S.C. Mathur, J. - (1.) BY our short order dated November 29, 1984, we had allowed this petition and quashed the orders dated February 13, 1979, and February 19, 1981, annexures 3 and 10, respectively, passed by the Commissioner of Income-tax, Lucknow, in proceedings under Section 273A of the Income-tax Act, 1961, Act No. 43 of 1961, in short "Act".
(2.) BY the impugned order dated February 13, 1979, the petitioner's application under Section 273A of the Act for waiver of penalty and penal interest arising from late filing of income-tax returns for the assessment years 1971-72, 1972-73 and 1973-74 was rejected by Sri S.K. Lall, the then Commissioner of Income-tax, Lucknow, and by order dated February 19, 1981, his successor, Sri Dharni Dhar, has refused to reconsider the order of his predecessor in the light of subsequent developments. Left with no remedy, the petitioner has approached this court for redress of his grievance under Article 226 of the Constitution. A few facts material for the disposal of this writ petition may be noticed. The petitioner's mother, Smt. Devi Sundra, voluntarily filed returns of her income for nine assessment years, including the years mentioned above, on August 16, 1976. The returns for the years in question as also for other years were filed belatedly and the petitioner had rendered herself liable to pay penalty and penal interest under the provisions of the Act. Under Section 273A of the Act, the Commissioner of Income-tax has jurisdiction to waive the penalty and penal interest. Taking advantage of this provision, the petitioner moved an application on September 1, 1979, for waiver of the said penalties ; a copy of this application is annexure 2. This application was moved by the petitioner as his mother, Smt. Devi Sundra, had died in the meanwhile and in the assessment proceedings, the petitioner represented the estate of his mother. By a composite order dated August 10, 1977, the Income-tax Officer, "D" Ward, Circle II, Lucknow, completed assessment in respect of all the nine assessment years. By this order, the Income-tax Officer accepted the returns for the years 1974-75, 1975-76 and 1976-77 in their entirety. Slight enhancement was made in the income for the years 1968-69, 1969-70 and 1970-71, but in the "years in dispute, substantial enhancements were made. In the year 1971-72 against the returned income of Rs. 13,255, the income assessed was at Rs. 21,555; similarly, in the years 1972-73 and 1973-74, against the returned incomes of Rs. 10,755 and Rs. 7,083, the incomes assessed were Rs. 21,755 and Rs. 18,083, respectively. In view of the fact that returns had been filed belatedly, the officer directed issue of penalty notices under Section 271(1)(a). For the same reason, he also directed that interest be charged under Section 139(8). It was after the passing of this order that an application for waiver of penalty and penal interest was filed under Section 273A. Simultaneously, the petitioner preferred appeals before the Appellate Assistant Commissioner against the enhancement of the figures of income in the years 1971-72, 1972-73 and 1973-74. These appeals were partly allowed and the figures of assessed income were reduced. Still not satisfied, the petitioner preferred appeals for all the three years before the Income-tax Appellate Tribunal, Allahabad. The Tribunal granted relief to the petitioner in all the three years. Thus, the additions which had been made to the income by the Income-tax Officer were completely wiped off. The order of the Appellate Assistant Commissioner was rendered on October 12, 1978, and that of the Tribunal on August 23, 1979. The petitioner's application for waiver came to be disposed of by the Commissioner in between these two dates, i.e., on February 13, 1979, to be precise. By this date, the stigma of concealment of income which had been put up by the order of the Income-tax Officer had not been completely effaced as the Appellate Assistant Commissioner had allowed the appeals only partly. After the petitioner had obtained complete success in assessment from the Income-tax Appellate Tribunal, he filed Writ Petition No. 3/1626 of 1979 (Tax) in this court for quashing of the Commissioner's order dated February 13, 1979, and for the issuance of a mandamus to forbear the Income-tax Department from realising the penalty and penal interest from him. This petition was disposed of by a Division Bench of this court by the judgment and order dated July 6, 1979, annexure 7. The Division Bench was of the opinion that after the petitioner had obtained complete success from the Income-tax Tribunal, he should have approached the Commissioner for waiver of penalty and penal interest bringing to his notice the changed circumstances. The petition was dismissed only on the ground that this demand for justice had not been made by the petitioner before approaching this court. No observation was made by the Division Bench with regard to the petitioner's entitlement to claim waiver of the penalty and penal interest. After the decision of the writ petition, the petitioner moved an application before the Commissioner on October 6, 1979, annexure 8. Through this application he brought to the notice of the Commissioner the changed circumstances arising from the decision of the Income-tax Appellate Tribunal and also the judgment of this court. It appears that the Commissioner of Income-tax had doubts about his competence to review the order of his predecessor and he, therefore, made a reference to the Central Government in the Ministry of Finance, Department of Revenue, for guidance. The Ministry advised the Commissioner through its letter dated December 8, 1980, annexure 9. In this letter, the Ministry reproduced the opinion rendered by the Central Law Ministry to the effect that the power under Section 273A was quasi-judicial and not administrative in character and, therefore, power of review could not be exercised as the same has not been conferred by the Act. After reproducing the opinion of the Ministry of Law, the Ministry of Finance advised the Commissioner that it was not open to him to review the order of his predecessor dated February 13, 1979. In view of the opinion given to him by the Ministry of Finance, the Commissioner of Income-tax by his order dated February 19, 1981, annexure 10, rejected the petitioner's application dated October 6, 1979. Having failed to obtain redress from the Commissioner of Income-tax, the petitioner has again approached this court through the instant petition. Sri K. B. Jindal, learned counsel for the petitioner, has not assailed the proposition that the power conferred under Section 273A is quasi-judicial and not administrative. He, however, submits that even though the power of review may not have been specifically conferred, it is implicit in this scheme of Section 273A itself. On this basis, he presses that the Commissioner's order dated February 19, 1981, suffers from manifest illegality.
(3.) SRI S. C. Misra, learned counsel for the Income-tax Department, has opposed the petition on the grounds stated in the opinion of the Central Government. Before proceeding to consider the scheme of Section 273A, it would be desirable to notice the ground on which Sri S. K. Lall rejected the petitioner's claim of waiver in respect of the years in question and the basis on which he allowed the said claim in respect of the other years. As already noticed, belated returns were filed by the petitioner's mother for several years. Therefore, the liability for payment of penalty and penal interest had been incurred not only in respect of the years in dispute but in respect of other years also. In other years, the claim for waiver was allowed and it was only in respect of the three years, presently in dispute, that the claim for waiver was disallowed. While allowing waiver for the years 1968-69, 1969-70 and 1970-71, the Commissioner observed as follows : "Shri D. P. Gupta, advocate, attended and was heard. I have also looked into the records of income for the assessment years 1968-69 to 1970-71 filed voluntarily prior to issue of notice under Section 139(2)/148. The variation in income returned and income assessed is due to difference of opinion. The disclosure of income is treated to be full, true and in good faith. The assessee appears to have co-operated in enquiries relating to assessment proceedings and has paid taxes on income disclosed and income assessed. All the conditions for waiver of penalty under Section 271(1)(a)/273(b) and interest under Section 139(8)/217 for the assessment years 1968-69 to 1970-71 having been fulfilled, I consider it to be a fit case for waiver under Section 273A." While allowing claim for waiver of interest under Section 139(8), he observed in respect of the years 1974-75 and 1975-76 as follows : "So far as the waiver petition relates to 1974-75 and 1975-76, I find that the Income-tax Officer has not initiated penalty proceedings for those years ; hence, the petition for penalty is filed as infructuous. As regards interest for 1974-75 and 1975-76, I find that the assessee filed retuns of income for these years voluntarily, prior to issue of notice under Section 139(2)/148. Relevant assessments have been completed by the Income-tax Officer on the returned income. The disclosure of income is thus full, true and in good faith. The assessee appears to have co-operated in enquiries relating to assessment proceedings and has paid taxes on income disclosed and income assessed. All the conditions for waiver of interest under Section 139(2) having been fulfilled, I consider it to be a fit case for waiver under Section 273A." The years in dispute were dealt with in para. 3 of the order as follows : "As regards waiver of penalty and interest for the assessment years 1971-72 to 1973-74, I find that the additions made for undisclosed investments for these years have been upheld by the Appellate Assistant Commissioner of Income-tax. These additions clearly attract penalty under Section 271(1)(c). As such, the disclosure for these years cannot be treated to be full, true and in good faith. Thus, the conditions for waiver of penalty and interest for these years remain unfulfilled. Assessee's request for these years is accordingly rejected." From the above, it would be seen that the only reason which weighed with the Commissioner for denying waiver in the disputed years was that the assessee had made concealment of substantial income in her voluntary returns for these years. If the stigma of concealment was not there, it is very apparent that the petitioner would have obtained relief from the Commissioner even at the initial stage. But, at that time, the stigma of concealment was sticking to the petitioner. It came to be removed only subsequently by the order of the Tribunal. The consequence of the Tribunal's order is that the petitioner had not concealed any income even in the years in dispute. Now, the scheme of Section 273A may be examined. ;