Judgment:
A.M. Sapre, J.
1. The short question that arises for consideration in this writ filed by the petitioner under Articles 226 and 227 of the Constitution is, whether the Commissioner of Income-tax was justified in rejecting the application made by the petitioner (assessee) under Section 273A of the Income-tax Act, 1961 The facts in brief are these :
2. The dispute relates to the assessment years 1981-82 to 1986-87.
3. It appears that the petitioner (an assesses) was assessed for the aforementioned assessment years by the Assessing Officer. It further appears that penalty under Section 271 of the Act in these years was also imposed by the Assessing Officer. This gave rise to the making of an application (annexure C) by the petitioner under Section 273A of the Act to the Commissioner claiming reduction or waiver of penalty so imposed by the Assessing Officer. It is this application that was rejected by the Commissioner by the impugned order which is challenged by the petitioner in this petition.
4. None for the petitioner. Sbri R. L. Jain, learned counsel for the respondents.
5. Having perused the record of the case and having heard the submissions of learned counsel for the Revenue, I am of the opinion, that this petition deserves to be allowed, thereby setting aside the impugned order.
6. Section 273A of the Act which alone is relevant for the disposal of this petition reads as under :
'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,-- . . .
(ii) reduce or waive the amount of penalty imposed or imposable on a person under Clause (iii) of Sub-section (1) of Section 271 ; or ... if he is satisfied that such person-- . . .
(b) in the case referred to in Clause (ii), 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 also has, in the case referred to in Clause (b), 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 interestpayable in consequence of an order passed under this Act in respect of the relevant assessment year.
Explanation.--For the purposes of this sub-section, a person shall be deemed to have made full and true disclosure of his income or of the particulars relating thereto in any case where the excess of income assessed over the income returned is of such a nature as not to attract the provisions of Clause (c) of Sub-section (1) of Section 271.'
7. A perusal of the aforequoted section shows that this section has been given overriding effect on all other sections of the Act. It empowers the Commissioner to reduce or waive the amount of penalty imposed or imposable provided he is satisfied that the assessee has prior to detection by the Assessing Officer of any 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. The section further provides that it must appear from the record of the case that the assessee has co-operated in any inquiry relating to the assessment of his income and has either paid or has made satisfactory arrangements for the payment of any tax or interest which has become payable in consequence of an order passed under this Act in respect of the relevant assessment year. The Explanation appended to the section then defines what is the meaning of the words 'full and true disclosure of his income'. By a deeming fiction it says that if it is found that where the excess of income assessed over the income returned is of such a nature as not to attract the provisions of Clause (c) of Section 271(1), then it would be deemed that the assessee has made a full and true disclosure of his income or particulars relating thereto,
8. If one peruses the impugned order, rejecting the application of the assessee, I find that the Commissioner has not given any finding in relation to the requirement of the Explanation appended to Section 273A. In other words, it was obligatory upon the Commissioner to have also examined the case of the assessee as to whether the assessee has satisfied the requirements of the Explanation or/and whether he can be given the benefit of the Explanation or not. It is not that only the requirement contained in Clause (b) alone has to be seen. It must also appear from the impugned order that the Commissioner has applied his mind by examining the case of the assessee in the light of the Explanation, The Legislature in its wisdom has by a deeming fiction given certain benefits to the assessee which if proved may result in reduction or waiver of penalty.
9. As observed supra, while rejecting the application of the petitioner (assessee), the Commissioner having not examined the case of the petitioner in the light of the Explanation, the impugned order cannot sustain and has to be, therefore, set aside.
10. Accordingly, and as a consequence, the petition succeeds and is allowed. The impugned order (annexure F) is set aside by a writ of certiorari. The case is remanded to the Commissioner of Income-tax, Indore, to decide the application of the petitioner afresh (annexure C) made under Section 273A of the Act on its merits in the light of the observations made above. Let this be done within four months from the date of the order. Since none has appeared in the High Court for the petitioner, the Commissioner will issue notice to the petitioner for hearing of the application before him.
11. No costs. Security amount, if deposited by the petitioner, be refunded.