Smt. Sushila Kumari and others V. Commissioner of Income Tax, Rohtak (Haryana)

CWP/7406/1991

AI Insights

The case involves Smt. Sushila Kumari and others, who petitioned against the Commissioner of Income Tax, Rohtak, challenging the dismissal of their application for waiver of interest and penalties imposed due to late filing of tax returns following the receipt of enhanced compensation for their agricultural land, which was acquired by the Haryana Urban Development Authority. The petitioners argued that the enhanced compensation and interest were not known to them at the time of the original tax return filings, and thus, penalties and interest should be waived. The court examined the circumstances under which the enhanced compensation was received and the subsequent tax filings, ultimately deciding in favor of the petitioners.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 796284 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 03-05-2012
• Assessment Year: misc
• Other Referred Cases: Shanti Sarup Sharma v. Commissioner of Income Tax and another, Parkash Devi (Smt.) v. CWT
• Laws Referred To: Income Tax Act, 1961, Land Acquisition Act, 1894, Wealth Tax Act, 1957
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: YOGESH PUTNEY
• Assessee Lawyers: PANKAJ JAIN; D K GOYAL; RISHABH KAPOOR
• Keywords: Agricultural Land Acquisition; Enhanced compensation; Income Tax; Interest Charge; Penalty Waiver
• Section: 143(1); 273A; 226; 227; 271(1)(a); 139(8); 217; 273(1)(b)

Judgement Text

"CWP No.7406 of 1991 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.7406 of 1991 Date of decision: 03.05.2012 Smt.Sushila Kumari and others -----Petitioners Vs. Commissioner of Income Tax, Rohtak (Haryana) ----Respondent CORAM:- HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE GURMEET SINGH SANDHAWALIA Present:- Mr. Pankaj Jain, Mr. D.K.Goyal, and Mr. Rishabh Kapoor, Advocates for the petitioners. Mr. Yogesh Putney, Standing Counsel for the revenue. Ajay Kumar Mittal,J. 1. The petitioners through the present petition filed under Articles 226/227 of the Constitution of India have impugned the order dated 20.3.1991, Annexure P.8 passed by the Commissioner of Income Tax, Rohtak – respondent on a petition filed by them under Section 273A of the Income Tax Act, 1961 (in short, “the Act”). 2. Briefly, the facts as narrated in the petition may be noticed. Agricultural land of the petitioners was acquired by the Haryana Urban Development Authority in the year 1985. The petitioners made a reference for enhancement of compensation before the District Judge under Section 18 of the Land Acquisition Act,1894. The amount of compensation was enhanced on 7.8.1989 by the District Judge. The said amount was received by the petitioners in CWP No.7406 of 1991 2 February 1990. Thereafter, the petitioners filed their return. While framing the assessment under section 143(1) of the Act, the Assessing Officer proposed to issue notice to levy interest for late filing of the return under section 139(8) of the Act and for imposition of penalty under Section 271(1)(a) and 273(1) (b) of the Act as per assessment orders in respect of petitioner No.1 for the assessment years 1987-88 and 1988-89 vide Annexures P.1 and P.2 respectively. Similar orders were passed in respect of other petitioners. The Assessing Officer imposed penalty under section 271(1) (a) amounting to ` 2852/-, ` 966/- and under Section 273(1) (b) of the Act amounting to ` 342/-, ` 342/-. Similar amounts of penalty have been imposed on the other petitioners. The petitioners moved an application before the respondent under Section 273A of the Act for waiver of interest charged under sections 217 and 139(8) of the Act and for penalty proceedings under sections 271(1) (a) and 273(1) (b) of the Act. The respondent dismissed the application vide order impugned herein (Annexure P.8). Hence the present petition by the petitioners. 3. Learned counsel for the petitioners submitted that the enhanced compensation and interest thereon was received and it was on that basis that the returns were filed for the earlier years and since the assessees had not known the amount of enhanced compensation and the interest in those years, charging of interest under section 139 (8) and 217 of the Act and penalties imposable under Section 271(1) (a) and 273 (1) (b) of the Act should have been waived. He placed CWP No.7406 of 1991 3 reliance upon a Division Bench judgment of this Court in Shanti Sarup Sharma v. Commissioner of Income Tax and another, (1999) 237 ITR 376 to submit that the compensation and interest received from the Government on a subsequent date which was not ascertained at the time of due date for filing of the return for a particular assessment year, it was held that interest under sections 139(8) and 217 of the Act was liable to be waived. Further, equally the penalties under Sections 271(1)(a) and 273 of the Act for not filing the returns when it was not known to the assessee that the amount of enhanced compensation and the interest received would make them liable to file the return and pay tax, there was no justification for the same. Learned counsel for the assessee further submitted that the amount of interest and penalties levied which is sought to be waived is ` 2852/-, ` 966/-, ` 342/- and ` 342/-, Annexures P.4 to P7 respectively which is very meagre and thus, it could not be held that there was any intention to evade payment of tax. 4. After hearing learned counsel for the parties and perusing the record, we find that the writ petition deserves to succeed. 5. 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 Parkash Devi (Smt.) v. CWT (1983) 141 ITR 122, 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; CWP No.7406 of 1991 4 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.” 6. Further, this Court while delving into the scope of Section 273A of the Act in Shanti Sarup Sharma's case (supra) 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.” 7. Adjudicating the issue in favour of the assessee, it was observed that the petitioner therein had received compensation in February 1991 and, therefore, there was no justification in charging interest for the earlier period. 8. The respondent had rejected the petition for waiver of interest and penalty vide Annexure P.8 primarily on the grounds that CWP No.7406 of 1991 5 there was no verification regarding full and true disclosure made by the assessee and the assessee had not paid or made satisfactory arrangements for the payment of interest etc. 9. Adverting to the factual matrix in the present case, the assessee-petitioner had received enhanced compensation in February 1990 relating to assessment years 1987-88 and 1988-89. As per assessment orders dated 21.5.1990, Annexures P.1 and P.2 appended alongwith the petition, the petitioners had paid the tax by way of self assessment under Section 140A of the Act immediately and had made true and full disclosure of their income as no addition was made to their declared income. The assessee having paid the tax under self assessment and had filed the application for waiver of interest and penalty especially when the amount of interest and penalty was meagre, it cannot be said that the assessee had not made satisfactory arrangements for payment of interest etc. Thus, both the grounds of rejection taken by the respondent are contrary to the record and cannot be sustained. 10. In such circumstances, ordinarily we would have referred the matter back to the respondent after setting aside order Annexure P.8, for passing order afresh in accordance with law. However, keeping in view that the quantum of penalties and interest is not very substantial and we have arrived at the conclusion that the assessee fulfilled the requirements as envisaged under Section 273A of the Act, we allow this writ petition and set aside order Annexure P.8. Consequently, in the peculiar facts and circumstances of this case, CWP No.7406 of 1991 6 the applications filed by the petitioners before the respondent under Section 273A of the Act are allowed. There shall, however, be no order as to costs. (Ajay Kumar Mittal) Judge May 03, 2012 (Gurmeet Singh Sandhawalia) 'gs' Judge "