Voluntary disclosure before Revenue detection can support penalty waiver, but not necessarily interest relief under section 273A(1).

A prior voluntary and good-faith disclosure of income, made by filing a revised return before any Revenue detection, can justify waiver of penalty under section 273A(1) of the Income-tax Act, 1961. On those facts, the Bombay HC held that the assessee qualified for penalty relief and set aside the refusal of such waiver. However, the Court sustained the refusal to waive interest under the same provision on the material before it. The petition therefore succeeded only in part, with penalty relief granted and interest relief left undisturbed.

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Issues: (i) Whether the assessee was entitled to waiver of penalty under section 273A(1) of the Income-tax Act, 1961 on the facts disclosed before detection of the income. (ii) Whether the assessee was entitled to waiver of interest under section 273A(1) of the Income-tax Act, 1961.

Issue (i): Whether the assessee was entitled to waiver of penalty under section 273A(1) of the Income-tax Act, 1961 on the facts disclosed before detection of the income.

Analysis: The assessee had filed a revised return and furnished particulars of the income voluntarily, before any detection by the Revenue, explaining inability to make the contemplated investment under section 54F. On these facts, the disclosure was treated as voluntary and made in good faith, bringing the case within the scope of waiver of penalty under section 273A(1).

Conclusion: The assessee was entitled to waiver of penalty, and the order refusing penalty relief was set aside.

Issue (ii): Whether the assessee was entitled to waiver of interest under section 273A(1) of the Income-tax Act, 1961.

Analysis: The Commissioner's refusal to waive interest was sustained on the material before the Court.

Conclusion: The assessee was not entitled to waiver of interest, and the refusal of interest relief was upheld.

Final Conclusion: The petition succeeded only to the extent of penalty relief, with the order modified accordingly and interest relief left undisturbed.

Ratio Decidendi: Where an assessee makes a prior, voluntary and good-faith disclosure of income before detection by the Revenue, penalty relief under section 273A(1) is warranted even if interest relief is not justified on the same facts.

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