K.A. Nayar, J.
1. These writ appeals filed against the common judgment in O. P. Nos. 5641, 5642, 5643, 7162, 7163, 7164, 7165, 7308 and 7309 of1988, raise the question whether the exercise of jurisdiction under Section 273A of the Income-tax Act by the Commissioner of Income-tax is proper. Writ Appeals Nos. 119, 109 and 127 of 1989 are by three partnerships and the rest are by the partners of the firms. The appellants are assessees to income-tax. For the assessment years 1979-80 to 1983-84, they submitted returns on July 6, 1982, for the first three years and, on October 19, 1983, and October 21, 1983, for the next two years. Regular assessments were made on them up to 1979-80.
2. On January 23, 1985, there was a search in the premises of the firms as well as in the residential premises of the partners. In the course of the search, the officers of the Income-tax Department seized certain items of gold ornaments and also account books. Immediately, with a view to settle the matter, the appellants, within 15 days of the search, filed petitions under Section 273A of the Act before the first respondent making a disclosure of the income for securing the assessments on the basis thereof. They also filed revised returns for the years 1979-80 to 1983-84 and the original returns for the years 1984-85 and 1985-86. As the law then stood, namely, Explanation 2 to Section 273A(1) of the Act which was in force for the period October i, 1984, to May 24, 1985, if full disclosure is made within 15 days, the assessees are entitled to certain benefits. But, when the Income-tax Officer completed the assessment as per the revised and original returns, though he accepted the same as correct, he imposed interest under Section 139(8) and Section 217 of the Act and also initiated penal proceedings under Sections 271 and 273 of the Act. The appellants filed revision petitions before the Commissioner of Income-tax and he gave certain deductions in the interest levied under Section 139(8) of the Act. Since the Commissioner did not waive the interest in full and also did not waive the penalty leviable under Sections 271 and 273, the appellants reminded the Commissioner of Income-tax to dispose of the petition filed under Section 273A of the Act.
3. Section 273A together with the Explanation, as it then stood, 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,--
(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 person under Clause (iii) of Sub-section (1) of Section 271 ; or
(iii) reduce or waive the amount of interest paid or payable under Sub-section (8) of Section 139 or Section 215 or Section 217 or the penalty imposed or imposable under Section 273,
if he is satisfied that such person-
(a) in the cases referred to in Clause (i), has, prior to the issue of a notice to him under Sub-section (2) of Section 139, voluntarily and in good faith made full and true disclosure of his income ;
(b) in the case referred to in Clause (ii), has, prior to the detection by the Income-tax 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 ;
(c) in the cases referred to in Clause (iii), has, prior to the issue of a notice to him under Sub-section (2) of Section 139, or where no such notice has been issued and the period for the issue of such notice has expired, prior to the issue of notice to him under Section 148, voluntarily and in good faith made full and true disclosure of his income and has paid the tax on the income so disclosed,
and also has, in all the cases referred to in Clauses (a), (b) and (c), 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.
Explanation 7.--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.
Explanation 2.--Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing belonging to a person are seized under Section 132 and within fifteen days of such seizure, the person makes a full and true disclosure of his income to the Commissioner, such person shall, for the purposes of Clause (b) of this subsection, be deemed to have made, prior to the detection by the Income-tax 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, a disclosure of such particulars.'
4. Explanation 2 brings in a deeming provision providing that where any books of account, other documents, money, bullion, jewellery or other valuable article or thing belonging to a person are seized under Section 132 of the Act and within 15 days of such seizure, the person makes afull and true disclosure of his income to the Commissioner, such person shall, for the purpose of Clause (b) of Sub-section (1) of Section 273A, be deemed to have made, prior to the detection by the Income-tax 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, a disclosure of such particulars. The whole concept of Section 213A as explained in Madhukar Manilal Modi v. CWT : [1978]113ITR318(Guj) is that the assessee concerned admits his liability to the penalty but relies upon certain mitigating circumstances or certain circumstances specified in the section for the purpose of getting the penalties waived or reduced. Admittedly, in this case, the appellants filed revised returns for the years 1979-80 to 1983-84 and the original returns for the years 1984-85 and 1985-86 after the search conducted on 23rd January, 1985. The appellants incurred the liability for payment of interest under Sections 139(8) and 217 and also for penalty under Sections 271(1)(a), (1)(c) and 273(2)(b) of the Act, namely, penalty imposable for not or late filing of returns, for concealment of income and for not filing the estimate of advance tax. On a reading of Section 273A of the Act, it is clear that the Commissioner has the discretion to reduce or waive the penalty imposed or imposable under Section 271(1)(a) for late filing of the return, if the assessee had voluntarily and in good faith made a disclosure of his income fully and truly before any notice under Section 139 of the Act has been served upon him and provided further the assessee had co-operated with the assessment and also made satisfactory arrangements for the payment of tax. In this case, the appellants have complied with the conditions precedent required for waiver provided it could be considered that the revised returns and the original returns filed in this case after search on 23rd January, 1985, was a disclosure made voluntarily and in good faith. Explanation 2, aforementioned, to Section 273A of the Act is a legislative command that if the assessee makes a full and true disclosure of his income within 15 days, it deems that he has made voluntarily and in good faith disclosure of the particulars of income prior to the detection of such particulars of income.
5. In East End Dwellings Co. Ltd. v. Finsbury Borough Council [1951] 2 All ER 587 Lord Asquith observed that:
'If one is bidden to treat an imaginary state of affairs as real, one must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.'
6. This observation of Lord Asquith has been approved by the Supreme Court in State of Bombay v. Pandurang Vinayak, : 1953CriLJ1049 , wherein the court observed that (headnote) :
'When a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the court is entitled and Boundto ascertain for what purposes and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction and it should be carried to its logical conclusion.'
7. These two decisions have been followed by the Supreme Court in American Home Products Corporation v. Mac. Laboratories Pvt. Ltd., : AIR1986SC137 .
8. For the purpose of Section 273A(1)(ii) read with Sub-clause (b) thereof, in the matter of waiving penalty imposable under Section 271(1)(c), the deeming provision directs that the assessee is to be deemed to have voluntarily and in good faith disclosed all the particulars before the detection of the concealed income as the disclosure was within 15 days of the seizure. When the deeming provision directs to treat the disclosure as voluntary and in good faith in the case of one situation alone, it was understood that in fact there is no disclosure voluntarily and in good faith in other cases. Therefore, the Commissioner of Income-tax, while disposing of the petitions filed under Section 273A of the Act, gave relief to the appellants only by waiving penalty payable under Section 271(1)(c) for concealment of income. In other words, penalty imposed or imposable under Section 271(1)(a) for late filing of return and under Section 273(2)(b) for not filing the estimate of the advance tax were not waived. Similarly, the Commissioner also refused to waive the entire interest levied by the Income-tax Officer under Section 139(8) and under Section 217 of the Act. All these can be waived only if it is considered that the appellants have voluntarily and in good faith made the disclosure. The disclosure in question has been made within 15 days after the search for the assessment years 1979-80 to 1983-84 (we are concerned only with these assessment years). Therefore, the question is whether the disclosure made by the appellants can be considered as being made voluntarily and in good faith.
9. On behalf of the appellants, counsel referred to the following decisions ; S. Sannaiah v. CIT : [1974]95ITR435(KAR) , Shankara Apaya Swami v. WTO : [1976]103ITR649(KAR) , Jakhodia Brothers v. CIT : [1978]115ITR61(All) , S.R. Jadav Desai v. WTO : [1980]121ITR531(KAR) Smt. Shantha Devi v. WTO : [1980]121ITR703(KAR) , Hakam Singh v. CIT : [1980]124ITR228(All) , B. Anjanappa v. CWT : [1980]124ITR433(KAR) , Navnitlal K. Zaveri v. CIT [1980] 125 ITR 385, Hira Singh v. CWT , Baidya Nath Sarma v. CWT , Radhey Shyam Chandrika Prasad v. CIT : [1983]139ITR274(All) , R.P. Ramaswamy Chettiar v. CWT : [1983]144ITR87(Mad) , Laxman v. CIT : [1988]174ITR465(Bom) , Harris v. Taylor [1915] 2 KB 580 and Guiard v. De Clermont and Donner [1914] 3 KB 145 and, on behalf of the respondents, Hakam Singh v. CIT : [1980]124ITR228(All) was referred to.
10. The words 'voluntarily and in good faith made full disclosure' cameup for consideration in Shankara Apaya Swami v. WTO : [1976]103ITR649(KAR) . Venkataramiah J., as he then was, considering a similar sectionin the Wealth-tax Act, namely, Section 18(2A), explained that the saidwords relate to the return which is filed beyond time without reasonablecause. The learned judge observed (at p. 652) :
'The expression 'voluntarily' means 'without compulsion' and 'good faith' means 'with due care and caution'. Hence, if the return filed by the assessee does not show that he has deliberately furnished wrong particulars about his wealth or deliberately omitted to include all the items of taxable wealth then he should be considered as having satisfied the above condition ...
It is needless to mention that the Commissioner while exercising his discretion under Section 18(2A) has to bear in mind several factors such as the gravity of the default, the loss occasioned to the Revenue by the assessee not filing the return in time, and the extent of tax withheld. These factors are only illustrative but not exhaustive. Just like in criminal cases a judge while imposing a sentence on the accused who is found guilty of an offence takes into consideration several factors apart from the fact that he has committed the offence in question, the Commissioner should take into consideration all other relevant factors while reducing or waiving the penalty imposed or imposable under Section 18(1)(a) of the Act.'
11. From the above, it will be seen that the Commissioner has to examine not only the return but also the disclosure made in the return. The word 'voluntarily' should not be read in the context of filing returns alone. The expression 'voluntarily' means without compulsion. This view is again reiterated in S.R. Jadhav Desai v. WTO : [1980]121ITR531(KAR) by the same High Court. It may be that the action of an assessee in filing a return after the books of account had been seized during a raid was impelled by the compelling circumstances and a fear that the assessee will be likely to be dealt with under the penal provisions of the Act. But it cannot be said as a principle of law that all returns filed after search will cease to be voluntary returns and that it cannot be considered as a voluntary disclosure. In the decision in Laxman v. CIT : [1988]174ITR465(Bom) , the High Court of Bombay dissected Section 273A(1) of the Act and held that the conditions precedent for exercise of discretion to waive penalty or interest under Section 273A of the Act are (headnote) :
'(a) voluntary disclosure of income before issuance of notice under Section 139(2) ;
(b) making of full and true disclosure of the income in good faith ;
(c) co-operation in the conduct of assessment proceedings ;
(d) payment or satisfactory arrangement for payment of tax or interest payable in consequence of an order passed with respect to the relevant assessment year.'
12. The court further held that all that is required is that the disclosure of income must be full and true according to the honest belief of the asses-see. The court also held that the word 'voluntary' means without compulsion and the Commissioner has to examine in each case the voluntary nature of the disclosure. Similarly, the term 'good faith' even though not defined under the Income-tax Act, is seen defined in Section 3(22) of the General Clauses Act, 1897, as under :
'A thing shall be deemed to be done in 'good faith' where it is in fact done honestly, whether it is done negligently or not.'
13. In Radhey Shyam Chandrika Prasad v. CIT : [1983]139ITR274(All) , explaining the term 'good faith' occurring in Section 273A of the Act, the High Court of Allahabad held that the assessee can be said to have acted in good faith if he discloses his income which he honestly believed to be true and full. In Hakam Singh v. CIT : [1980]124ITR228(All) , an application under Section 273A of the Act was rejected by the Commissioner of Income-tax on the ground that the return filed by the assessee was not voluntary, for, in that case, there was a search on November 22, 1973, and the return was filed only on October 7, 1974, for the four years. Penalty proceedings were initiated for delayed submission of return and for not filing a return of advance tax under Sections 271(1)(a) and 273(b). The Commissioner of Income-tax held that the returns were not voluntary and they were made after the search prompted by a sense of fear. The court held (at p. 232) :
'A return filed under the constraint of exposure to adverse action by the Income-tax Department, in our opinion, will not be voluntary within the meaning of Section 273A. The action of the petitioners in filing the returns after the books of account had been seized at a raid was impelled by the compelling circumstance that the petitioner was likely to be dealt with under the penal provisions of the Income-tax Act. The action of the petitioner in filing the returns under such a constraint cannot be said to be voluntary.'
14. Counsel for the Revenue strongly urged that the principle laid down in the above case applies to the facts of this case. But, we do not understand the case as laying down as a principle that disclosure made after the search cannot be considered as voluntary disclosure. Under Section 273A of the Act, the Commissioner of Income-tax will have to examine whether the disclosure made by the appellants in the case is bona fide and voluntary on the facts of each case. He has to examine the nature of the incriminating documents obtained after search and the period to which they relate. Thegold ornaments seized and the books of account taken possession of by the Department may show no suppression or may show suppression for a year or two. The raid may wake up the sleeping partners to corrective actions. The orders in question which are the subject-matter of appeals proceeded on the basis that the return filed is not voluntary in nature only on the ground that the same has been made after the search on January 23, 1985. Explanation 2 which was in force on October 1, 1984, to May 24, 1985, gives certain benefits if the disclosures are made within 15 days of the search. The disclosures in question were made on February 7, 1985, within 15 days of the search. It may be that, during the search, certain matters relating to particular assessment years might have come to the knowledge of the Income-tax Officer. The disclosure in question is not shown related to matters revealed from the search in space and time. Documents relating to a particular year might be in the possession of the officers. But the assessee', taking advantage of the provisions contained in Section 273A of the Act, might have made a full disclosure, not only for any particular year to which the documents obtained from search related but also for all earlier or subsequent years. If an assessee, in order to reduce his tax burden, transfers his assets to his near relatives, the motive for the transfer may be reduction of income-tax burden. But, for that reason, the return will not cease to be voluntary. Similarly, by virtue of seizure of certain documents, the appellants might have decided to make a full disclosure of the income for earlier years also. The return and the disclosure will nevertheless be voluntary even though the intention of the appellants in so doing was only to save the penalty. Hence, the disclosure or the filing of the returns after the search by itself will not be decisive of the fact that the returns and disclosures are not voluntary.
15. On a perusal of the impugned orders, it is seen that there is no detailed consideration of these aspects. The impugned orders in question fall into two categories : in the first category, the Commissioner rejected a petition under Section 273A of the Act on the ground that the returns are not voluntary, having been made after the search and in the other, namely, the order in W. A. No. 127 of 1989, the Commissioner rejected the petition on the ground that the disclosure was not voluntary because the same was made after the search. The question to be examined is not whether the return is voluntary for the purpose of Section 273A(1)(a) and (c). The question is whether the disclosure in the return is made voluntarily and in good faith. If the respondent obtained the documents after search which would show that the assessees have suppressed income or failed to furnish full particulars for all the years in question, the disclosures thereafter made for the years in question may not be voluntary or bona fide. The Commissioner of Income-tax has to examine for what period suppression is found out after search, what is the nature of the suppression and omission,the gravity of the offending act, subsequent conduct of the assessee, proportionality of the penalty, etc. No doubt, discretion is given to the Commissioner to waive the penalty. But he has to exercise the discretion in accordance with law. He should not act merely as a tax-gatherer. In Indian Express Newspapers (Bombay) P. Ltd. v. Union of India , considering the exercise of discretion under Section 25 of the Customs Act, 1962, the Supreme Court observed :
'The power exercisable under Section 25 of the Customs Act, 1962, is no doubt discretionary ; but it is not unrestricted. It is useful to refer here to the observations of Lord Denning M.R. in Breen v. Amalgamated Engineering Union [1971] 2 QB 175, which read thus : 'The discretion of a statutory body is never unfettered. It is a discretion which is to be exercised according to law. That means at least this : the statutory body must be guided by relevant considerations and not by irrelevant. If its decision is influenced by extraneous considerations which it ought not to have taken into account, then the decision cannot stand. No matter that the statutory body may have acted in good faith ; nevertheless the decision will be set aside. That is established by Padfield v. Minister of Agriculture, Fisheries and Food [1968] AC 997, which is a landmark in modern administrative law'.'
16. In Laker Airways Ltd. v. Department of Trade [1977] 2 All ER 182 Lord Denning M. R. observed :
'If it found that the power has been exercised improperly or mistakenly so as to impinge unjustly on the legitimate rights or interests of the subject, then these courts must so declare. They stand, as ever, between the executive and the subject, alert, as Lord Atkin said in a famous passage, 'alert to see that any coercive action is justified in law' : see Liversidge v. Anderson [1941] 3 All ER 338. To which I would add 'alert to see that a discretionary power is not exceeded or misused'.'
17. In this case, we are not concerned with the correctness of the orders. In the exercise of discretion under Article 226 of the Constitution of India, this court is concerned only with the decision-making process. In Ranjit Thakur v. Union of India, : 1988CriLJ158 , the Supreme Court observed (headnote; :
'Judicial review, generally speaking, is not directed against a decision, but is directed against the 'decision-making process'. The question of the choice and quantum of punishment is within the jurisdiction and discretion of the court martial. But the sentence has to suit the offence and the offender. It should not be vindictive or unduly harsh. It should not be so disproportionate to the offence as to shock the conscience and amount in itself to conclusive evidence of bias. The doctrine of proportionality, as part of the concept of judicial review, would ensure that even on an aspect which is, otherwise, within the exclusive province of the court martial,if the decision of the court even as to sentence is an outrageous defiance of logic, then the sentence would not be immune from correction. Irrationality and perversity are recognised grounds of judicial review.'
18. The Supreme Court also held that the penalty imposed must be commensurate with the gravity of the misconduct and that any penalty disproportionate to the gravity of the misconduct would be violative of Article 14 of the Constitution. To the same effect is the decision in State of U. P. v. Maharaja Dharmander Prasad Singh, : [1989]1SCR176 . The Supreme Court held (at page 1010) :
'However, judicial review under Article 226 cannot be converted into appeal. Judicial review is directed, not against the decision, but is confined to the examination of the decision-making process.'
19. Dismissal of these writ appeals on technical grounds will amount to denial of justice by taking a strictly legalistic view. Our commitment is to justice. As the Supreme Court held in Shri Anadi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani, : (1989)IILLJ324SC , technicalities should not come in the way of granting relief under Article 226 of the Constitution. Mandamus is a very wide remedy which must be easily available to reach injustice wherever it is found.
20. On a reading of the impugned orders, we hold the view that the Commissioner has not considered the application under Sections 271(1)(a) and 273(2)(b) as required by law. Merely because the returns are filed after the search, they will not cease to be a voluntary or a bona fide disclosure. Therefore, the matter calls for a fresh look by the Commissioner of Income-tax.
21. We, therefore, set aside the impugned orders, and direct the Commissioner of Income-tax to reconsider the matter relating to penalty imposable under Sections 271(1)(a) and 273(2)(b) in question afresh.
22. The writ appeals are allowed as above. There shall be no order as to costs.