2013 (10) TMI 1226 - HC - Income Tax

Court grants certiorari, emphasizes factors for waiver applications under Income Tax Act

Dr. Santosh Rani Batra Versus Commissioner of Income-tax

The court granted the petitioner's writ of certiorari, quashing the order dismissing the application for waiver of penalty and interest under Section ... Power to reduce or waive penalty under section 273A - power of CIT to reduce penalty where income was surrendered voluntarily – Held that:- Perusal of Section 273-A of the Act, reveals that the case of the petitioner falls under Section 273-A(1)(ii)(a)(b) of the Act and, therefore, required the Commissioner of Income Tax to consider if the petitioner disclosed income prior to issuance of notice under Section 139(2) of the Act voluntarily and made full disclosure of her income in good faith etc. Section 273-A of the Act commences with the words 'notwithstanding anything contained in this Act' thereby postulating that the Commissioner shall while considering an application under Section 273-A of the Act, confine his consideration to factors referred to in Section 273-A of the Act and to no other factor. Thus, if the Commissioner while exercising power under Section 273-A of the Act places sole reliance upon grounds that led to imposition of penalty and interest, such an exercise of power, would in essence, be contrary to power conferred by Section 273-A of the Act. While exercising power under Section 273-A of the Act the Commissioner is required to confine his consideration to factors set out in the sub-sections of Section 273-A of the Act and to no other factor. Issues:1. Application for waiver of penalty and interest under Section 273-A of the Income Tax Act, 1961.2. Consideration of factors under Section 273-A for voluntary disclosure of income.3. Commissioner's discretion and consideration of relevant factors under Section 273-A.4. Dismissal of application for waiver based on survey proceedings against the petitioner's husband.5. Interpretation of Section 273-A and the Commissioner's jurisdiction.Analysis:1. The petitioner sought a writ of certiorari to quash an order dismissing the application for waiver of penalty and interest under Section 273-A of the Income Tax Act, 1961. The petitioner voluntarily filed income tax returns for specific years without notice under Sections 139 or 148, fulfilling conditions under Section 273-A. The application was rejected based on survey proceedings against the petitioner's husband, leading to a dispute on the Commissioner's power under Section 273-A.2. The key contention revolved around whether the petitioner's disclosure of income was voluntary before the issuance of any notice under Section 139(2) of the Act. Section 273-A mandates the Commissioner to consider factors like full and true disclosure of income in good faith. The Commissioner's discretion under Section 273-A is limited to the specified factors, and reliance solely on penalty grounds for rejection would be contrary to the Act's provisions.3. The Commissioner's decision was challenged as overlooking the voluntary nature of the petitioner's tax returns, supported by a report confirming voluntary filing. The absence of notices under relevant sections before filing returns was crucial. The Commissioner's failure to consider these aspects led to the order's setting aside, emphasizing the importance of adhering to Section 273-A requirements.4. The dismissal of the application based on survey proceedings against the petitioner's husband was deemed unjust as no such proceedings were conducted against the petitioner. The absence of specific notices or orders served on the petitioner before filing returns highlighted the Commissioner's oversight in assessing the voluntary nature of the disclosure.5. The judgment clarified the interpretation of Section 273-A, emphasizing the Commissioner's obligation to confine considerations to factors outlined in the Act. The decision to remit the matter back to the Commissioner for a fresh review underscored the significance of applying the statutory provisions accurately and ensuring due process in assessing waiver applications under Section 273-A.