Asha Pal Gulati vs Central Board Of Direct Taxes
2014 Latest Caselaw 5 Del

$~R-2
*     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.

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

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

(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

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

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

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

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