ORDER R.S. GARG, 1: By this petition under Art. 227 of the Constitution of India, the petitioner challenges the legality, correctness and validity of the order dt. 19th March, 1985 passed by CIT, Bhopal in case NVI)/HORS/IT/98/78 for the asst. yr. 197172 on the ground that the learned CIT did not exercise his powers in accordance with law nor has considered legal position for attraction of s. 273A(4) of the Act. 2. According to the petitioner, he had filed the return of loss and while passing the assessment order on 29th Nov., 1971, the AO had directed issuance of penalty notice for concealment of the amount of Rs. 16,000. Immediately thereafter, the petitioner filed an application under s. 271(4A) of the Act on the ground that he had made full and complete disclosure voluntarily and in good faith but the said application happened to be rejected on 14th Feb., 1975 by the CIT, Bhopal. In reply to the notice issued to the petitioner for imposition of the penalty, he submitted by his reply dt. 25th June, 1975 that there were mala fides on his part and merely because of default the concealment has been committed penalty is required to be imposed unless the petitioner had acted with some ulterior motives. After hearing the petitioner by order dt. 7th July, 1975, the ITO rejected the plea of the petitioner and directed imposition of penalty of Rs. 13,000. The said order became final but after coming into force of s. 273A(4) w.e.f. 1st Oct., the petitioner again moved an application on 14Lh Jan., 1980 stating therein that the levy of the penalty had caused genuine hardship to the assessee and the assessee had fully co-operated in the assessment. The learned CIT by his order dt. 19th March, 1985 rejected the application of the petitioner. 3. Shri Nerna, learned counsel or the petitioner, submits that the order passed by the CIT is patently illegal because he has taken into consideration the our material which otherwise he could not. According to him an application under s. 271(4A) of the Act could be filed on different grounds or grounds which are available for filing an application under s. 273A(4). He further submits that the observation made by the CIT that assessee was not cooperative in the recovery proceeding is also bad because of his return of loss recovery proceeding were not required to be initiated. He further submits that the observation made by the CIT that assessee was not cooperative in the recovery proceeding is also bad because of his return of loss recovery proceeding were not required to be initiated. Regarding the observations that the petitioner would not suffer any genuine hardship, he submits that the learned CIT has merely employed the language of the provisions of law but has not given his finding nor he has considered that in the return of loss where the assessee has already suffered loss, imposition of the penalty would in fact be a genuine hardship. On the other hand Shri Tankha, learned counsel for the respondents submits that the order passed under s. 271(4A) having become final, the petitioner was entitled to file an application under s. 273M4) of the IT Act and even if it was return of loss and there were no recovery proceeding the petitioner was required to prove that he would in fact suffer a genuine hardship. He submits that the order passed by the CIT does not call for any interference. 4. According to s. 271(4A) a party could move an application before the CIT for waiver/reduction of the penalty on the grounds that he had disclosed the full material and had given full disclosure voluntarily and in good faith. Sec. 273A(4) came in the statute book w.e.f. 1st Oct., 1975. The petitioner seeking protection under this provision filed another application and while deciding the application the Department or the CIT never raised the objection that the provisions would not be applicable. By the Direct Tax Laws (Amendment) Act, 1989, sub-s. (6) of s. 273A has been amended w.e.f. 1st April, 1989 according to which the provisions of s. 273A as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1989, shall apply to and in relation to any assessment for the assessment year, commencing on the 1st day of April, 1988, or any earlier assessment year, and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year. 5. 5. The consideration of the rejection of the petitioner's application filed under s. 271(4A) would certainly show that the CIT had taken into consideration the irrelevant material because he was not required to consider the full and complete disclosure and in good faith while considering the application under s. 273M4). According to sub-s. (4) of s. 273A, the CIT may, on an application made in this behalf by an assessee, and after recording his reasons for so doing, reduce or waive the amount of any penalty if he is satisfied that to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case and the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him. 6. It is not disputed before me that in the instant case, when the return was a return of loss, no recovery of the tax was required to be started against the petitioner. The observation made by the CIT that assessee was not co-operative in recovery proceeding would certainly be contrary to the record and would show non-application of the mind. So far as the question of hardship concerned except employing of the language as provided under s. 273A the CIT has not given any reasons. Considering the totality of the circumstances. I am of the opinion that the order dt. 19th March, 1985 passed by CIT, Bhopal deserves to be quashed. It is accordingly quashed. The learned is directed to reconsider the matter in accordance with law after giving an opportunity of hearing to the petitioner. There shall be no orders as to costs. Security amount, if any, deposited by the petitioner be refunded after due verification.