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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 02.01.2014
+ W.P.(C) 3129/1992
ASHA PAL GULATI ..... Petitioner
Through: Mr. Satyen Sethi with Mr. Arta
Trana Panda, Advocates.
versus
CENTRAL BOARD OF DIRECT TAXES ..... Respondents
Through: Mr. Rohit Madan, Sr. Standing Counsel with Mr. Ruchir Bhatia, Jr. Standing Counsel.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.V. EASWAR MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
1. The petitioner challenges an order of the Commissioner of Income Tax, made on 17.08.1992. The impugned order was made on an application preferred under Section 273A of the Income Tax Act, 1963 (hereinafter referred to as the "Act") seeking waiver of penalty and interest for the assessment years 1980-81 to 1988-89. Apparently, the application stands disposed off vide order dated 17.08.1992 and upon being challenged this Court set aside the impugned order and remitted the matter for reconsideration.
W.P.(C) No.3129/1992 Page 1 of 8
2. Briefly, the facts are that the petitioner/ income tax assessee had for the concerned years filed late returns, in respect of the sole head of income enjoyed by her i.e. income from house property. A tabular statement disclosing the income on which the returns were to be filed and the dates on which they were actually filed has been disclosed in the revenue's counter affidavit and the same is reproduced below: -
A. Year Due date Date of filing Delay in months
1980-81 30.06.1980 28.08.1980 2 months (about)
1981-82 30.06.1981 12.03.1984 32 months
1982-83 30.06.1982 12.06.1984 23 months
1983-84 30.06.1983 12.06.1984 11 months
1984-85 30.06.1984 28.06.1984 -
1985-86 30.06.1985 30.07.1985 1 month
1986-87 30.06.1986 07.03.1988 20 months
1987-88 30.06.1987 06.12.1988 17 months
1988-89 30.06.1988 10.08.1989 13 months
3. The Commissioner by the impugned order was of the opinion that having regard to Section 273A(3), the assessee was a persistent defaulter and, therefore, could not be granted the benefit of waiver sought for. The impugned order also proceeded on the footing that the assessee had W.P.(C) No.3129/1992 Page 2 of 8 neither paid nor made satisfactory arrangement for the payment of tax. Lastly, the Commissioner was of the opinion that having regard to the conditions spelt out in Section 273A(4), the present petitioner could not be afforded relief.
4. The petitioner argues and her counsel submits in this regard that the narrow interpretation placed by the Commissioner upon the concerned section i.e. Section 273A robs it of any meaningful effect. It is contended in the facts of this case that inclusion of penalty under Section 140A, under Section 271(1A) as well as the inclusion of interest under Section 220 was on an erroneous basis. It was submitted that all that the Commissioner had to see at the relevant time of consideration of the application was whether tax was paid or satisfactory arrangement for its payment had been made. Learned counsel in this regard highlighted the decision of the Bombay High Court reported as Krishnan Gopi v. Bhaskaran, (1986) 161 ITR 631 (Bom.). It was next argued that the Commission's approach was erroneous in denying the relief inasmuch as a collective order under Section 273A was contemplated. It was submitted that this view is supported by several decisions including the judgments reported as Surendra Prakash v. Commissioner of Wealth Tax W.P.(C) No.3129/1992 Page 3 of 8 (1991) 187 ITR 456; Mohinder Singh v. CIT, (2012) 211 Taxman 196 (P&H); Sanjana Films v. CIT, (2001) 250 ITR 304 (AP) and Smt. Prakashkumari v. CIT, (2010) 326 ITR 82 (Bom.).
5. The revenue's counsel Mr. Madan relied upon the impugned order and argued that the Commissioner was right in denying the discretion sought for by the assessee. Counsel submitted that the interpretation of Section 273A(3) could not be faulted and that the court should be slow in exercising its discretion under Article 226 of the Constitution of India unless the approach or interpretation of the statutory authorities is patently illegal. Counsel emphasised that despite the matter being heard twice, the petitioner was unable to show as to when he has made satisfactory arrangement for payment of tax and interest.
6. As is evident from the impugned order, the Commissioner had to contend with an application under Section 273A of the Act and the language of the said provision opens with a non obstante clause. Applying first principles, it is evident that when such discretion is allowed it has to be generally construed in the broadest terms without placing a narrow interpretation. So viewed, it is evident that the basic conditions which are to be considered by the Commissioner are spelt out W.P.(C) No.3129/1992 Page 4 of 8 in clauses (a), (b) and (c) read with Explanation to Section 273A(1) of the Act. On this, the Commissioner in the present case held that the petitioner had been unable to show that a satisfactory arrangement had been made for payment of tax and interest for all the years except for one year i.e. 1981. This fact has been disputed by the petitioner. He submits that if payments deposited under various heads and even under Section 220 are not taken into account, the final picture would be entirely different. It is submitted that the question whether satisfactory arrangements were then made or not would arise only in respect of 4 years i.e. assessment years 1985-86 to 1988-89.
7. The question of the writ petitioner or any assessee having to pay the amounts of penalty and interest in the first instance in order to qualify for relief under Section 273A cannot arise. If such a construction were to be given, the object of conferring discretion itself would be perhaps defeated. Therefore, once the statutory conditions laid down in the Explanation stood satisfied and the department accepted the returned income, (as in this case) the question of not making full and true disclosure could not have arisen at all. So viewed, the question of imposing any penalty under Section 271(1)(e) of the Act, in the opinion W.P.(C) No.3129/1992 Page 5 of 8 of the Court, cannot arise. The impugned order to this extent cannot be sustained, because it presupposes that penalty amounts and total dues under Section 220 had to be paid or arranged.
8. The second issue which this Court has to decide is as to the meaning and effect of the term "satisfactory arrangement for payment" of interest and tax. Here this Court is of the opinion that the view taken by the Bombay High Court in Krishnan Gopi (supra) is apt. The question of considering whether the assessee had paid or had made satisfactory arrangement for payment of the amount of tax and interest can be said to arise only upon determination of such amount by the revenue and the concerned assessing authority. The judgment in Krishnan Gopi (supra) even appears to suggest that the onus in such cases is in the first instance upon the revenue if the issue arises before the Court. This view also appears to have been taken in other judgments i.e. Smt. Prakashkumari (supra).
9. The Court, on a construction of Section 273A(3) of the Act, observes that the view adopted by the Commissioner was erroneous and in this regard it is held that the views expressed by various High Courts viz. Allahabad, Punjab and Haryana, Andhra Pradesh and Bombay, are W.P.(C) No.3129/1992 Page 6 of 8 apt and this Court adopts the same. The language of the provision i.e. Section 273A (3) of the Act does not talk of one year but of one instance. In this case clearly the view of the Commissioner proceeded on the assumption that the relief could be given one time for one year. That view is held to be incorrect in the said four decisions of the various High Courts, which this Court, with respect, adopts.
10. In view of the above conclusion, this Court holds that the writ petition has to succeed. It is accordingly held that the inclusion of any amount over and above the tax and interest payable, such as penalties determined under various provisions as well as the assumption that such amount is collectively payable is without the authority of law. The assessee has been able to demonstrate that payment of tax and interest had been made in respect of the years 1981-82 to 1984-85. The impugned order is set aside in totality in respect of these assessment years. The impugned order is accordingly set aside. The matter is, therefore, remitted to the concerned Commissioner of Income Tax, who shall after taking into account the payments made at various points of time determine the only issue i.e. whether the assessee/ writ petitioner had made satisfactory arrangements for the payment of tax (i.e. without W.P.(C) No.3129/1992 Page 7 of 8 including any penalty amounts and dues under Section 220) for the relevant years 1985-86 to 1988-89.
11. The writ petition is allowed in the above terms. There is no order as to costs.
S. RAVINDRA BHAT (JUDGE) R.V. EASWAR (JUDGE) JANUARY 02, 2014 hs W.P.(C) No.3129/1992 Page 8 of 8