1. The judgment of the court was delivered by G. T. NANAVATI, ACTG. C. J. - In all these petitions, the petitioners applied to the Commissioner of Income-tax under section 273A of the Income-tax Act, 1961, for waiver or reduction of penalty and interest which had become payable by the petitioner because of late filing of the returns and late payment of tax. As the point which arises for consideration is the same, they are all disposed of together by this common judgment.
2. Learned counsel for the petitioners drew our attention to the fact that in all these cases, the Commissioner came to the conclusion that the conditions laid down in section 273A having been satisfied, penalties deserved to be waived. But while considering the question of waiver of interest, he held that as the tax due was not paid prior to the making of disclosures, interest did not deserve to be waived, and that type of order was passed in cases from which Special Civil Applications Nos. 5401, 5403, 5404, 5405 and 5407 of 1983 arise. In Special Civil Applications Nos. 5402 and 5406 of 1983 and 3269 of 1984, the Commissioner thought it fit to reduce the interest amount by 50 per cent. only on the ground that the petitioners had not filed income-tax returns for three to four yeas continuously.
3. What is submitted by learned counsel is that the conditions for the waiver of penalty and interest being the same, the reasoning of the Commissioner for holding that the conditions were satisfied in the case of waiver of penalty but not in the case of waiver of interest must be regarded as inconsistent an to that extent the orders passed by him should be regarded as orders passed without proper application of mind. Section 273A, as if it then stood, read as under :
'273A. (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 case 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.'
4. There is no dispute that these are cases in which applications under section 273A could be made. There is also no dispute as regards the conditions that the petitioners had voluntarily and in good faith made full and true disclosure of their income. The question which arises for consideration is whether the two common conditions which are applicable to all the three clauses, viz., (a), (b) and (c), can be said to have been satisfied in respect of both the claims, viz., the claim of waiver of penalty and the claim of waiver of interest. The two conditions are that : (i) the assessee should have co-operated in any enquiry relating to the assessment of his income, and (ii) the assessee should have paid or made satisfactory arrangements for payment of tax or interest payable in consequence of an order passed in respect of the relevant assessment year. Thus, the condition regarding payment was common both for the purpose of waiver of penalty and for the purpose of waiver of interest. Whereas for the purpose of payment of penalty, the Commissioner came to conclusion that the condition for payment of tax was satisfied, with respect to the waiver of interest, he came to the conclusion that the very same condition was not satisfied. Obviously, that discloses non-application of mind because the two things are so inconsistent that they cannot stand together. Even in those cases where the Commissioner has come to the conclusion that even though the other conditions were satisfied as the defaults were for three years or more, only 50 per cent. reduction should be granted to the petitioners. With respect to these case, it was submitted by learned counsel for the Revenue that it was within the discretion of the Commissioner to pass such an order. But the Commissioner has not stated why when all other conditions were fully satisfied, full amount of interest did not deserve to be waived. If the assessee had not committed default, no interest would have become payable. Interest became payable only because the assessee had committed the default. Therefore, while considering the question as to whether the interest deserved to be waived or not, the Commissioner should not have given much importance to the fact that for three years the returns were not filed by the concerned assessee. Thus, in all these cases, the impugned orders appear to have been passed without proper application of mind.
5. Ordinary, we would have quashed the orders and sent the matters back to the Commissioner for the purpose of passing fresh orders after proper application of mind, but these are 12 to 13 years old matters and, therefore, considering the fact that so many years have elapsed and the amounts involved are not substantial, we think it proper to put an end to those litigations by modifying the impugned orders passed by the Commissioner to the extent that the waiver of interest in Special Civil Applications Nos. 5401, 5403, 5404, 5405 and 5407 of 1983 shall be 50 per cent. and in Special Civil Applications Nos. 5402 and 5406 of 1983 and 3269 of 1984 shall be 75 per cent.
6. In the result, we partly allow these petitions. The impugned orders stand modified to the extent stated above. Rule is made absolute in each of these petitions. No order as to costs.