M.R.Calla, J. - (1.) THESE two writ petitions have been filed by the assessee against the common order dated January 14, 1981, passed by the Commissioner of Income-tax, Jaipur, with regard to the assessment years 1975-76 and 1976-77, deciding the objections filed by the petitioner-association under Section 273A of the Income-tax Act, 1961 (in short, "the Act"), seeking waiver/reduction of interest charged under Sections 139(8) and 217 of the Act and the penalties leviable under Sections 271(1)(a) and 273 of the Act S. B. Civil Writ Petition No. 1629 of 1981 relates to the year 1975-76 and the other writ petition-S. B. C. W. P. No. 1631 of 1981-relates to the year 1976-77.
(2.) THE petitioner herein is a truck owners' association at Kota. It is assessed to income-tax in the status of an association of persons. It maintains books of account and documents. It is the petitioner's own case that it could not file returns for the years 1975-76 and 1976-77 in time but the same were voluntarily filed by it for both the years, prior to the issuance of the notice under Sub-section (2) of Section 139 of the Act. It is further the case of the petitioner that for both the years, a full and true disclosure of the income was made and the petitioner had also paid tax on the income so disclosed. The Income-tax Officer, Ward 'C', Kota, who completed the assessment on January 17, 1980, issued a notice under Sections 274/271(1)(a) and 273 of the Act, to the petitioner for both the years. The petitioner filed objections before the respondent under Section 273A of the Act, seeking waiver of interest charged under Sections 139(8) and 217 of the Act and penalties leviable under Sections 271(1)(a) and 273 of the Act. Separate petitions to this effect were filed by the petitioner for the years 1975-76 and 1976-77, whereupon the petitions filed by the petitioner for both the years were decided by the common order dated January 14, 1981, whereby interest and penalties were reduced for both the years to the extent mentioned and indicated in the impugned order, against the respective years. It is against this common order passed for the years 1975-76 and 1976-77 that these two separate writ petitions have been filed. The grievance of the petitioner is that the amount of interest and penalties should have been waived in full. Shri N.M. Ranka, learned counsel for the petitioner, has raised the following contentions : (i) Once it had been found by the Commissioner of Income-tax that all the conditions mentioned in Section 273A of the Act had been satisfied, then the amount of interest and penalties should have been waived in full. (ii) The respondent, Commissioner of Income-tax, has given no reasons for not allowing the full waiver of interest and penalties nor has he given reasons as to why the interest and penalties had only been reduced. No return was filed as the same was not considered necessary because only questions of law are involved and there is no dispute about the facts. However, it was submitted on behalf of the respondent that the waiver of interest or penalties, whether full or in part, cannot be claimed as a matter of right and it is the discretion of the authority charged with the power to consider the question of waiver as to whether the waiver is to be allowed in part or in full. In the facts of this case, the discretion has been judiciously exercised and it cannot be said that the Commissioner of Income-tax has acted arbitrarily in not granting full waiver and the impugned order shows that reasons have been given. It was also submitted that even if the court finds that two views are possible, the one which is taken by the authority should not be interfered with. I have considered the submissions made on behalf of both the sides and I proceed to deal with the contentions raised before me ad seriatim one by one. "(i) Once it had been found by the Commissioner of Income-tax that all the conditions mentioned in Section 273A of the Act had been satisfied, then the amount of interest and penalties should have been waived in full."
(3.) A look at the impugned order dated January 14, 1981, passed by the respondent, Commissioner of Income-tax, would show that the Income-tax Officer had himself reported that the returns for both the years were filed voluntarily and that all the tax had been paid and that the assessee had co-operated with the Department in the completion of the assessments. It is also reported that it was the first petition filed by the assessee under Section 273A and no notice under Section 271(1)(c) was issued by the Income-tax Officer and it was held by the Commissioner of Income-tax that the disclosure made was full and complete. The assessee had filed returns of his income on March 31, 1979, and March 21, 1979, for the assessment years 1975-76 and 1976-77, respectively. Thus, there was a delay of about 45 and 33 months in the filing of returns for the two years, respectively. Disallowance of Rs. 3,600 in each of the two years had also been made by the Income-tax Officer out of the salary payments treating the same to be not incidental to the business of the assessee and thus, interest and penalties were reduced as mentioned and indicated against each of the two years in the impugned order dated January 14, 1981, passed by the Commissioner of Income-tax, Jaipur. It would thus appear that in the instant case, the requirement of Section 273A of the Act, i.e., the filing of the return prior to the detection by the Assessing Officer and prior to the issue of the notice under Section 271(1)(c) of the Act were found to be satisfied. Shri Ranka has argued that once the requirements under Section 273A are fully satisfied, the waiver of interest and penalties must be full, even if the power is to be exercised as a discretion to reduce or waive. Shri Ranka has cited Shiv Narain Dhabhai v. CWT [1980] 121 ITR 224 (Raj). In this decision, the Division Bench has held with reference to Section 18B of the Wealth-tax Act, 1957, that though the discretion has been vested in the Commissioner to reduce or waive the amount of penalty imposed or imposable, yet the discretion must be exercised judiciously and not arbitrarily and if the conditions laid down by Section 18B are satisfied, the Commissioner cannot refuse to reduce or waive the amount of penalty imposable. Thus, this judgment only leads to the conclusion that the discretion must be exercised judiciously and not arbitrarily but it does not cover the argument of Shri Ranka that once the conditions laid down in the section are satisfied, the Commissioner should waive the amount of interest and penalty. Shri Ranka has also cited Seetha Mahalakshmi Rice and Groundnut Oil Mill Contractors Co. v. CIT [19811 127 ITR 579 (AP), a Division Bench decision of the Andhra Pradesh High Court. In this judgment also, the same principle has been laid down that the discretion must be exercised judiciously, fairly and reasonably, objectively and not arbitrarily or capriciously and that as there were no proceedings taken under Section 271(1)(c), the assessee must be deemed to have made a true and full disclosure of his income even though an addition was made by the Income-tax Officer in the income returned by the assessee. Indra and Co. v. CIT [1980] 122 ITR 510 (Raj) was also cited by Shri Ranka wherein it has been held that in introducing Section 273A, the object of the Legislature was to give substantial concession to the assessee and, therefore, this section must be construed liberally in favour of the subject. ;