Reasoned partial tax waiver required when discretionary relief is limited; unreasoned reduction of penalty and interest cannot stand.

Discretionary waiver of penalty and interest under section 273A of the Income-tax Act and section 18B of the Wealth-tax Act must be supported by recorded reasons when relief is granted only in part. Where the assessee had filed voluntary returns before notice and the statutory conditions for relief were accepted, the Commissioner could not restrict the waiver to 50 per cent without explaining that limitation. An unreasoned partial grant is unsustainable and liable to be set aside for reconsideration on merits.

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Issues: Whether the Commissioner's order restricting waiver of penalty and interest to 50 per cent under section 273A of the Income-tax Act, 1961 and section 18B of the Wealth-tax Act, 1957 was sustainable in the absence of recorded reasons.

Analysis: The assessee had filed the returns before the issuance of notices under sections 139(2) and 148 of the Income-tax Act, 1961 and the corresponding notices under the Wealth-tax Act, 1957, and the assessments were completed on the basis of those voluntary returns. The Commissioner accepted the statutory conditions for relief but granted only partial reduction without recording any reason for limiting the waiver to 50 per cent. In the absence of reasons, the order could not stand, and the matter required reconsideration on merits.

Conclusion: The restriction of relief to 50 per cent was unsustainable; the impugned order was quashed and the matter was remitted for fresh decision.

Ratio Decidendi: Where discretionary relief under the taxing statutes is granted only in part, the authority must record reasons for limiting the relief; an unreasoned partial grant is liable to be set aside and reconsidered.

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