H.N.SETH, J. - (1.) THIS petition under Article 226 of the Constitution, by M/s. Radhey Shyam Chandrika Prasad, hereinafter referred to as the petitioner, is directed against an order dated November 17, 1976, passed bythe Commissioner of Income -tax, Kanpur, refusing to entertain its application under Section 273 -A of the I.T. Act, for waiving certain penalties imposed upon it on the ground that the condition precedent for exercise of the power under that section did not exist.
(2.) THE petitioner carried on business in country liquor during the previous, years relevant to the assessment years 1972 -73 and 1973 -74. It filed income -tax returns disclosing its income as Rs. 28,900 and Rs. 25,620, respectively, for each of the aforementioned two years. However, it revised its return for the assessment year 1973 -74 and disclosed its income for that year as Rs. 30,000. In due course, the ITO, vide order dated December 13, 1971, finalised the assessment of the petitioner at Rs. 35,000 for the year 1972 -73 and Rs. 39,000 for the year 1973 -74. He also directed that notices be issued to the petitioner to show cause why penalty under Section 271(1)(a) for late filing of the return for the year 1972 -73 and that under Section 273(b) of the I.T. Act for not paying the advance tax for the years 1972 -73 and 1973 -74 be not imposed. Eventually, as the ITO was not satisfied that there was any reasonable cause for the petitioner not to file its income -tax return for the year 1972 -73 within time, he imposed upon it a penalty of Rs. 2,544. Likewise as he was not satisfied that there was any reasonable cause for the petitioner for not furnishing an estimate of the advance tax payable by it in accordance with the provisions of Sub -section (3) of Section 212, in either of the two assessment years, he imposed upon it a penalty of Rs. 1,733 for each of the two years. The petitioner then made an application under Section 271(4A) of the I.T. Act, as it stood then, to the Commissioner, praying that the aforementioned penalties imposed by the ITO be waived but then at a later stage it pressed the prayer made by it under Section 273(1) of the I.T. Act. The Commissioner refused the request for waiving the penalties imposed upon the petitioner, vide his order dated November 17, 1976 (annex. F to the writ petition). A perusal of the order shows that he, for the purposes of disposing of the prayer made by the petitioner, assumed that the petitioners had filed the tax returns for both the years voluntarily, and made the following observations : ' For purposes of waiver under Section 273A, however, the mere voluntariness of the returns is not enough and one of the prime requirements is that the returns should have been filed in good faith. In this case, for both the years, apparently the assessee did not choose to declare his correct income. The very fact that he agreed subsequently to an enhancement of his income to a higher figure shows that the assessee had no intention of declaring his correct income and was keeping back the correct information from the knowledge of the Dapartment. This is not a case where the assessee has maintained regular accounts and the account version has been disbelieved. In this case, no proper accounts have been maintained. The business of the assessee is that of Abkari contract. He has returned his income by estimate, which on his own admission, were not correct. Legally and otherwise, the position is well established that nobody knows better than the assessee himself what his real income is. It is obvious from the facts that the declaration of income made by the assessee in his returns or even in his revised return for the assessment year 1973 -74 was not full and complete or in good faith.'
(3.) THESE observations show that in the opinion of the Commissioner, the requisite conditions for waiving penalty under Section 273A, namely, that the disclosure of income by the assessee should have been in good faith and that it should also have been correct, were not satisfied and as such the request made by the petitioner could not be accepted.;