K. C. Agrawal, J. - (1.) PARAS Bhan Sadh was carrying on business at Farrukhabad. He was assessed to tax since the assessment year 1957-58 on estimated income as he was representing to the department that he did not maintain regular books of account. After the petitioner was assessed for the assessment year 1971-72, the file of the petitioner's case was examined by the Inspecting Assistant Commissioner of Income-tax on August 17, 1972. After examination of the case, he directed the Income-tax Officer to reopen the assessment for the year 1971-72 under Section 143(2){b) of the Income-tax Act and to ask the petitioner to submit the net wealth statement. Pursuant, to the aforesaid order, the Income-tax Officer on September 12, 1972, called upon the petitioner to file the list of debtors, creditors along with the personal net wealth statement. The petitioner was also required to give basis of sales and purchases made by him. Thereafter, on October 20, 1972, a notice under Section 143(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), was issued to the petitioner. After seeking some adjournments, the petitioner filed a written application on December 13, 1972, to the Commissioner of Income-tax making a disclosure of the net wealth at Rs. 1,39,000. By this application, the petitioner also made a prayer that the amount of money disclosed by him be spread over the assessment years 1964-65 to 1972-73. It was, thereafter, that the notices under Section 148 of the Act were issued for the assessment years 1964-65 to 1970-71. Thereafter, the petitioner filed another application on 13th January, 1975, stating the prayer that spreading over be confined to assessment years 1966-67 to 1972-73. It appears that soon thereafter the assessment orders were made on 27th February, 1975. On March 4, 1976, the petitioner-received a letter from the office of the Commissioner of Income-tax that as the provisions of the Income-tax Act had been amended by the Taxation Laws (Amendment) Act, 1975, the application filed by the petitioner earlier under Section 271(4A) of the Act had become infructuous and that the petitioner should, therefore, file, if so advised, a fresh application for waiver under the newly added Section of the Income-tax Act. Then the petitioner filed an application under Section 273A of the Act to the Commissioner of Income-tax making a prayer for the waiver of the penalty on the ground that as he had voluntarily and in good faith filed returns before the Income-tax Officer and got the assessment made on himself, the penalty imposed on him be waived. This application of the petitioner was rejected by the Commissioner of Income-tax on 18th May, 1977. The order rejecting the application reads as under : "This order covers application made by the assessee under Section 273A of the I. T. Act, 1961, for a. ys. 1966-67 to 1972-73. After considering the circumstances of the case, I am satisfied that the application made by the assessee is not covered by the provision of Section 273A of the I. T. Act. I hereby reject the petition under Section 273A of the I. T, Act, 1961, for a. ys. 1966-67 to 1972-73. Sd. A. R. Natarajan, Commissioner of Income-tax, Agra. Dated: 18-5-1977."
(2.) UPON the rejection of the said application the petitioner filed the present writ in this court challenging the order of the Income-tax Commissioner, inter alia, on the grounds that the petitioner having not been given an opportunity of an oral hearing the order passed was invalid. Secondly, that the. order being not a speaking one was invalid. Thirdly, that the Commissioner of Income-tax wrongly held that the requirements of Section 273A of the Act were not fulfilled in the present case. As we are in agreement with the learned counsel for the petitioner on the second point, we need not discuss the first and the third points raised on behalf of the petitioner, since, in our opinion, the decision on the second point would be sufficient for the purposes of disposing of the present writ petition. The second argument, as already mentioned, was that the order impugned was bad inasmuch as the Commissioner of Income-tax did not record reasons in support of the order which he made. In this connection, the first aspect of the matter which may, briefly, be examined is about the nature of the proceedings. The learned counsel for the petitioner contended that the same was quasi-judicial. Now, what is involved in a judicial process is well settled and as pointed out by Shah J. in Jaswant Sugar Mills Ltd. v. Lakshmi Chand [1963] 24 FJR 53 ; AIR 1963 SC 677, a quasi-judicial decision involves the following three elements : (1) It is in substance a determination upon investigation of a question by the application of objective standards to facts found in the light of preexisting legal rules ; (2) it declares rights or imposes upon parties obligations affecting their civil rights; (3) the investigation is subject to certain procedural attributes contemplating an opportunity of presenting its case (to a party).
(3.) IN the instant case, it would be seen that under Section 273A of the Act the Commissioner of INcome-tax is required to decide an application filed under that provision objectively by taking into account the factors mentioned therein. He, has to consider it on merits and if the conditions for the exercise of the power conferred by this sectionare made out, he is obliged to exercise the discretion in favour of an assessee making an application under this provision. Though the word used in Section 273A of the Act is "discretion" it is obvious that it does not vest in the authority the power to act arbitrarily and to reject an application filed under this provision even if the circumstances calling for the exercise of such a power exist. IN our opinion, therefore, the nature of the proceedings under Section 273A of the Act is quasi-judicial. It is incontrovertible that where an authority makes an order in exercise of a quasi-judicial function it must record reasons in support of the order. If an authority is needed for the said proposition reference may be made to the cases ,of the Supreme Court in Express Newspapers P. Ltd. v. Union of India, AIR 1958 SC 578; 14 FJR 278 and Siemens Engineering and Manufacturing Co. of India Ltd. v. Union of India, AIR 1976 SC 1785. In these two cases, the Supreme Court has clearly laid down that every quasi-judicial order must be supported by reasons and, therefore, it is now settled that such an order must be a speaking order.;