M.C. Agarwal, J. - (1.) BY this petition under Article 226 of the Constitution of India the petitioner, a partnership-firm seeks the quashing of an order dated January 20, 1986, passed by the Commissioner of Income-tax, Agra, whereby he rejected the petitioner's application under Section 273A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the waiver or reduction of penalties levied under Section 271(1)(c) and Section 273 of the Act.
(2.) I have heard Sri Vikram Gulati, learned counsel for the petitioner, and Sri Shekhar Srivastava, learned standing counsel for the respondents. No counter-affidavit has been filed on behalf of the respondents. The facts are that a search under Section 132 of the Act was conducted on the residential premises of the partners of the assessee firm and their family members on September 8 and 9, 1983. The petitioner and its partners wanted an amicable settlement and, therefore, they met the Commissioner of Income-tax who visited Farrukhabad shortly after the search. Ultimately, it was agreed that the petitioner would offer the following additional amounts of income : The petitioner moved an application offering the aforesaid amount to tax and agreeing to imposition of the minimum penalty leviable under Section 271(1)(c) and Section 273 of the Act. The assessments were accordingly completed and penalties were levied. It is claimed that the petitioner fully co-operated with the Department in settling its cases. It is alleged that in pursuance of the assessments interest under Section 215/217 has been charged and for the assessment years 1981-82, 1982-83 and 1983-84 penalties under Section 271(1)(c) in the sums of Rs. 41,845, Rs. 51,280 and Rs. 46,292, respectively, have been levied.
(3.) AFTER the completion of the assessments and the levy of penalty the petitioner moved an application under Section 273A before the Commissioner of Income-tax praying for the waiver/reduction of amounts of penalties under Section 271(1)(c) and Section 273. It is claimed that under Section 273A(4), the Commissioner has an overriding power to reduce or waive the penalty. Section 273A(4) reads as under : " (4) Without prejudice to the powers conferred on him by any other provision of this Act, the Commissioner 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 payable by the assessee under this Act or stay or compound any proceeding for the recovery of any such amount, if he is satisfied that - (i) to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case ; and (ii) the assessee has co-operated in any enquiry relating to the assessment or any proceeding for the recovery of any amount due from him. " The Commissioner, by the impugned order, rejected the prayer of the petitioner for waiver/reduction of the penalties on the ground that the same were levied according to the settlement arrived at between the assessee and the Revenue. The petitioner's contention is that the petitioner having co-operated in the assessment proceedings, it was entitled to waiver of the penalties in the exercise of overriding powers under Sub-section (4) aforesaid and that the Commissioner erred in rejecting the application on the short ground that the penalties were levied in accordance with the settlement with the petitioner.;