Reasoned exercise of waiver discretion under Wealth-tax law required; partial waiver was quashed for absence of reasons.

An order under section 18B of the Wealth-tax Act granting only partial waiver of interest and penalty was unsustainable where the authority had already recorded satisfaction that the statutory conditions for waiver were met but gave no reasons for refusing full relief. When discretionary power to reduce or waive interest and penalty is exercised on accepted statutory factors, the decision must disclose the basis for limiting the waiver. The absence of sound or convincing reasons for restricting relief to 50 per cent rendered the order vulnerable for want of a fair and transparent exercise of power, and the partial waiver order was quashed.

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Issues: Whether an order under section 18B of the Wealth-tax Act, 1957 granting only partial waiver of interest and penalty could be sustained when the authority had recorded satisfaction that the statutory conditions for waiver were met but gave no reasons for refusing full waiver.

Analysis: The authority stated that the conditions under section 18B were satisfied and that the assessee deserved relief, yet it curtailed the relief to 50 per cent without disclosing any sound or convincing reason for declining complete waiver. Where statutory discretion to reduce or waive interest and penalty is exercised after recording satisfaction on the relevant factors, the order must disclose the basis for limiting the relief. Absence of reasons in such a situation renders the decision vulnerable as it offends the requirement of fair and transparent exercise of power.

Conclusion: The partial waiver order was invalid for want of reasons and was quashed; the petition succeeded.

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