High Court quashes Commissioner's order, directs review under Income-tax Act.

The High Court allowed the special civil application, quashing the Commissioner's order and directing a review of the application under section 273A of the Income-tax Act. The court emphasized that the Commissioner must assess the fulfillment of conditions under section 273A and determine the relief against penalties, highlighting that refusal based on a pending appeal was erroneous. The court did not address other contentions raised by the respondent's advocate. No costs were awarded due to special circumstances.

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Issues: Challenge to order of Commissioner of Income-tax under section 273A of the Income-tax Act.

Detailed Analysis:
The petitioner, an income-tax assessee, challenged the order of the Commissioner of Income-tax, Gujarat III, regarding the waiver of penalties under section 273A of the Income-tax Act, 1961. Penalties were imposed for assessment years 1969-70, 1970-71, and 1971-72. The petitioner contended that all conditions under section 273A were fulfilled and sought relief. However, the Commissioner rejected the application citing the filing of appeals against the penalties imposed by the Income-tax Officer. The Commissioner's order stated that since the assessee had appealed to the Appellate Assistant Commissioner, the application for penalty waiver became redundant and not feasible.

Section 273A of the Income-tax Act empowers the Commissioner to reduce or waive penalties under specific clauses if certain conditions are met. The section does not preclude invoking its provisions if an appeal has been preferred against the penalty order. Unlike other sections that explicitly bar revision or appeal in certain circumstances, section 273A focuses on mitigating circumstances for penalty reduction or waiver. The distinction between challenging a penalty in an appeal and seeking relief under section 273A is crucial. The Commissioner erred in refusing to exercise jurisdiction under section 273A based on the pending appeal before the Appellate Assistant Commissioner. The grounds given by the Commissioner were extraneous to the section and not legally tenable.

The court allowed the special civil application, quashing the Commissioner's order, and directed the Commissioner to review the application under section 273A on its merits. The court emphasized that the Commissioner must assess whether the conditions specified in section 273A are fulfilled and determine the extent of relief against the penalties. The judgment highlighted that the Commissioner's refusal based on the pending appeal was erroneous. The court did not address additional contentions raised by the respondent's advocate regarding the scheme and operation of section 273A. No costs were awarded due to the special circumstances of the case.

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