the learned CIT, vide order Annexure 15 dt. 12th Dec., 1988. It was contended by the petitioner that unless the CIT was not ready to waive or substantially reduce the penalty, there was no reason for the petitioner to deposit the tax on 30th March, 1988. It was contended on behalf of the petitioners that while acting as a Court in a quasi-judicial capacity, the learned CIT, while hearing the arguments on the waiver petition, has given a categorical and specific assurance/promise to the petitioner for complete waiver/substantial reduction of penalty in question, although that assurance/promise was not reduced in writing but that can be inferred by the order sheet dt. 29th March, 1988, which reads as under :

(3.) I have considered the rival submissions made at the Bar. Now, I proceed to decide this writ petition on merits. At the very outset, I make it clear that so far as the levy of penalty under s. 271(1)(c) of the Act is concerned, an appeal against that order is still pending and, therefore, this Court is not going to give any finding as regards that contention of the petitioners. In that view of the matter, now only two controversies remain to be decided and they are : (1) Whether the waiver petition filed under s. 273A has been rightly rejected or that order deserves to be quashed along with the order passed on the application under s. 154 of the Act ? and (2) Whether the prosecution launched against the petitioners is uncalled for and if that is so, whether it deserves to be quashed ?