B. R. Sound-N-Music v. O. P. Bhardwaj & another — 1988 DIGILAW 125 (BOM)

JUDGMENT - Mrs. Manohar Sujata, J.:—The petitioners are a partnership firm registered under the Indian Partnership Act, 1932. The petitioner-firm was regularly assessed under the provisions of the Income Tax Act, 1961 since the assessment year 1976-77. In respect of assessment years 1978-79, 1979-80, 1980-81, 1981-82 and 1982-83 the petitioner-firm filed its returns also. These returns, however, were filed voluntarily. No notices under section 139(2) or section 148 of the Income Tax Act, 1961 were issued to the petitioner. For these assessment years the Income Tax Officer has levied interest under section 139(8), penal interest under section 215/217 ad penalties under sections 271(1)(a), 273(b) and section 271(1)(c) of the Income Tax Act, 1961. The petitioner made an application dated 12-7-1985 addressed to the Commissioner of Income-tax, Bombay City-III, Bombay under section 273-A of the Income Tax Act, 1961 requesting him to waive the interest and penalties so levied under the provisions of that section. Appendix 'A' which is annexed to this application and which is at page 38 of the petition, gives particulars of due date of the return in respect of each of these assessment years, actual date on which the return was filed, income returned, income assessed and particulars of interest, penal interest and penalties levied or leviable in respect of these returns. The application of the petitioner has been rejected in limine by the Commissioner of Income-Tax on the ground that the provisions of section 273-A are applicable only to voluntary disclosures of concealed income and not to a case where there is delay in filing a routine return of income or there is any default in payment of advance tax. This order is dated 31-3-1986. 2. The petitioner-firm has challenged the validity of this order. The relevant provisions of section 273 are as follows: “273-A(1). Notwithstanding anything contained in this Act, the ... ... This order is dated 31-3-1986. 2. The petitioner-firm has challenged the validity of this order. The relevant provisions of section 273 are as follows: “273-A(1). Notwithstanding anything contained in this Act, the ... ... Commissioner may, in his discretion, whether on his own motion or otherwise, – (i) reduce or waive the amount of penalty imposed or impossible on a person under Clause (i) of sub-section (1) of section 271 for failure, without reasonable cause, to furnish the return of total income which he was required to furnish under sub-section (1) of section 139; or XXX XXX XXX (ii) reduce or waive the amount of interest paid or payable under sub-section (8) of section 139- or section 215 or section 217 or the penalty imposed or imposable under section 273, if he is satisfied that such person – (a) in the case referred to in Clause (i) has, prior to the issue of a notice to him under sub-section (2) of section 139, voluntarily and in good faith made full and true disclosure of his income. (b) xxx xxxx xxxx xxx (c) in the cases referred to in Clause (iii), has, prior to the issue of a notice to him under sub-section (2) of section 139, or where no such notice has been issued and the period for the issue of such notice expired, prior to the issue of notice to him under section 148, voluntarily and in good faith made full and true disclosure of his income and has paid the tax on the income so disclosed. and also has, in all cases referred to in Clauses (a)...(c), co-operated in any enquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year. 3. It is, therefore, necessary that the petitioner-firm should have voluntarily and in good faith made full and true disclosure of its income and that it should have done so and paid tax on the income disclosed prior to the issue of notice to it under section 139(2) or section 148 of the Income Tax Act. 3. It is, therefore, necessary that the petitioner-firm should have voluntarily and in good faith made full and true disclosure of its income and that it should have done so and paid tax on the income disclosed prior to the issue of notice to it under section 139(2) or section 148 of the Income Tax Act. It is further necessary that the petitioner should co-operate in any enquiry relating to the assessment of its income and should have paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under the Income Tax Act in respect of the relevant assessment year. 4. The petitioner-firm complied with all these conditions. It has been denied to the benefit of section 273-A on the ground that its case is not one of voluntary disclosure of concealed income. There is nothing, however, in the language of section 273-A to suggest that the section should apply only to a voluntary disclosure of concealed income. When a return is filed, the assessee discloses his income in such return. When he does so voluntarily in good faith without any notice being issued under section 139(2) or section 148, he discloses his income voluntarily and in good faith as required under section 273-A. In fact, there are a number of judgments which support such a construction of section 273-A. 5. In the case of (Dr. Paramjit Singh Grewal v. Commissioner of Income-tax)1, reported in 1980(125) I.T.R. 549 the provisions of section 271(4-A) of the Income Tax Act, 1961 were considered. This section is now deleted. The present section 273-A is substantially similar to the old section 271(4A). the latter also uses the expression” has voluntarily and in good faith made full disclosure of his income”. The Punjab and Haryana High Court in that case observed (P.552): “The Act nowhere provides that if the person concerned is an assessee in the previous years and had been submitting returns, he is not entitled to the benefit of that section. (Section 271(4)). If that had been the intention of the Legislature it could have specifically said so in the Act. It is a settled proposition of law that the provisions of a taxing statute have to be construed strictly. (Section 271(4)). If that had been the intention of the Legislature it could have specifically said so in the Act. It is a settled proposition of law that the provisions of a taxing statute have to be construed strictly. If the person making an application under this section fulfils aforesaid requirements, the Commissioner has to decide the question of waiving the imposition of penalty on merits in each case.” It relied upon a judgment of Jammu Kashmir High Court in the case of (Gulam Mohd. Sheikh v. Commissioner of Wealth Tax)2, reported in 1977(109) I.T.R. 395 which has construed similar provisions of the Wealth Tax Act in a similar fashion. 6. In the case of (Millan Bone Mills v. Commissioner of Income-tax)3, reported in 1984(149) I.T.R. 663 the Allahabad High Court construed the provisions of section 273-A. In that case also it was contended that the assessee did not fulfil the condition precedent for the exercise of jurisdiction under section 273(1) because the assessee's case could not be regarded as one of voluntary disclosure of concealed income. The assessee was regularly assessed to tax in the previous assessment year. The Allahabad High Court held that there was nothing in section 273-A(1) to show that the discretion under the section could not be exercised in the case of a person who had been a regular assessee. It negatived the contention that the assessee's case was not one of disclosure because the assessee was regularly assessed to tax in the previous years. A number of High Courts have therefore taken the view that a full and true disclosure of income required under section 273-A includes such disclosures made in regular returns filed under the Income Tax Act. 7. It was submitted by Mr. Jetley, learned Counsel for the respondents that if one looks at the Statement of Objects and Reasons as also the speech of the Finance Minister made in Parliament while introducing the Bill which incorporated the previous section 271(4A) in the Income Tax Act, it would be seen that the section was applicable only to concealed income if voluntarily disclosed. In the first place, in interpreting a section of the Act one cannot look at the Statement of Objects and Reasons or the speech of the Finance Minister, except for a limited purpose of ascertaining the mischief which the Act seeks to remedy. In the first place, in interpreting a section of the Act one cannot look at the Statement of Objects and Reasons or the speech of the Finance Minister, except for a limited purpose of ascertaining the mischief which the Act seeks to remedy. Secondly, the Statement of Objects and Reasons or the speech of the Finance Minister relied upon are not in respect of Bill which introduced section 273-A at all. They pertain to previous section 271(4A) which is now replaced by section 273-A. The language of section 273-A is plain and unambiguous and it applies to the late returns filed by the assessee in the present case. 8. It was next submitted by Mr. Jetley that since the petitioner-firm has preferred appeals in respect of some of the assessment orders, it cannot come by way of present writ petition. The present writ petition, however, is not in respect of the subject-matter of the pending appeals. It is in respect of an order passed by the Commissioner of Income Tax under section 273-A where he has declined to exercise his power of waiver on the ground that section 273-A does not apply to the case of petitioner. The power to waive interest and penalties under section 273-A is an independent power which is not affected in any way by the right of appeal and/or revision which is granted under the other provisions of the Income Tax Act. (See in this connection 126 I.T.R. 825(Kar.) (C.W.T. v. B. Kempanna)4, 1983(143) I.T.R. 941 (Jagdish Agarwal v. Commissioner of Wealth-tax, M.P.)5. It is an independent power which can be exercised by the Commissioner of Income Tax, even assuming that penalties and interest are rightly levied. The fact that an appeal is pending in respect of some of these assessment years is, therefore, not relevant or germane to the present writ petition. 9. Reliance sought to be placed on the case of (Purshottam Thackersey v. K.N. Anantarama Ayyar)6 reported in 1985(154) I.T.R. 395 is misplaced. In that case both the order levying penalty as also the order refusing to waive penalty under the Wealth Tax Act were challenged by the writ petition. In respect of the order of penalty an appeal was pending and hence the learned Single Judge of this High Court refused to entertain the writ petition in respect of the order of penalty. In respect of the order of penalty an appeal was pending and hence the learned Single Judge of this High Court refused to entertain the writ petition in respect of the order of penalty. He also held that the order which refused to waive penalty was in proper exercise of discretion in that case and hence he refused to set aside and order also. This judgment does not apply to the present case. 10. Petition, therefore, succeeds and the Rule is made absolute in terms of prayer (a). 11. Respondents to pay to the petitioner costs of the petition. Order accordingly.