Anoop V. Mohta, J.:— The present petition is against an order whereby respondent No. 1 refused to exercise jurisdiction under section 273A of the Income-tax Act, 1961 (for short “the Act”) for waiver of interest under sections 139(8) and 217 of the Act for the income-tax assessment years 1983-84 to 1985-86.
2. The petitioner being a co-owner received rental income from the property during the relevant years.
3. The petitioner voluntarily filed her income-tax returns for the above years before receipt of any notice under section 139(2) or 148 of the Act. The petitioner filed a petition on May 4, 1988, under section 273A for waiver of interest charged and for waiver of penalties and restricted the same only for the years 1983-84 to 1985-86. The petitioner had made full payment of taxes on the income as assessed but not paid interest as an application was filed for waiver of the interest. The respondent, however, by order dated May 24, 2001, rejected the petitioner's application.
4. This court in Writ Petition No. 311 of 1996 (Vasantbhai Jethalal Lathiwala v. Commissioner Of Income-Tax, [2010] 325 ITR 41) elaborated the scheme and purpose of section 273A of the Income-tax Act in paragraph Nos. 7, 9, 11 and 13 as under (pages 43, 44 and 46):
“The Division Bench of the Bombay High Court in Laxman v. CIT, [1988] 174 ITR 465 (Bom); [1989] 75 CTR (Bom) has explained the scheme and purpose of the section in the following words (page 474):
‘On behalf of the respondent, it was contended that the power under section 273A of the Act is purely discretionary in character and, under the circumstances, no interference in writ jurisdiction is called for. We find it difficult to accept this contention. Once the conditions required for exercise of discretion in any judicial or quasi-judicial proceedings are satisfied, exercise of discretion cannot be either arbitrary or capricious and has to be judicious and objective. When the power is given to a public authority for being used for the benefit of a class of persons and the conditions precedent for the exercise are well defined, there is a duty to exercise such power and on failure to perform that duty, courts are not only empowered but are duty bound to interfere. In the instant case, refusal to exercise discretion is for no other reason than misconception of the scope of the power and hence a writ of mandamus can be issued directing the Commissioner of Income-tax to entertain the application and to proceed to exercise the discretion within the limits specified by law…’
The Bombay High Court in Arnnd B. Apte v. CIT, [2004] 270 ITR 581 (Bom) further observed that section 273A of the Act contemplates full and true disclosure made voluntarily and in good faith even though such a disclosure is made through belated returns. In that case, the application of waiver under section 273 of the Act cannot be rejected on the ground that there was no voluntary disclosure, and thereby such order of the Commissioner was quashed and set aside and remanded the matter to decide the application on the merits…
In Sukhdev Hargopal Puri v. Union of India, [2005] 279 ITR 591 (Bom) this court has considered the power of the Commissioner to grant waiver as a one-time measure can grant relief with regard to any number of assessment years based upon the section 273A(3) of the Act….
It is necessary for the Commissioner to take into consideration all the material available on the record (Sangram Singh Mehta v. ITO, [2008] 296 ITR 483 (Raj)).”
5. In the present case as the section itself provides that such an assessee can apply for waiver of interest and penalty and accordingly applied also. Therefore, merely because the interest amount was not paid but complied with all other elements as required the rejection of application on that ground, in our view, is not correct.
6. The Department failed to prove that the application was filed only after service of notice. There is an affidavit to show that the petitioner never received any notice under section 139 or such other section. The return was filed voluntarily disclosing the full facts and material. The burden lies upon the Department to show that the notices were duly served for the assessment years 1983-84 to 1985-86 which they failed to discharge. In view of the affidavit of denial, detailed material and evidence to support the case of service is missing in the present case. Therefore, we are of the view that there were no notices served before the voluntary disclosure of the income by the petitioner.
7. Taking all these aspects into account, we are of the view that the impugned order dated May 24, 2001, for the assessment years 1983-84 to 1985-86 as restricted, needs to be quashed and set aside, the respondents to pass order after giving full opportunity of hearing and reconsider the application filed by the petitioner in accordance with law. The matter is remanded accordingly. The petition is allowed to that extent only with no order as to costs.