Rajendra Babu, J. - (1.) The appellants before us preferred a writ petition under Article 226 of the Constitution of India before the High Court of Delhi seeking for a direction to extend the benefit of waiver of penalty arising under Section 271 (4A) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). Pursuant to a scheme, the second appellant Firm, made an application on February 12, 1965 stating that they would place before the Income-tax Officer a true statement of their financial assets, transactions and they were prepared to file a statement of the affairs as on March 31, 1965. The statement of affairs filed on 20th May, 1965 disclosed an income of about Rs. 28,00,000/- as the total accretion to its wealth over the eight years up to March 31, 1965. Ultimately after some negotiations between the Department Officials and the appellants, the appellants agreed to be assessed at Rs. 66,56,000/- subject to the usual allowance for depreciation etc. spread over eight assessment years 1958-59 to 1965-66. Assessment for the year 1958-59 to 1959-60 were to be reopened inasmuch as they were complete by that time. The Inspecting Assistant Commissioner issued notices to the appellants to initiate proceedings under Section 271 (1) (c) of the Act for the non-disclosure of the income relating to the aforesaid period. A penalty in a sum of Rs. 4,90,365/- was imposed on the appellants for the years 1958-59 to 1964-65. Appeal preferred against the said order to the Income-tax Appellate Tribudnal met with failure.
(2.) During the pendency of the penalty proceedings an application was filed under Section 271 (4A) of the Act and the Commissioner of Income-tax sent a report on the said application on 23-3-1968 setting forth the circumstances to reduce the penalty against the appellants in terms of provisions of Section 271 (4A) of the Act. The Commissioner noticed that the said provision has envisaged disclosure of income made (i) voluntarily; (ii) in good faith; (iii) such disclosure being full and true; and (iv) is made prior to the detection by the I.-T.O. of the concealment in question and held that these circumstances to attract waiver or reduction under Section 271 (4A) stood satisfied. He referred to various items such as Hundi loans and the amounts surrendered, accretion to wealth between different dates. However a communication was sent by the Secretary of the Central Board of Direct Taxes on 28th March, 1968 refusing to reduce the penalty. Again another letter was sent on April 18, 1969 by the Commissioner pursuant to a letter received by him on 14th April, 1969 making a further report on the matter, he set out the various details thereto as to how the matter had been dealt with by the various authorities and the manner in which the appellants would be entitled to the benefit under the provisions referred to earlier. The Central Board of Direct Taxes has to approve any action of the Commissioner to waive or reduce penalty in cases when the same is above Rs. 50,000/-. Hence in this case reference was made by the Commissioner of Income-tax to the Board for approval of his action to reduce the penalty but the Board refused to reduce the penalty as suggested by the former.
(3.) Writ petition was preferred before the High Court. In the High Court two contentions were put forth; firstly, that the imposition of the penalty on the appellants was premature inasmuch as the application of the appellants filed under Section 271 (4A) of the Act for waiver of the penalty was still pending disposal; secondly, that the condition precedent for the satisfaction of the Income-tax Officer that the assessee had concealed his income had not been satisfied in view of the voluntary disclosure made. The High Court found no substance in either of the contentions and dismissed the writ petition. The High Court took the view that the levy of penalty under Section 271 (1) (c) of the Act was not in any way dependent on the provisions of Section 271 (4A) of the Act and the question of reduction would arise only when the penalty is imposed. Therefore, it was of the view that imposition of penalty was not premature. The High Court was also of the view that the penalty could be imposed under Section 271 (1) (c) of the Act when an assessee has concealed particulars of income or furnished inaccurate particulars of such income. The assessee in the present case had concealed the income, but later on disclosed the same in the statements of returns which had been filed prior to the introduction of the voluntary disclosure scheme and that circumstance would not make any difference so far as levy of penalty is concerned and dismissed the writ petition. Hence, these appeals by special leave.;