V.S.Dave, J. - (1.) A common question as to "whether the petitioners' applications under Section 273A of the Income-tax Act, 1961, has been wrongly rejected by the Commissioner of Income-tax", is involved in all the above three cases which have cropped up because of the fact that application was moved post search and seizure operation carried on by authorised officers of the Income-tax Department under Section 132 of the Income-tax Act, 1961, at the residential premises of Shri Kalianmal Jain at house No. 1563, Singhiji-ka-rasta, Jaipur, on January 12, 1988.
(2.) IN order to appreciate the point involved in these cases, it would be relevant to quote briefly the facts of each writ petition. IN Writ Petition No. 4624 of 1989, Smt. Ramjanki Devi is a partner in a firm, Messrs. Chandmal Kalianmal, Jaipur, which is an assessee for the last several years. The petitioner, Smt. Ramjanki, too was assessed for the assessment year 1987-88 showing her total income to be Rs. 17,691 which was -assessed under Section 143(1) of the INcome-tax Act on August 31, 1987. Then, on January 12, 1988, the aforesaid search and seizure was carried out at the residence of Shri Kalianmal Jain who happened to be the petitioner's father and certain documents were seized. Some of the documents seized disclosed that certain gifts were received by the assessee through Nathulal, petitioner, in Writ Petition No. 4625 of 1989, Miss Sapna, daughter of Nathulal's brother, Shri Mahaveer Kumar and Smt. Ramjanki Devi, widowed sister of Nathulal. The gifts received which were shown in the documents were as under : JUDGEMENT_63_ITR188_1991Html1.htm An order under Section 132(5) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), was passed against Shri Nathulal Jain and the assessing authority included total gifts amounting to Rs. 12,92,000 in the hands of Nathulal as income from undisclosed sources provisionally. No proceedings under Section 182(5) of the Act were initiated against Ramjanki Devi. However, it was held that the gift of Rs. 4,50,000 was income from undisclosed sources of Nathulal Jain. The assessing authority also included the amount of Rs. 2,92,000 received by Miss Sapna Jain in the hands of Shri Nathulal Jain, thereby treating the same as Shri Nathulal's income from undisclosed sources. All the three petitioners individually filed returns of income for the assessment year 1987-88 suo motu and, according to them, voluntarily and in good faith and prior to detection or even allegation of any concealment of any particulars of income. Ramjanki Devi disclosed her taxable income to be Rs. 4,74,691 for the assessment year 1987 88. She filed the said return on February 7, 1989, and, on the same day, filed a petition under Section 273A of the Act before the Commissioner of Income-tax praying for waiver of penalty, if any, imposable under Section 271(1)(c) of the Act and waiver of interest, if any, under Section 215 and penalty, if any, imposable under Section 273 of the Act. It is also pertinent to mention here that, prior to filing the return a day earlier, a sum of Rs. 20,000 was also paid as part of the additional tax due and the balance tax was paid by redemption and encashment of seized N.S.Cs. and F. D. Rs. under the orders of the Commissioner of Income-tax, Jaipur, Similarly, Nathulal Jain submitted an application under Section 273A of the Act on February 17, 1989, and filed voluntarily and suo motu returns disclosing taxable income of Rs. 5,72,049 instead of Rs. 20,649 initially disclosed. His application under Section 273A of the Act before the Commissioner was also filed on February 17, 1989, and a day prior to it he too had deposited additional part of tax Rs. 20,000. In the same manner, Mahaveer Kumar Jain on the. same day, filed returns disclosing taxable income of Rs. 5,06,710 instead of Rs. 2,34,307 shown initially and, on the same day, i.e., February 17, 1989, submitted an application under Section 273A of the Act before the Commissioner after depositing a sum of Rs. 20,000 on February 16, 1989. It is pertinent to mention here that in the afternoon of February 17, 1989, itself, all the three petitioners had been served with notices under Section 147(a) of the Act. The petitioners' case, therefore, on the aforesaid facts, is that, in the course of assessment proceedings under Section 147(a) of the Act, the reassessing authority confronted the assessee with either the donors of the gifts or the alleged purchaser of the draft and that the Income-tax Commissioner mechanically rejected the application moved under Section 273A of the Act and levied both penalty and interest as shown in annexure 5 in each of the writ petitions. The petitioners' submission is that the application under Section 273A of the Act has been wrongly rejected without proper application of mind to the facts and circumstances of the case. It is submitted that the impugned order is not a speaking order and hence it is difficult to make out as to on what ground the application has been rejected. It is submitted that an order under Section 273A of the Act is a quasi judicial order which is required to be an express and speaking order and must disclose the mind of the deciding authority, since it is open to scrutiny under article 227 of the Constitution of India. It is submitted that respondent No. 3 was unnecessarily obsessed with the fact that the application arose in a search and seizure matter and the disclosure was made on account of fear and was not by a voluntary desire to conform to the norms of law. It is submitted that there was no warrant for corning to such a conclusion that neither the facts of the case disclosed nor the circumstances were such from which such an inference can be drawn. It is submitted that the petitioners have deposited the tax prior to the service of the notice under Section 148 of the Act and the disclosure was voluntary and in good faith. Learned counsel submits that, in order to attract the applicability of Section 273A of the Act, the following ingredients are required to be satisfied : 1. The assessee had voluntarily made a disclosure of his income before evasion of tax was detected. 2. the disclosure should have been full and true disclosure of the assessee's income made in good faith. 3. the assessee had co-operated in any inquiry relating to the assessment of his income, and 4. the assessee had paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence, of any order passed in respect of the relevant assessment year. In all the three writ petitions, it is submitted that the aforesaid four requisite conditions were fully satisfied. Learned counsel for the petitioners further Submitted that the Central Board of Direct Taxes/New Delhi, have issued circulars giving guidelines on September 29, 1981. Instruction No. 14, 17 (F) No. 281786/81-IT (INV.) is as under : "The various instructions issued by the Board contain only clarifications on the scope and applicability of Section 271(4A)/273A of the Income-tax Act, and the corresponding provisions under the Wealth-tax Act. These clarifications have been given in consultation with the Ministry of Law and relate to the conditions stipulated in Section 271(4A)/273A of the Income-tax Act and Section 18(2A)/18B of the Wealth-tax Act which are to be satisfied before any waiver/reduction as envisaged in these provisions could be granted by the Commissioner. While the Commissioner should examine the applicability of section, 273A of the Income-tax Act/section 18B of the Wealth-tax Act in the light of these clarifications, once the stipulated conditions are satisfied the discretion of the Commissioner is not fettered by any advice/directions from any authority. The Commissioner being a quasi-judicial authority for the purposes of these sections should apply his mind to the facts of the case and pass an order on merits. In this connection, reference may be made to the Board's Instruction No. 1377/ F. No. 281/40/79. IT(INV.) dated January 27, 1981, in which the Board has brought to the notice of the Commissioners its earlier instructions and the decisions of the High Courts, and has advised the Commissioners that as the orders under Section 271(4A)/273A of the Income-tax Act and Section 18(2A)/18B of the Wealth-tax Act are quasi-judicial orders, they should be supported by reasons with reference to the facts of the case."
(3.) IN support of his arguments, Shri Mehta submitted that Section 273A of the Act has been carefully worded by the Legislature and the words used are "voluntarily and in good faith made full and true disclosure of his income" and these words have been interpreted several times by various courts. Learned counsel placed reliance on Seetha Mahalakshmi Rice and Groundnut Oil Mill Contractors Co. v. CIT [1981] 127 ITR 579 (AP), Jakhodia Brothers v. CIT [1978] 115 ITR 61 (All), Harjas Rai v. CIT [1982] 138 ITR 77 (P & H), Dhan Raj v. Commissioner of INcome-tax [1983] 140 ITR 652 (All) ; S. R. Jadav Desai v. WTO [1980] 121 ITR 531 (Kar), Radhey Shyam Chandrika Prasad v. CIT [1983] 139 ITR 274 (All), Shiv Narain Dhabhai v. CWT [1980] 121 ITR 224 (Raj), Rasoolji Buxji v. CIT [1988] 174 ITR 328 (Raj), A. C. Gopinatha Menon v. CIT [1988] 173 ITR 404 (Ker) and Kundan Lal Behari Lal v. CWT [1975] 98 ITR 359 (All). Learned counsel also submitted that, in view of the fact that on February 17, 1988, itself, notice in proceedings under Section 147(a) of the Act had been issued which will not be meant to have been that the petitioners had the knowledge because there is distinction between notice issued and notice served. What is required in law is the service of the notices and not the mere issuance of the notice. Learned counsel relied on CWT v. Kundan Lal Behari Lal [1975] 99 ITR 581 (SC). Mr. V. K. Singhal appearing for the Revenue submitted that the facts and circumstances of the case were such which disclosed that it was a racket which was unearthed and the Department detected several cases where the Department has been defrauded and for this reason facts required to be looked into from a different angle. It is submitted that when the documents were seized in the search, they pertained to the gifts made from Gangtok. On the next date of the search, the statement of Nathulal was recorded which was self-contradictory. When Ramjanki Devi was asked: about the gifts, she refused to have received the gift. Mahaveer Kumar had avoided giving a statement before the Income-tax Officer. It was found during investigation that persons in Gangtok were showing fictitious gifts made to Indian citizens. To illustrate, it was submitted that drafts were purchased in the names of persons who were non-existent such as one was in the name of one Mahendra Kumar alleged to have been written in the handwriting of Mahaveer Kumar. These drafts purchased in Jaipur "were sent to Gangtok. The Income-tax Officer found foul play after recording the reasons as contemplated by Section 148 of the Income-tax Act and initiated proceedings. The Department's case is that it was only after this when the petitioners came to know that they are in hot spot as the racket is unearthed, that they hurriedly filed revised returns admitting the said amount as income from "undisclosed sources". It is submitted that, in pursuance of the notices, the assessment orders have already been passed on March 27, 1989, and the petitioners' appeals are pending against those assessment orders. In the assessment order, it is submitted that the assessing authority has given a categorical finding that the returns cannot be considered to be valid revised returns under Section 139(5) of the Act and it was not a voluntary action of the assessees and they were guilty of designed concealments. The submission of learned counsel is that the assessees had not declared correct particulars in the original returns filed and had also not made honest statements under Section 132(4) of the Act and/or proceedings under Section 132(5) when the donors were required to be produced. ;