C.K.THAKKER, J. - (1.) RULE. Mr. M.J. Thakore appears and waives service of rule on behalf of the respondents. In the facts and circumstances of the case, the petitions are taken up for final hearing.
(2.) BOTH these petitions are filed for quashing and setting aside orders dt. 31st Oct., 1994 and 19th Jan., 1995 passed by the CIT, Gujarat III, Ahmedabad, in so far they do not waive interest and penalty in their entirety levied on the petitioners by directing the respondents to waive interest and penalty totally. Both the petitioners are partnership firms. For the asst. yrs. 1985-86 and 1986-87 the Assessing Officer had levied interest on the petitioners for late filing of IT returns as also for non-payment of advance tax. Penalty was also imposed. According to the petitioners, they had fulfilled all the conditions prescribed under s. 273A of the IT Act, 1961 (hereinafter referred to as "the Act") and they were entitled to waiver of interest and penalty levied upon them. The petitioners, therefore, submitted applications to the respondent requesting him to waive levy of interest and penalty. It is contended by the petitioners that no opportunity of hearing was afforded to them. But the respondent was satisfied about fulfilment of conditions laid down in s. 273A of the Act. Hence, he granted the benefit and waived interest and penalty partly. In the impugned order, in para 2 it was stated : "2. After considering the facts of the case and the conditions laid down under s. 273A of the IT Act, 1961, I, CIT, Gujarat III, Ahmedabad, hereby waive interest and penalty as per details given below." Mr. Separkar, learned counsel for the petitioners, submitted that when conditions mentioned in s. 273A have been satisfied, it was not open to the respondent to waive only a part of interest and penalty, as has been done in instant cases. He submitted that no reasons are recorded; no speaking order is passed; no opportunity of hearing is afforded, and the order is made which is contrary to law. According to the learned counsel, the impugned order requires to be quashed and set aside by directing the respondent to waive interest and penalty in its entirety. Reliance is placed in this connection by Mr. Soparkar on the decision of the Hon'ble Supreme Court in the case of Apex Finance Leasing Ltd. vs. CIT and Ors. (1994) 207 ITR 781 (SC) and the decision to this Court in Kantilal Ishwarlal Chael vs. CWT (1993) 111 CTR (Guj) 164 : (1993) 203 ITR 579 (Guj). In Kantilal's case (supra), this Court held while considering similar provisions of s. 18B of the WT Act, 1957 held that once the authority is satisfied that the case is covered for grant of waiver of interest and penalty, in absence of sound and convincing reasons, it is not open to him to waive only a part thereof.
(3.) IN our opinion, submission of Mr. Soparkar is well founded. No doubt, s. 273-A confers discretionary power on the respondent to waive interest and penalty on fulfilment of certain conditions. At the same time, however, it cannot be gainsaid that such discretionary power requires to be exercised judicially, judiciously and on sound principles. An officer cannot, at his sweet will, arbitrarily grant power of waiver. Again, the power is coupled with duty and when conditions for exercise of such powers are established, the authority cannot refuse to exercise it. IN the instant cases, it is the assertion of the petitioners, not refuted by the respondent, that the requisite conditions were present. The respondent himself has granted benefit by reducing interest and penalty partly. He, however, did not apply his mind and no reason/ground whatsoever has been recorded as to why he did not grant the prayer of the petitioners in its entirety. The impugned orders, hence, suffer from non-application of mind. The point is also concluded by a decision of the apex Court as well as of this Court. The petitions, therefore, require to be allowed by quashing the impugned orders and by directing the respondent to pass fresh orders in accordance with law. For the aforesaid reasons, the petitions are allowed by making the rule absolute, the impugned orders are quashed and set aside. It is directed that the respondents will pass fresh orders in accordance with law. In the facts and circumstances of the case, no order as to costs.;