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PETITIONER: SMT. HARBANS KAUR

       Vs.

RESPONDENT: THE COMMISSIONER OF WEALTH-TAX JULLUNDUR

DATE OF JUDGMENT:       13/01/1997

BENCH: B.P. JEEVAN REDDY, K.T THOMAS

ACT:

HEADNOTE:

JUDGMENT:      (With CA Nos. 1335-36/81, 1337/81 1338/81)                       J U D G M E N T THOMAS J.      Appellants in  these appeals  were  liable  to  penalty under section 18 of the Wealth Tax Act, 1957, (for short the Act’), for  failure to  file the  returns in  respect of the assessment years 1970-71, 1971-72, 1972-73, 1973-74, 1974-75 and  1975-76.   When  Parliament   amended   the   Act   and incorporated Section  18-8 by  Taxation Laws  (Amendment Act 1975) i.e.  Act  41  of  1975,  appellants  in  these  cases submitted wealth  tax returns  and made  a request  for full waiver of the penalty as envisaged in the new provision. The Commissioner of  Wealth Tax  (the ‘Commissioner’  for short) found  that   as  the  appellants  have  complied  with  the conditions stipulated  in section  18-8 of  the Act they are entitled to  the benefit  of  the  new  provision.  However, keeping in view the facts and circumstances of the case, the Commissioner,  instead  of  granting  waiver  for  the  full penalty  had   only  reduced  it  to  5%  for  the  relevant assessment years. Appellants submitted that once a person is found to be entitled to the benefits of the new provision of section 18-B of the Act, the Commissioner should have waived the  entire   amount  of  penalty  payable  by  that  person concerned. So  saying they  approached  the  High  Court  by filing  writ   petitions  but   those  writ  petitions  were dismissed in limine. Hence, these appeals.      Learned counsel  contended that  once a person is found entitled to  the benefit under section 18B, the Commissioner cannot withdraw part of the benefit by imposing a penalty of 5 per  cent. According to him, once the failure is condoned, power to  waive cannot be exercised in a truncated manner as was done in this case but only in a full measure.      Section 18(1)  empowers the  officer under  the Act  to impose penalty  on a person in certain contingencies. As per the  sub-section   if  the  Wealth  Tax  Officer,  Appellate Assistant Commissioner  or Appellate  Tribunal in the course of any  proceedings under  the Act  is  satisfied  that  any person has,  without reasonable cause, failed to furnish the returns which  he is  required to  furnish  or  has  without reasonable cause  failed to  furnish within the time allowed

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or without  reasonable cause  failed to comply with a notice under  section   16  (2)   or  (4),  or  has  concealed  the particulars  of   any   assets   or   furnished   inaccurate particulars of  any assets  or debts such officer may direct that such  person shall  pay, by  way of penalty, the amount specified respectively in three clauses set out therein.      Section 18-8  confers  power  on  the  Commissioner  to reduce or waive such penalty in certain contingencies, if he is satisfied  that  such  person  has  made  full  and  true disclosure of  his net wealth and has also cooperated in any equity relating  to the assessment of his net wealth and has either paid or made satisfactory arrangement for the payment of any  tax or  interest payable  in consequence of an order passed under the Act.      If  the   conditions  stipulated  in  the  section  are satisfied Commissioner  has a  discretion in  the matter. In exercise of  that discretion, Commissioner can either reduce the amount  of the  penalty or  he may even waive the entire penalty. It  is for  the Commissioner to decide on the facts of a  particular case  whether a  waiver in  entirety  or  a reduction alone is warranted.      The   words    "the    Commissioner    may    in    his discretion......reduce or  waive the  amount of  penalty" in Section 18-8  of the  Act are  clear enough to show that the power conferred  on the  Commissioner is  to be exercised by his in  such manner  as he  deems just  and proper.  When  a discretion is  conferred on  an authority  the same  must be exercised  fairly   and  not   arbitrarily,  justly  ad  not fancifully vide  S.G. Jaisinghani  vs. U.O.I.  & others: AIR 1967 SC 1427.      Even if  the legislature has not used the words "in his discretion" in  Section  18(B)(1)  Commissioner  could  have exercised  only   a  discretionary  power  in  view  of  the employment of  the word  "may". Now when the Parliament used both expressions "may" and "in his discretion" together, the position is  placed  beyond  the  pale  of  any  doubt  that legislature  wanted   an  officer   of  the   rank  of   the Commissioner to  be reposed  with the discretionary power to choose between entire waiver or reduction in any proportion.      Of course  when the  Commissioner, instead  of giving a complete waiver,  chooses to  give only  a reduction for the penalty amount  he must  indicate in  his order  that he has applied his  mind in  that regard. In this view, there is no warrant  for  the  proposition  that  the  Commissioner,  if satisfied of  the compliance  of conditions,  has  only  one choice i.e.  to waive the penalty in entirety. Otherwise, it may mean  that Commissioner  can in  a case where conditions are  not   satisfied,  reduce   the  penalty   amount.  When conditions are not satisfied, Commissioner cannot do either. Only  when  the  said  conditions  are  satisfied  that  the occasion  arises   for  the  Commissioner  to  exercise  his discretion - not before.      Learned counsel  has cited  the following  decisions of various High Courts in support of the contention that waiver in full  has to  be ordered when all the required conditions have been  complied with: Shakuntla Mehra vs. CWT (1976) 102 ITR 301  of the  Delhi High  Court; Shankara  Apya Swami vs. WTO, Belgaum  (1976) 103  ITR 649,  of  the  Karnataka  High Court; Anjanappa vs. CWT (1980) 124 ITR 433 of the Karnataka High Court;  Rasiklal Ranchhodbhai  Patel vs. CWT (1980) 121 ITR 219  of the  Gujarat High  Court Sardar Kartar Singh vs. CWT (1982)  135 ITR  375 of  the Gaughati High Court. In all those decisions learned Judges have pointed out that without indicating any  reason whatsoever  the  Commissioner  cannot dispense with  his discretion  in  granting  waiver  of  the

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penalty. Those  decisions have  not laid  down a proposition that the  only course  which a  Commissioner  can  adopt  on fulfillment of  the conditions  is to  waive the  penalty in entirety.      Section 18-8  is analogous  to  section  273-A  of  the Income Tax  Act, 1961  where under also a similar discretion has been  conferred on  the Commissioner  of Income  Tax for either reducing the penalty or granting waiver of the entire penalty. It  is understood  in clear  terms  that  the  said discretion in  Income Tax  Act  is  to  be  exercised  in  a reasonable and  fair manner. The decision of the Bombay High Court [Purshottam Thackersey vs. K.N. Anantrama Ayyar (1985) 154 ITR  438] cited  before us  only shows that the order of the Commissioner  declining to  waive  the  penalty  without advancing any  reason whatsoever cannot be supported and the matter was remitted to the Commissioner for passing an order afresh.      In the  cases on  hand, the  Commissioner has indicated his own  reasons for  resorting to the power of reduction of the penalty  in preference  to granting  full waiver  of the penalty. We  cannot say  that the  reasons indicated  in the orders  are   in  any   manner  unjust  or  irrelevant.  We, therefore, find  no ground  to interfere  with the  impugned order and  the judgments  of the High Court. The appeals are dismissed.