1. Heard counsel for the parties.
2. The petitioner seeks quashing of impugned order dated September 17, 1991, passed by the Commissioner-respondent No. 1 under Sections 273A(1) and 273A(4) of the Income-tax Act, 1961 (briefly, 'the Act'). The facts, as briefly stated, are that during the course of assessment proceedings relating to the assessment year 1985-86, a notice was issued to the assessee under Section 143(2) of the Act on November 26, 1987, calling upon it to explain liabilities worth Rs. 9,78,835. After issue of the notice, the assessee filed a revised return for the assessment year 1984-85 on January 18, 1988, surrendering liabilities worth Rs. 8,66,325. Liabilities of Rs. 9,78,835 appeared in the following names :
Sl. No.
Name of party
Amount (Rs.)
1.
Raj Kumar Coal Depot
2,42,273
2.
Chandan Coal Depot
1,82,487
3.
Shiv Coal Supplier
1,72,902
4.
Shailendra Coal Agency
1,25,258
5.
Bhawani Coal Co.
26,400
6.
Singh Coal Co.
2,29,515
9,78,835
3. The position of the accounts of the aforesaid parties in the assessee's books was reflected as under :
Assessmentyear 1984-85
Assessmentyear 1985-86
Purchases
Payment
Balanceas on March 31, 1985
Purchases
Payment
Balanceas on March 31, 1986
(Rs.)
(Rs.)
(Rs.)
(Rs.)
1.
RajKumar Coal Depot
2,57,273
Nil
2,57,273
Nil
15,000
2,42,273
2.
ChandanCoal Depot
1,97,487
Nil
1,97,487
Nil
15,000
1,82,487
3.
ShivCoal Supplier
1,87,906
Nil
1,87,906
Nil
15,000
1.72,902
4.
ShailendraCoal Agency
1,40,258
Nil
1,40,258
Nil
15,000
1,25,258
5.
BhawaniCoal Co.
81,400
Nil
81,400
Nil
55,000
26,400
6.
SinghCoal Co.
Nil
Nil
Nil
2,42,016
12,500
2,29,515
4. The Assessing Officer in the assessment order relevant to the assessment year 1985-86 observed that the payments to the above parties were shown in cash instalments of Rs. 2,500 in the subsequent years but the purchase bills issued by the parties were cash bills. The Assessing Officer further observed :
'. . . This lead me to suspect the genuineness of liabilities shown in the names of the above parties. The assessee was, therefore, required, vide order sheet entry dated November 26, 1987, to prove the purchases of coal from the above parties. The assessee was also required to file confirmatory letters from them regarding liabilities shown in their names in the balance-sheet.'
5. Penalty proceedings under Section 271(1)(c) of the Act were initiated for having concealed the particulars of income and for having furnished inaccurate particulars of the same by the assessing authority. In the penalty order, the Assistant Commissioner of Income-tax, i.e., the Assessing Officer observed as under :
'. . . Therefore, vide order sheet entry dated November 26, 1987, the assessee was required to prove the genuineness of the above purchases and to file confirmatory letters from the parties. Thus, when the assessee was cornered on this, it surrendered the liabilities of Rs. 8,64,325 and Rs. 1,14,516 for the assessment years 1984-85 and 1985-86, respectively, by filing revised returns on January 15, 1988, and admitted the same as bogus liabilities shown in the balance-sheet as the payments to coal dealers were made earlier in the assessment year 1984-85 out of books . . .'
6. This is how the Assessing Officer imposed the penalty to the extent of Rs. 6,00,000 for the assessment year 1984-85 and to the extent of Rs. 75,000 for the assessment year 1985-86 under Section 271(1)(c) and of Rs. 20,000 under Section 273(2)(c) of the Act. Thereafter, the petitioner approached the Commissioner under Section 273A, Sub-section (1) and Sub-section (4), of the Act for waiver of penalties.
7. By order dated March 26, 1990, annexure 'K-1' to the writ petition, the Commissioner made a reference to the Central Board of Direct Taxes (hereinafter referred to as 'the Board') for seeking approval under Section 273A(2) stating as follows :
'In a way the submissions of the assessee are correct as revised return filed by the assessee surrendering the amount of Rs. 8,66,325 can be taken as voluntary because this was done without any notice being issued to him. The notice issued in 1985-86 making certain general enquiries from the assessee regarding the liabilities does not explicitly show any direction by the Department of the concealment surrendered by the assessee subsequently. In view of this I am of the opinion that the assessee deserves relief under Section 273A and the penalty imposed under Section 271(1)(c) may be dropped . . .
. . . However, the voluntary nature of the surrender cannot be totally ignored also because by the time the assessee filed the revised return the Income-tax Officer had not reached any definite conclusion that the liabilities were fictitious. He had only started making preliminary enquiries regarding this. Looking to these circumstances a sympathetic view may be taken against the assessee . . .
Besides the above, the assessee has moved a petition dated February 26, 1990, wherein he has contended that his case is covered by the provisions of Section 273A(4) of the Income-tax Act, 1961, being a case of genuine hardship . . .
. . . The penalties levied by the Assessing Officer amount to Rs. 6,95,000 (Rs. 6,00,000 assessment year 1984-85 plus Rs. 95,000 assessment year 85-86).
The penalties together with taxes already paid will be much more than the amount surrendered. In view of these facts and taking the totality of circumstances the payment of penalties will cause genuine hardship. The assessee has fully co-operated in the completion of assessment and paid taxes before finalisation of proceedings'.
8. The Board by order dated June 18, 1991, annexure 'K-1' to the writ petition, refused to accord approval stating as under :
'. . . In this connection, I am directed to inform you that it was only as a result of the enquiries initiated by the Income-tax Officer in this case, after he noticed that the amounts of liabilities shown in the balance-sheet did not tally with the entries in the books of account, that the assessee surrendered the amounts assessable for the assessment years 1984-85 and 1985-86 and, therefore, the surrender by the assessee cannot be termed as voluntary and in good faith. In view of these facts, the proposal for waiver of penalties imposed under Section 271(1)(c) in this case for the above mentioned assessment years cannot be accepted by the Board.'
9. On these facts, Shri C. S. Agarwal, learned counsel for the petitioner, made the following submissions :
(i) that the order of the Board, dated June 18, 1991, annexure 'K-l' to the writ petition, is vitiated inasmuch as that was passed by the Board in violation of the principle of natural justice without giving an opportunity of being heard to the petitioner ;
(ii) that under Section 273A(1) of the Act, the Commissioner may, in his discretion, reduce or waive the amount of penalty imposed or imposable on a person if he is satisfied that such person has, prior to the detection by the Assessing Officer of the concealment of particulars of income or of the inaccuracy of particulars furnished in respect of such income, voluntarily and in good faith, made full and true disclosure of such particulars and had also co-operated in any enquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year. It is submitted that satisfaction has to be recorded by the Commissioner and not by the Board. It is urged that the Board is not at all competent to record a finding that there was no voluntary disclosure, because the power to record satisfaction whether or not there was voluntary disclosure, is vested in the Commissioner. It is further submitted that even if the Board is assumed to be competent to record its own satisfaction about the nature of disclosure--whether voluntary or involuntary--then it was incumbent upon the Board to afford a hearing to the petitioner in case it chose to differ from the Commissioner ; (iii) that the jurisdiction of the Board under Section 273A(2) is limited in that it can simply accord approval to the extent whether waiver is to be granted fully or partially and that like an appellate authority it cannot reverse the satisfaction already recorded by the Commissioner that the petitioner had made voluntary disclosure ; (iv) that whereas the Commissioner recommended waiver on two grounds : (i) that the disclosure was voluntary on the part of the petitioner ; and (ii) that the petitioner would face hardship within the meaning of Sub-section (4) of Section 273A, the Board did not touch upon the finding recorded by the Commissioner under Section 273A(4). It is submitted that the ground of hardship under Section 273A(4) is absolutely independent of that as stated under Sub-section (1) of Section 273A and, therefore, it was incumbent upon the Board to record a clear finding on the ground, which the Commissioner found to have existed under Section 273A(4)(v) and last but not the least, it is submitted by the petitioner that whereas in the reference order, annexure 'K-l' to the writ petition, the Commissioner recorded findings under Sections 273A(1) and 273A(4) in favour of the petitioner, he made a volte face in the impugned order, annexure 'A' to the writ petition. It is, therefore, urged that the Commissioner was not competent to reverse his own view, which he earlier took while making reference to the Board for seeking approval.
10. Be that as it may, we find force in the submission of counsel for the petitioner that the Board should have recorded clear findings on both the counts as recorded by the Commissioner and that the Board having failed to record a finding on the ground, as contemplated by Section 273A(4), the Board's order dated June 18, 1991, annexure 'K-l' is vitiated in law.
11. On the point of opportunity, learned standing counsel heavily relied on the case of Carborundum Universal Ltd. v. CBDT : [1989]180ITR171(SC) . In this case the assessee applied for waiver of interest under Section 220(2A) of the Act. It was contended before the court that a request had been made to the Board to afford a personal hearing before the petitions were disposed of, but no opportunity of personal hearing was afforded by the Board. The question, therefore, was whether refusal to grant waiver was vitiated on the ground of oral opportunity of hearing not being given. The court held as follows (page 174) :
' The legal position is that where a statutory provision does not exclude natural justice, the requirement of affording an opportunity of being heard can be assumed, particularly when the proceedings are quasi-judicial. Exclusion, however, can either be by a clear provision or inferred from the scheme as also the nature of power which is being exercised. We have already noticed that the power of the Board which was invoked was discretionary. It was to be exercised on the basis of the recommendation of the Commissioner and the material provided by the assessee. Personal hearing in every situation is not necessary and there can be compliance with the requirements of natural justice of hearing when a right to represent is given and the decision is made on a consideration thereof. Keeping the nature of the power invoked for exercise, the fact that the petitioner had an opportunity to represent its case in writing and the further fact that the Board had taken into consideration the report of the Commissioner in the background that it is not the allegation of the petitioner that the Commissioner's recommendations were different, we do not think, that in the facts of the case, it can be held that the petitioner was entitled to a right of being personally heard before its petition under Section 220(2A) of the Act was disposed of.'
12. Relying extensively on the aforesaid authority, Shri Bharat Ji Agarwal, learned senior standing counsel urged before us that there being no provision for personal hearing under Section 273A, the order of the Board could not be impugned on that ground and that the petitioner cannot claim a right of personal hearing.
13. In Carborundum Universal Ltd. : [1989]180ITR171(SC)
'. . . Our conclusion is, however, confined to the facts of the case and as and when the question arises in a different situation, the matter may be open to examination.'
14. From the aforesaid observations, it is amply clear that no universal Rule was laid down by the Supreme Court that no opportunity of oral hearing would be given when there was no such requirement under a statute. It is left to the facts and circumstances of each case. In the case at hand, the Board already recorded a finding contrary to the satisfaction recorded by the Commissioner that disclosure was voluntary. If the petitioner is denied the right of personal hearing then we see substance in the submission of counsel for the petitioner that in all probability, the Board would reiterate its finding on the point of the nature of the disclosure and, therefore, we think that on the facts and in the circumstances of this case, opportunity of being heard to the petitioner as sought, is necessary in the interests of justice.
15. In the result, the writ petition succeeds and is allowed. The impugned order of the Commissioner of Income-tax dated September 17, 1991, annexure-A to the writ petition and the Board's order dated June 18, 1991, annexure 'K-1' to the writ petition are quashed and the Board is directed to pass a fresh order after giving opportunity of being heard to the petitioner recording clear findings on both the grounds, as contemplated by Sub-sections (1) and (4) of Section 273A of the Act, preferably within three months from the date the certified copy of this order is produced before it by the petitioner, who undertakes to produce the same before th'e Board within 10 days from today.