Satish Kumar Sanghi V. Commissioner of Income Tax, Rohtak and another

CWP/10568/2012

AI Insights

The case involves Satish Kumar Sanghi, an agriculturist, who sought a waiver of interest and penalties imposed by the Commissioner of Income Tax, Rohtak, following the enhancement of compensation for his land acquired by the government. Initially, the Commissioner had waived 70% of the interest and penalties, but later, this was completely withdrawn, leading Sanghi to challenge the decision in the High Court. The court found that the Commissioner had not adhered to its previous directions and had failed to provide valid reasons for the withdrawal of the waiver, thus ruling in favor of Sanghi.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 795974 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 05-02-2013
• Assessment Year: misc
• Other Referred Cases: Parkash Devi vs. CWT, Jalandhar, Shanti Sarup Sharma vs. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961, Land Acquisition Act, 1894
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: INDERPREET SINGH
• Assessee Lawyers: AMAN BANSAL
• Keywords: Certiorari; Certiorari; Income Tax Return; Land acquisition compensation; Penalty; Waiver of interest
• Section: 143(1); 273; 273A; 226; 227; 271(1)(a); 139(8); 217

Judgement Text

"CWP No.10568 of 2012 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.10568 of 2012 Date of decision: February 05, 2013 Satish Kumar Sanghi Petitioner Versus Commissioner of Income Tax, Rohtak and another Respondents CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE GURMEET SINGH SANDHAWALIA Present: Mr. Aman Bansal, Advocate for the petitioner. Mr. Inderpreet Singh, Advocate for the revenue. Ajay Kumar Mittal,J. 1. Prayer in this writ petition filed under Articles 226/227 of the Constitution is for issuance of a writ in the nature of certiorari for quashing the impugned order dated 1.2.2012, Annexure P.14 passed by respondent No.1 – Commissioner of Income Tax, Rohtak, whereby the claim of the petitioner for waiver of interest under Sections 139(8) and 217 and penalties under Sections 271(1)(a) and 273 of the Income Tax Act, 1961 (in short, “the Act”) has been rejected. Further prayer for quashing the demand notice dated 26.3.2012 Annexure P.15, notice dated 19.11.1991, Annexure P.1 under Section 148 of the Act and also for refund of the interest has also been made. 2. A few facts relevant for the decision of the controversy involved, as narrated in the petition, may be noticed. The petitioner is CWP No.10568 of 2012 2 an agriculturist. His only source of income was agriculture income which did not require filing of income tax return. Vide notification dated 13.8.1979, some land of the petitioner was acquired by the Government and vide award dated 7.1.1981, compensation for the land acquired was awarded at the rate of ` 12000/- and ` 15000/- per acre for barren and irrigated land respectively. The petitioner sought enhancement by filing application under Section 18 of the Land Acquisition Act, 1894. Vide order dated January 20, 1989, the compensation was enhanced to ` 24000/- and ` 30,000/- per acre for barren and irrigated land respectively alongwith interest at the rate of 9% per annum from 7.1.1981 to 6.1.1982 and 15% per annum from 7.1.1982 onwards. The compensation amount was received by the petitioner on 15.9.1990. Thereafter, the petitioner after calculating the interest of each of the relevant years submitted his income tax returns voluntarily on 27.2.1991 and the said returns were duly accepted by the concerned officer under Section 143(1) of the Act on 7.8.1992. The Assessing Officer while framing assessment levied interest under Sections 139(8) and 217 of the Act. The Assessing Officer also passed the order for issuance of penalty notices under Sections 271(1)(a), 271 (1) (c) and 273 of the Act. The penalty proceedings were later on dropped by the Assessing Officer vide separate orders. On 12.10.1992, the petitioner filed a petition under Section 273A of the Act for waiving of interest. The Commissioner of Income Tax, Rohtak waived the penalty and interest upto 70% of the amount vide order dated 17.3.1993, Annexure P.5 in respect of the CWP No.10568 of 2012 3 years 1982-83 to 1988-89. The application for waiver of interest for the year 1989-90 was not entertained in view of amendment in the Act w.e.f 1.4.1989. Feeling aggrieved, the petitioner approached this Court through CWP No.15887 of 1993 against the order passed by the respondent under Section 273A of the Act. For the assessment years 1982-83 to 1988-89, the writ petition was allowed while relying upon the observations made by this Court in Parkash Devi vs. CWT, Jalandhar, (1983) 141 ITR 122 and the case was remitted back to the respondent to re-decide the application. The petitioner approached the respondent several times to decide the pending application but ultimately, vide impugned order dated 1.02.2012, the claim of the petitioner was rejected. Hence the present petition. 3. Learned counsel for the petitioner submitted that the Commissioner of Income Tax, Haryana, Rohtak while adjudicating the application under Section 273-A of the Act on 17.3.1993 after recording that the conditions enumerated in Section 273-A of the Act were complied with, had waived of only 70% of the total amount of interest and penalty, which was challenged by way of CWP No.15887 of 1993. This Court on 26.8.1996 had remanded the matter for the assessment years 1982-83 to 1988-89 to the Commissioner of Income Tax to decide the same keeping in view the observations made in Smt.Parkash Devi's case (supra). However, the petition with regard to assessment year 1989-90 was rejected by this Court. According to the learned counsel, after the remand by this Court, the Commissioner of Income Tax on 1.2.2012 while deciding the application under Section CWP No.10568 of 2012 4 273A of the Act had even withdrawn the benefit of the waiver which had been allowed to the petitioner earlier. It was urged that the said action of the respondent-CIT was in grave violation of the mandate given by this Court while deciding CWP No.15887 of 1993 on 26.8.1996. 4. Learned counsel for the respondents supported the order passed by the Commissioner of Income Tax. 5. After hearing learned counsel for the parties, we find merit in the writ petition. 6. A Division Bench of this Court while considering the provisions relating to Section 18B of the Wealth Tax Act, 1957 which are pari materia to those in Section 273A of the Act, in Smt. Parkash Devi's case (supra), held that the following five conditions are required to be fulfilled:- “1) that the returns were filed by the petitioner prior to the issuance of a notice to her under sub-section (2) of section 14 of the Act; 2) that these were filed voluntarily and in good faith; 3) that the petitioner had made full and true disclosure of her net wealth; 4) that she had cooperated in the inquiry relating to the assessment of her net wealth; and 5) that she had paid or made satisfactory arrangements for the payment of the tax or interest payable in consequence of an order passed under the Act in respect of the relevant assessment years.” 7. Further, this Court while delving into the scope of Section 273A of the Act in Shanti Sarup Sharma vs. Commissioner of CWP No.10568 of 2012 5 Income Tax and another, (1999) 237 ITR 376 held as under:- “Section 273A of the Income Tax Act, 1961, empowers the Commissioner to reduce or waive interest and penalty. The power under Section 273A is discretionary. The Commissioner is given the discretion, when the requisite conditions envisaged by that section are satisfied, that he may waive or reduce the penalty or the interest imposable under the Act. However, the exercise of discretion cannot be either arbitrary or capricious and has to be judicious and objective. Section 273A does not confer absolute discretion upon the Commissioner to pass any order which he pleases to make. He is required to consider the application on the merits.” 8. In the present case, this Court while remanding the case on earlier occasion in CWP No.15887 of 1993 had directed that keeping in view the observations made in Smt.Parkash Devi's case (supra) , the Commissioner of Income Tax shall pass fresh order under Section 273-A of the Act. The waiver of only 70% of the interest and penalty was held not to be proper while adjudicating the aforesaid writ petition. 9. A perusal of the impugned order herein shows that now the Commissioner of Income Tax has even withdrawn the said discretion which was exercised qua granting 70% of the waiver of total amount of interest and penalty. A reading of the order shows that no legal and valid reason has been given therefor. Moreover, this order is in contradiction to the order passed by this Court while remanding the case to the Commissioner of Income Tax for passing fresh orders in CWP No.10568 of 2012 6 accordance with law. 10. In such circumstances, ordinarily we would have referred the matter back to the respondent after setting aside the order dated 1.2.2012, Annexure P.14, for passing order afresh in accordance with law. However, keeping in view the fact that the matter has already been remanded to the Commissioner of Income Tax on an earlier occasion and he had faulted in passing order in accordance with the provisions of the Act, we have examined the matter and after hearing counsel for the parties at length, we have arrived at the conclusion that the assessee fulfilled the requirements as envisaged under Section 273A of the Act and the present case calls for complete waiver of interest and penalty for the assessment years 1982-83 to 1988-89. Consequently, we allow this writ petition and set aside the impugned order dated 1.2.2012, Annexure P.14 and, thus, there will be complete waiver of interest and penalty in the facts and circumstances of the case. As a necessary corollary, it is further directed that in case any amount has been got deposited from the petitioner on the aforesaid count, the same shall be refunded to the petitioner in accordance with law. (Ajay Kumar Mittal) Judge February 05, 2013 (Gurmeet Singh Sandhawalia) 'gs' Judge "