DATTA A.SAWANT AND ANR vs. COMMISSIOENR OF INCOME-TAX NASIK AND ORS

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WP/1416/1995HC BombayHCBM01017312199404 October 2005Author: HON'BLE SHRI JUSTICE J.P. DEVADHAR,HON'BLE SHRI JUSTICE V.C. DAGA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the interest of justice would be served by quashing the impugned orders and directing the Commissioner of Income Tax (CIT) to pass fresh orders in accordance with law. The Court found that the CIT's rejection of the Section 264 application against the Section 271(1)(c) penalty was flawed, as it did not consider the petitioners' submission that the return was filed voluntarily and later revised on the Assessing Officer's advice. Similarly, the rejection of other penalty applications based on the acceptance of gold ornaments by partners and lack of evidence was deemed questionable, as mere addition to income at the assessee's instance does not automatically imply concealment. The rejection of the Section 273A waiver application on the ground that the return was not filed voluntarily was also considered incorrect. Consequently, the impugned orders were quashed and set aside, and the matter was remitted back to the CIT to decide the applications afresh. The Court expressed hope that the CIT would dispose of the applications expeditiously given the AY 1987-88. No issue was expressly left undecided.

What were the facts?

The petitioners, Datta A. Savant and another, challenged orders passed by the Commissioner of Income Tax (CIT) under Section 264 of the Income Tax Act, 1961. These orders had rejected the petitioners' applications against penalty orders passed under Sections 271(1)(a), 271(1)(c), and 273(2)(b). Additionally, they challenged a CIT order dated July 26, 1994, which declined to entertain an application under Section 273A for waiver of penalties/interest for Assessment Year (AY) 1987-88. The CIT's order under Section 264 rejecting the penalty under Section 271(1)(c) was based on a 32-month delay in filing the return of income. The petitioners contended that the return was filed voluntarily, first as an unregistered firm and later as an AOP on the Assessing Officer's advice, an aspect not considered by the CIT. Other applications were rejected because gold ornaments were accepted by partners, with the CIT finding no evidence. The rejection of the Section 273A waiver application was based on the return not being filed voluntarily.

What were the issues?

1. Whether the Commissioner of Income Tax erred in rejecting the application under Section 264 of the Income Tax Act, 1961, against the penalty order under Section 271(1)(c) on the grounds of delay in filing the return of income, without considering the voluntary nature of the filing and subsequent advice from the Assessing Officer? (Question of law and fact, concerning Section 271(1)(c) and Section 264). 2. Whether the Commissioner of Income Tax was justified in rejecting other applications for penalties under Sections 271(1)(a) and 273(2)(b) solely on the basis that gold ornaments were accepted by partners and no evidence was produced, despite the addition to income being at the assessee's instance? (Question of law and fact, concerning Sections 271(1)(a), 273(2)(b), and 264). 3. Whether the Commissioner of Income Tax correctly rejected the application for waiver of penalties/interest under Section 273A on the ground that the return was not filed voluntarily? (Question of law and fact, concerning Section 273A). Assessee's Contentions: The return was filed voluntarily, first as an unregistered firm and later as an AOP on the Assessing Officer's advice. The addition to income at the assessee's instance does not warrant a finding of concealment. The rejection of the Section 273A waiver application on the ground of the return not being filed voluntarily is incorrect. Revenue's Contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 264,Section 271(1)(a),Section 271(1)(c),Section 273(2)(b),Section 273A

AI-generated summary — verify with the full judgment below

FARAD FARAD FARAD CONTINUATION SHEET No. CONTINUATION SHEET No. CONTINUATION SHEET No.

IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY

APPELLATE APPELLATE APPELLATE SIDE. SIDE. SIDE.

WRIT WRIT WRIT PETITION NO. 1416 PETITION NO. 1416 PETITION NO. 1416

OF OF OF 1995. 1995. 1995.

Datta A. Savant & anr.

..Petitioners.

vs.

The Commissioner of Income Tax,

Nasik & ors.

..Respondents.

-------------------------------------------------------------

Office Notes,Office

Memoranda of Coram,

Court’s or Judge’s orders

appearnaces,Courts’s

orders or directions

and Registrar’s orders. :

------------------------------------------------------------

Shri

V.H.

Patil with Ms.

Aasifa

Khan

i/b K.B. Bhujle and A.K. Jasani for the

petitioner.

Shri Parag Vyas for the respondents.

CORAM: CORAM: CORAM: V.C.DAGA AND J.P.DEVADHAR,JJ. V.C.DAGA AND J.P.DEVADHAR,JJ. V.C.DAGA AND J.P.DEVADHAR,JJ.

DATED: DATED: DATED: 4.10.2005. 4.10.2005. 4.10.2005.

this

petition,

challenged

Act,

rejecting

applications

made

against

penalty

271(1)a);

271(1)(c)

(2)(b)

Act.

The

also

challenged order

Commissioner

dated

26th

July

1994,

declining

entertain

made

273A

the Act for a waiver of

penalties/interest under the provisions

of the Income-tax Act for A.Y.1987-88.

On perusal of the order passed

Act

against

penalty

levied

271(1)(c) Act, it seen

has rejected

there delay

months filing income

forced file

income.

It case

petitioner

filed

11.2.1991

voluntarily

status

unregistered firm later

filed 28.2.1991 status

A.O.P.

advice

Assessing

Officer.

This

aspect

has

not

considered

order.

Similarly,

other

two

applications

rejected mainly

because

gold

ornaments

ultimately

accepted

partners

cannot

produce

any

evidence.

Mere

addition income,

instance

would

not

warrant

finding

concealment.

Similarly,

rejection

for

waiver

penalty/interest

273A

return has not been filed voluntarily

does not appear to be correct.

In the result, we are of the

opinion

interest

justice

would

be served quashing

directing Commissioner

pass

fresh

accordance with law.

Accordingly,

petition are quashed

set

aside.

The matter remitted

back

to the C.I.T. to decide the aforesaid

application in accordance with law.

Since the matter pertains to

A.Y.

1987-88,

we hope

will dispose of the applications as

expeditiously as possible.

The petition is allowed in

terms of prayer (a) of the petition with

no order as to costs.

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