TaxTMI 
TaxTMI 
2009 (9) TMI 559
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplied to the petitioners. Between September 13, 1986, and December 18, 1986, various steps were taken. On December 18, 1986 order was passed under section 132(5). On January 14, 1987, an application was moved under section 132(11), but it appears no action was taken due to further developments. An application under section 273A was made on January 27, 1987. On January 27, 1987 the petitioners in this petition disclosed an additional income of Rs. 2.29 crores. On March 3, 1987, the group filed revised returns. On March 31, 1987, according to the petitioners, the group paid additional tax of Rs. 1,06,00,000 on additional income disclosed in the revised returns for the assessment years 1970-71 to 1987-88. The assessments pursuant to the revised returns were finalized by the Department by accepting the disclosed income. 3. The petitioners have approached this court contending that petitioners Nos. 1 to 9 are nationals and citizens of India. Petitioner No. 10 is the partnership firm. Petitioners Nos. 1 to 4 are assessees on their own. Petitioners Nos. 5 to 9 represent their respective HUFs. The petitioners are required to be assessed to tax under the provisions of the Income-tax Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as the same in the original return of the income itself. However, certain penalty and interests were levied. 7. The total amount under different provisions totalled to Rs. 1.44 crores. Out of this, an amount of Rs. 49 lakhs. had already been paid and the balance amount of penalty remaining unpaid was Rs. 95 lakhs. The interest and penalty imposed was as under : Rs. Interest under sections 139(8), 215/217 13 lakhs Penalty under section 273 4lakhs Penalty under section 271(1)(c) 1.27 crores Total 1.44 crores 8. We may now reproduce the relevant provisions of section 273A as it then stood: "273A-Power to reduce or waive penalty, etc., in certain cases.- (1) Notwithstanding anything contained in this Act, the Commissioner may, in his discretion, whether on his own motion or otherwise,- (i) reduce or waive the amount of penalty imposed or imposable on a person under clause (i) of sub-section (1) of section 271 for failure, without reasonable cause, to furnish the return of total income which he was required to furnish under sub-section (1) of section 139 ; or (ii) reduce or waive the amount of penalty imposed or imposable on a perso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a case falling under clause (c) of sub-section (1) of section 271, the amount of income in respect of which the penalty is imposed or imposable for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the aggregate amount of such income for those years, exceeds a sum of five hundred thousand rupees, no order reducing or waiving the penalty under sub-section (1) shall be made by the Commissioner except with the previous approval of the Board. (3) Where an order has been made under sub-section (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section in relation to any other assessment year at any time after the making of such order : (4) Without prejudice to the powers conferred on him by any other provision of this Act, the Commissioner may, on an application made in this behalf by an assessee, and after recording his reasons for so doing, reduce or waive the amount of any penalty payable by the assessee under this Act, or stay or compound any proceeding for the recovery of any such amount, if he is satisfied that- (i) to do otherwise would ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ner was pleased to hold that the petitioners had not satisfied the requirement that the disclosure was "voluntary". The petitioner had offered, complied with all the other conditions inasmuch as they had co- operated in the investigation, relating to assessment of income-tax. They had also either paid or made satisfactory arrangements for payment of taxes or interests. The assessments were also made on the basis of the disclosures made by the assessees. As the Commissioner recorded a finding that the disclosure was not made voluntarily, he rejected the application under section 273A(1)(i) which provides for waiver of penalty and interest. 12. Similarly in respect of the application under section 273A(4) the Com- missioner recorded a finding that the petitioners herein had not made out a case of genuine hardship and accordingly dismissed the said application. 13. At the hearing of this application, on behalf of the petitioners it is submitted by their learned counsel that respondent No. 1 misdirected himself in law in relying on the judgment in the case of Tribhovandas Bhimji Zaveri v. Union of India [1993] 204 ITR 368 (SC). It is submitted that the judgment in the case of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....osure of income in good faith prior to detection by the Assessing Officer ; (C) the assessee must have co-operated in the conduct of the assessment proceedings ; and (d) the assessee must have paid or made satisfactory arrangements for payment of tax or interest payable in consequence of the order passed under the Act with respect to the relevant assessment year. 15. In so far as section 273A(4) is concerned, the predicates required to be satisfied are : (1) On the facts of the case there would be genuine hardship to the assessee if the relief is not granted. (2) The assessee has co-operated in the inquiry relating to the assessment or in proceedings for recovery of any amount due from him. 16. Considering these provisions, let us first consider the judgments relied upon on behalf of the petitioners. The learned counsel has placed reliance in the judgment in the case of a Full Bench of the Allahabad High Court in the case of Bhairav Lal Verma v. Union of India [1998] 230 ITR 855. The court there was considering the case under the provisions of section 273A(1)(i) of the Income-tax Act. The learned Full Bench after considering various judgments including the case of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the existence of the ingredients of the provisions and that the Commissioner cannot take into consideration the facts extraneous to the provisions or factors not germane to the decision making. 19. Reliance was also placed on the judgment of the learned single judge of this court in Rohitkumar and Co. v. F. J. Bahadur, CIT [1991] 190 ITR 93. The issue before the learned single judge was a case of seizure made on April 30, 1981. Six days thereafter the petitioner brought to the notice of the Deputy Director of Inspection (Intelligence) as well as the Commissioner that that amount belonged to them and should be treated as its income for the assessment year 1981-82. The previous year for the relevant assessment year had not ended. On these facts the learned court came to the conclusion that there is no question of concealment at the hands of the assessee far less a case of detection and the returns filed cannot but be held to be voluntary and in good faith. 20. Reliance was also placed in the case of a Division Bench of this court in Dr. Mrs. Sudha Kankariya v. CIT [2004] 270 ITR 296 (Bom). On the facts there, there was no search. The assessee husband on his own free will approa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hen the disclosure is made subsequently to the seizure of incriminating material, the disclosure is made because of adverse consequences and such disclosure is not voluntary. On the facts of our case, the disclosure was made pursuant to search and seizure of incriminating material which includes the "Boston diary". The issue whether the authorities could have deciphered the documents on their own without the petitioner co-operating, in our opinion, is immaterial. There is nothing on record to state that in due course exercising their powers under the Act the authorities could not have been deciphered the seized material. The view taken by the court is in conformity with the view taken in Tribhuvandas Zaveri [1993] 204 ITR 368. 24. We may then refer to two judgments under the provisions of section 273A(4) of the Act in Garden Silk Weaving Factory v. CIT [1995] 213 ITR 10 (Guj). The Gujarat High Court was considering whether on the facts of the case, the Commissioner had considered the issue of genuine hardship. The court found that the issue of hardship had not been considered and accordingly remanded the matter back to the Commissioner. 25. In B. M. Malani v. CIT [2008] 306 I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are seized then any disclosure subsequently made would not be voluntary. The omitted Explanation only had sought to bring or to make it voluntary for a period which otherwise was not voluntary. The omission would only mean that this deemed voluntariness is now no longer legally available. 29. Considering this aspect of the matter and considering the judgment in Tribhuvandas [1993] 204 ITR 368 (SC) and the judgment in the case of a Division Bench in Natwarlal [1993] 115 CTR 518 (Bom), it would be clear that any disclosure made subsequent to seizure of incriminating material, such disclosure would not be voluntary. The Full Bench judgment of the Allahabad High Court in Mohd. [1998] 230 ITR 855, also makes that position clear. It is clarified there that pursuant to the search incriminating material is found and disclosure made, the disclosure is liable to be treated as not voluntary but if no incriminating material is found and still disclosure is made, then it would be treated as voluntary. 30. On that touch stone let us consider the facts and arguments advanced on behalf of the petitioner. The only ground that is contended to say that it was voluntary was that without their as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vailable price but the petitioners in the said argument itself have thereafter stated as under : "This evidently shows the spirit of co-operation and desire to comply with the terms of section 273A(4)." 32. It was not on the ground of financial hardship. Documentary evidence by way of balance-sheet or any other material was not produced to show that the petitioners were not in a position to pay the penalty and if they had paid penalty, there would be adverse consequence on the petitioners. It was for the petitioners to produce that material to discharge the burden and for the respondents to consider the same. No such material was placed by the petitioner before respondent No. 1. In the absence of placing material, the petitioners cannot be heard to complain that there was non-compliance by the respondent Commissioner in considering the case under section 273A(4) nor has any material been placed before this court to show hardship that would be occasioned to the petitioners assuming it could be placed. The learned Commissioner has recorded a finding that the petitioner did not produce any evidence to show that he did not have adequate financial resources. That by itself must ha....