ANALYSIS OF SECTION 273A FOR WAIVER/REDUCING OF INTEREST AND PENALTY

The power of the Revenue with regards to waiver or reduction of penalty and interest has been laid down in Section 273A of Income Tax Act, 1961.
Certain specific clauses needs to be considered by the Revenue before exercising power as mentioned in Section 273A, which are as follows:

1. Reduction or waiver of penalty, if the Commissioner is satisfied that the assessee has voluntarily and in good faith , made true and full disclosure of particulars of income prior to the detection by the Assessing officer, and also
2. The assessee has co-operated in any enquiry relating to 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.
3. Where an order has been made under this Section in favour of any person whether such order relates to one or more than one assessment year. The benefit is available to the assessee not more than once.

Further, it is also pertinent to note that in cases where the penalty imposed is in respect of income relating to the relevant Assessment year or where such disclosure relates to more than one assessment year, if the aggregate amount of income exceeds Rs.5,00,000 , the Commissioner can reduce or waive penalty only with the previous approval of the Chief Commissioner or Director General.
The Recent judgement of High Court of Punjab and Haryana in the case of Dr.Santosh Rani Batra v. Commissioner of Income-Tax, Patiala deals with the same issue.
Facts of the case
The assessee has filed her income tax returns for the years 1985-86 to 1989-90 voluntarily before detection by the relevant authority. The Assessing Officer levied penalty and interest and framed an assessment for non disclosure of income. The assessee filed an application under section 273A for wavier or reduction of penalty and interest. The Commissioner rejected the application made by assessee on the ground that certain accounts and fixed deposits were discovered in the name of assessee and her husband and the assessee has revealed her income only after detection of concealed income during survey proceedings against the husband of the assessee.

Decision

A perusal of the impugned order reveals that before passing the order, the Commissioner obtained a report from the Deputy Commissioner of Income Tax, Chandigarh Range, which clearly states the fact that the income tax returns were filed voluntarily. The Commissioner of Income Tax ignored the fact that the proceedings were conducted against the assessee’s husband and not against the assessee.

It is relevant to take note of the provisions of Section 273A which highlights the facts that where the assessee has disclosed full particulars revealing his/her correct income before the detection by the Assessing Officer, the application if any made by the assessee for waiver of penalty should be considered in the light of the abovementioned provisions of Section 273A of Income Tax Act, 1961.

The basis on which the Commissioner has passed the decision is contrary to the provisions of the above mentioned section as it ignored the provision of Section 273A. In view of the above facts and findings, High court set aside the impugned order passed by Commissioner, allowed writ petition and the matter is remitted to the Commissioner of Income Tax, Patiala for deciding the application filed under Section 273A of the Act, afresh and in accordance with law.

Therefore, on the basis of the judgement as discussed above , we come to a conclusion that while considering an application for waiver of interest and penalty under Section 273A, Commissioner should confine his consideration to factors referred to in Section 273A and to no other factors.