1. Petitioner No. 1 in Special Civil Application No. 3583 of 1989 is a partnership firm carrying on business as a tobacco commission agent. Petitioners Nos. 2, 3 and 4 are partners in the said firm ("the firm" for short). The firm was duly registered under the relevant provisions of the Income-tax Act, 1961 ("the Act" for short). The firm and its partners had prepared statements of their income and returns for the assessment years 1976-77 to 1979-80 in time and handed them over to their income-tax practitioner. An application under Form No. 12 for continuance of registration of the firm was duly signed and the same was also handed over to the income-tax practitioner in time for each of the said assessment years. Advance tax also had been paid in due course. The income-tax practitioner engaged by the petitioners, however, did not file their returns for the said assessment years within the prescribed time. The petitioners on coming to know that their returns were not filed within the prescribed time, engaged another income-tax practitioner who filed them on December 4, 1980. The returns of the income of the firm and the partners for the assessment years 1976-77 and 1977-78 were filed beyond a period of two years prescribed for completing the assessments for those years. The firm and the partners, on filing of the returns, as aforesaid, also paid tax under section 140A of the Act. The income-tax Officer accepted the returns for the assessment years 1978-79 and 1979-80 and framed assessments accordingly. However, so far as the assessments years 1976-77 and 1977-78 were concerned, since the returns of these years were filed beyond the prescribed period of two years for making assessments as aforesaid, the Income-tax Officer issued notices under section 148 of the Act against the firm and its partners. Since the returns were already filed, the firm and the partners, in response to the notices under section 148, stated that the said returns be treated as returns in response to the notices under section 148. The Income-tax Officer, it appears, accepted this plea and treated the returns which were already filed as returns in response to the notices under section 148. These returns were also accepted and assessments were framed accordingly.
2. The Income-tax Officer, while framing the assessments for the assessment years 1976-77 to 1979-80 as aforesaid, initiated penalty proceedings under section 271(1)(a) of the Act, and, ultimately, levied penalty under the said provision. The Income-tax Officer also charged interest under section 139(8) of the Act in the case of the firm and under section 139(8) and section 215 of the Act in the cases of two partners of the firm. Thereupon, the firm and the partners made applications to the Commissioner of Income-tax ("the Commissioner" for short) for waiver of penalty and interest under section 273A of the Act. These applications which were for the assessment years 1976-77 to 1979-80 were made on January 12, 1983. It, however, appears that detailed applications for the waiver of the penalty and interest under section 273A were again made on July 11, 1988. The Commissioner, by his order dated January 4, 1989, passed in the case of the firm, held that the returns of income for the assessment years 1976-77 and 1977-78 were filed beyond the time permissible under section 139(4) of the Act and as such they could not be considered to be returns in the eye of law. It was observed that the assessments for the said two years could be made only after issuing notices under section 148 calling upon the firm to furnish returns. Therefore, so far as the assessment years 1976-77 and 1977-78 were concerned, according to the Commissioner, necessary conditions for waiver were not satisfied. He, therefore, rejected the firm's prayer for waiver of penalty and interest for the assessment years 1976-77 and 1977-78. However, so far as the assessment year 1978-79 was concerned, the Commissioner held that as the firm had paid advance tax more than the tax demanded and the return had been filed voluntarily, penalty and interest levied for the said assessment year deserved to be waived in full. He, accordingly, waived in full the penalty and interest levied for the assessment year 1978-79. So far as the assessment year 1979-80 was concerned, no penalty or interest was levied in the case of the firm. The Commissioner, therefore, held that the application for the said year deserved to be dismissed. So far as, partner Chandulal Cheldas Patel-petitioner No. 3 in Special Civil Application No. 3583 of 1989 was concerned, the Commissioner, as in the case of the firm, held that the necessary conditions for invoking the provisions of section 273A of the Act were not fulfilled for the assessment years 1976-77 and 1977-78. So far as the assessment year 1978-79 was concerned, the Commissioner waived penalty but refused to waive interest under section 139(8) and section 215 of the Act. Since neither penalty not interest was charged for the assessment year 1979-80, the Commissioner rejected the said partner's application as being infructuous. An identical view has been taken in the case of the partner Mahendrakumar Chandulal Patel-petitioner No. 4 in Special Civil Application No. 3583 of 1989. It was stated before us that the petitioners do not know whether any order under section 273A has been passed in the case of said partner Cheldas Khushaldas Patel, petitioner No. 2 in Special Civil Application No. 3583 of 1989, namely, the firm and its partners sought to challenge the aforesaid orders passed by the Commissioner. An objection was raised that the common petition challenging the orders passed by the Commissioner in the case of the firm and the partners was not maintainable and, therefore, separate petitions being Special Civil Applications Nos. 662, 663 and 664 of 1990 were filed on behalf of the partners, namely, Cheldas Khushaldas Patel, Chandulal Cheldas Patel and Mahendrakumar Chandulal Patel.
3. Since common questions arise for our consideration in these petitions, they are being disposed of by this common judgment.
4. The questions which arise for our consideration in these petitions are (1) whether the Commissioner was justified in rejecting the petitioners applications for waiver of penalty and interest for the assessment years 1976-77 and 1977-78 on the ground that the returns filed by the petitioners beyond the period of two years could not be treated as returns in the eye of law and since the assessments were made after issue of notices under section 148, the necessary conditions for waiver of penalty and interest laid down in section 273A were not fulfilled for the assessment years 1976-77 and 1977-78 and (2) whether, the Commissioner was justified in rejecting the prayer of two partners, namely, Chandulal Cheldas Patel and Mahendrakumar Chandulal Patel for waiver of interest levied under section 139(8) and section 215 of the Act on the ground that the returns were delayed from year to year.
5. Section 273A of the Act in so far as it is relevant for our purpose as it stood at the relevant time, reads as follows :
"273A. (1) Notwithstanding anything contained in this Act, the Commissioner may, in his discretion, whether on his own motion or otherwise, -
(i) reduce or waiver 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...
(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...
(3) where an order has been made under sub-section (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section in relation to any other assessment year at any time after making of such order."
6. The Commissioner has been empowered to reduce or waive the amount of penalty imposed or imposable on a person under section 271(1)(i) for failure, without reasonable cause, to furnish under sub-section (1) of total income which he was required to furnish under sub-section (1) of section 139 or to 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. So far as reduction or waiver of the amount of penalty imposed or imposable under section 271(1)(i) is concerned, the person seeking reduction or waiver of penalty has to satisfy the Commissioner that he has, prior to the issue of notice to him under sub-section (2) of section 139 voluntarily and in good faith made full and true disclosure of his income. So far as reduction or waiver of interest payable under section 139(8) or section 215 or section 217 or penalty imposed or imposable under section 273 is concerned, the person seeking reduction or waiver or penalty of interest has to satisfy the Commissioner that he has, prior to the issue of 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 in the income so disclosed. Sub-section (3) lays down that, where an order has been made under sub-section (1) in favour of any person, whether such order relates to one or more assessment years, he shall not be entitled to any relief under this section in relation to any other assessment year at any time after the making of such order. This sub-section clearly indicates that an order made under sub-section (1) may relate to one or more assessment years. It would thus appear that, under section 273A(1), the Commissioner may either suo motu or otherwise waive penalty and/or interest in respect of one or more years. It is open to an assessee to move the Commissioner for waiver of penalty and interest for one or more years. The Commissioner is empowered to take up for consideration the question of waiver of penalty and/or interest for one or more assessment years. However, once an order waiving penalty and interest in respect of one or more assessment years is made in respect of an assessee, no order granting such relief for any other assessment year can be made in favour of the same assessee.
7. The Commissioner, in the case of the firm, refused to waive penalty and interest for the assessment years 1976-77 and 1977-78 only on the ground that the returns filed beyond the prescribed period could not be considered to be returns in the eye of law. As pointed out above, since the returns for the said two assessment years were filed beyond the period prescribed for making assessment, the Income-tax Officer issued notice under section 148 of the Act and at the request of the petitioners treated the returns which were earlier filed as returns filed in response to the notice under section 148. It is urged on behalf of the Revenue that disclosure of income voluntarily and in good faith, as envisaged under sub-clauses (a) and (c) of sub-section (1), could be made only by filing a valid return and, if disclosure was not made by a valid return, such disclosure could not be considered, even if it was made voluntarily and in good faith.
8. We are not inclined to accept the submission made on behalf of the Revenue. There is nothing in the above provision to support the Revenue's argument that disclosure could be made only by a valid return. What the provision envisages is a disclosure and not a disclosure by a valid return. It is significant that the provision does not require the filing of a return of income for disclosure of income. Disclosure need not necessarily be made by filing returns of income. It could be made either by an application or a letter or a return which might be beyond the period prescribed for making assessments. A return filed after the expiry of the period of limitation for making assessment would, in our opinion, amount to disclosure of income within the meaning of sub-clauses (a) and (c) of sub-section (1) of section 273A. It cannot be gainsaid that the return of income discloses the total income of the assessee filing the return. Therefore, merely because the return of income is filed beyond the period prescribed for making assessment, it would not mean that it does not disclose income. As pointed out above, a return of income does disclose the total income of the assessee and such return would not cease to be disclosure of his total income, merely because it is filed beyond the period prescribed for making assessment. In other words, it is not necessary that there should be a valid return filed before the expiry of the period prescribed for making assessment for making disclosure as envisaged under sub-clauses (a) and (c) of sub-section (1) of section 273A. sub-clause (b) of sub-section (1) also speaks about full and true disclosure of particulars of income. So far as a case covered by clause (ii) of sub-section (1) is concerned, such full and true disclosure has to be made prior to the detection by the Income-tax Officer of concealment of particulars of income or of the inaccuracy of particulars furnished in respect of such income. Such disclosure could also be by a revised return or an application or a letter addressed to the taxing authority. Disclosure contemplated by sub-clauses (a), (b) and (c) cannot have different meanings. In other words, it has the same meaning and such disclosure could be made by a return within or beyond the prescribed time for making assessment or by a letter or an application to the taxing authority.
9. In the instant case, the petitioners had filed returns of income for four years for the assessment years 1976-77 to 1979-80, almost at the same time. So far as returns for 1976-77 and 1977-78 were concerned, they were filed after the period of making assessment had expired. Therefore, so far as these two years are concerned, the Income-tax Officer issued notices under section 148 and, as pointed out above, the returns which were already filed were treated as returns in response to the said notices. These returns, though filed after the expiry of the period prescribed for making assessment, did disclose the petitioners total income. We, therefore fail to see why these returns could not have been treated as disclosure of income made by the petitioners within the meaning of sub-clauses (a) and (c) of sub-section (1) of section 273A. As held by us, the said provision does not require the filing of a valid return for making disclosure. The Commissioner was, therefore, wrong in refusing to grant relief to the petitioners on that ground alone. The Commissioner has held that, so far as the assessment year 1978-79 was concerned, the petitioners has filed the return voluntarily. In other words, according to him, the petitioners had voluntarily and in good faith made a full and true disclosure of their income, so far as the assessment year 1978-79 was concerned. So far as the assessment years 1976-77 and 1977-78 are concerned, it is not held that the petitioners had not made a full and true disclosure of their income in the returns of income filed by them but, as pointed out above, the Commissioner refused to treat these returns as disclosure. This view, in our opinion, is not correct. We, therefore, hold that the Commissioner ought to have given relief to the petitioners for the assessment years 1976-77 and 1977-78 also.
10. The view which we have taken is supported by the decision of the Allahabad High Court in Dhan Raj v. CIT [1983] 140 ITR 652. The Allahabad High Court held that, under the provisions of section 273A(1) of the Act, there is no warrant for saying that a full and true disclosure of income can be made only in a valid return filed by an assessee. The disclosure contemplated by the provision can be made by way of a petition. The main object of the provision is to facilitate a voluntary disclosure of concealed income by holding out to the businessmen a temptation of reliefs against penalties and interest, to which they may have been liable under the normal law. We fully agree with the view taken by the Allahabad High Court.
11. The petitioners had made a common application for waiver of penalty and interest for the assessment years 1976-77 to 1979-80. The Commissioner had power to waive penalty and interest for all the four years since, admittedly, in the cases of the petitioners, prior to the application, no order has been made under sub-section (1) of section 273a. Once the order is made, the petitioners are not entitled to claim waiver of penalty or interest for other assessment years. The view which we are inclined to take is supported by the decisions of the Allahabad High Court in Ram Sarandas Har Swaroop Mal v. CIT [1990] 186 ITR 503 and in Surendra Prakash v. CWT [1991] 187 ITR 456.
12. We, therefore, hold that the Commissioner was not right in refusing to grant relief to the petitioners for the assessment years 1976-77 and 1977-78. Since it is not disputed that all the petitioners had voluntarily and in good faith filed returns of income for the said assessment years disclosing their income and since the Commissioner had not stated any other grounds for not granting to the petitioners the relief by way of waiver of penalty or interest, they are entitled to such relief. So far as the assessment year 1978-79 is concerned, as pointed out above, the Commissioner has waived in full penalty and interest in the case of the firm. However, so far as the two partners, namely, Chandulal Cheldas Patel and Mahendrakumar Chandulal Patel, are concerned, the Commissioner has waived penalty but refused to waive interest under section 139(8) and section 215 of the Act for the assessment year 1978-79. There appears to be no reason or justification not to waive interest under section 139(8) and section 215 of the Act for the assessment year 1978-79. So far as the assessment year 1979-80 is concerned, no penalty or interest has been levied and, therefore, the question of waiver does not arise in the case of the firm and its partners. The partner, Cheldas Khushaldas Patel in whose case no order under section 273A has been passed is entitled to the same treatment which is given to the firm and the other two partners. He also appears to have filed returns voluntarily and in good faith for the assessment years 1976-77 to 1979-80. In his case also, penalty and interest under section 139(8) and section 215 of the Act deserves to be waived.
13. In the result, these petitions are allowed. The Commissioner is directed to waive penalty and interest for the assessment years 1976-77 and 1977-78 in the case of the firm and the partners. He is further directed to waive interest under section 139(8) and section 215 of the Act for the assessment year 1978-79 in the case of the partners, Chandulal Cheldas Patel and Mahendrakumar Chandulal Patel. He is further directed to waive penalty and interest in the case of the partner, Cheldas Khushaldas Patel, for the assessment years 1976-77 to 1979-80. Rule made absolute in each of these petitions with no order as to costs.