Case Law Details
CASE LAWS DETAILS
DECIDED BY: HIGH COURT OF BOMBAY,
IN THE CASE OF: Shardadevi P. Jhunjhunwala Vs CIT, Appeal No: W. P. No. 428 of 1996, DECIDED ON: September 14, 2009
RELEVANT PARAGRAPH
19. In B. M. Malani Vs Commissioner of Income Tax and Another, (2008) 306 ITR 196 (SC),the Supreme Court was considering the issue of genuine hardship under Section 220(2A)of the Income Tax Act. Considering the provisions there, the court was pleased to hold that :
“The ingredients of genuine hardship must be determined keeping in view the dictionary meaning thereof and the legal conspectus attending thereto.”
In Benera Valves Ltd. Vs. Commissioner of Central Excise,2006 (204)ELT 513 (SC),considering the expression “undue hardship ” the court noted that there is a matter within special knowledge of the applicant and has to be established by him. Secondly under Indian conditions, it is normally related to economic hardship. The court observed the quoting in the judgement in S. Vasudev Vs. State of Karnataka (1993)2 SCR 715 that something which is not merited by the conduct of the claimant or is very much disproportionate to it.
20. Before answering the issue, we may now consider the effect of the Explanation II, though it has since been omitted. An explanation is at times appended to a section to explain the meaning of the words contained in the section. See Dipak Chandra Ruhidas Versus Chandan Kumar Sarkar (2003)7 SCC 66.When the explanation opens with the words “for the purpose of this section ” or when it is added towards the ends of the section, it prima facie indicates that the explanation applies to all the clauses in the section .See Controller of Estate Duty Vs Kantilal Trikamal AIR 1976 SC 1935. By the explanation it was made clear that if any books or documents, money, bullion, amongst others are seized under section 132 and within fifteen days of such seizure, the person makes a full and true disclosure of his income to the Commissioner, such person shall, for the purpose of clause (b)of this sub section, be deemed to have made, 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, a disclosure of such particulars. The explanation has since been omitted with effect from 1.10.1984.What this would mean is firstly the contention raised on behalf of the Petitioners that the seizure of documents by authority other than income tax officer/A.O. is not detection by the A. O. has to be rejected. Secondly and consequently once the documents are seized then any disclosure subsequently made would not be voluntary. The omitted explanation only had sought to bring or to make it voluntary for a period which otherwise was not voluntary. The omission would only mean that this deemed voluntariness is now no longer legally available.
21. Considering this aspect of the matter and considering the judgment in Tribhuvandas (supra)and the judgement in the case of Division Bench in Natwarlal (supra),it would be clear that any disclosure made subsequent to seizure of incriminating material, such disclosure would not be voluntary. The Full Bench judgement of Allahabad High Court in Mohd (supra),also makes that position clear. It is clarified there that pursuant to the search incriminating material is found and disclosure made, the disclosure is liable to be treated as not voluntary but if no incriminating material is found and still disclosure is made, then it would be treated as voluntary.
22.On that touch stone let us consider the facts and arguments advanced on behalf of the petitioner. The only ground that is contended to say that it was voluntary was that without their assistance, the Revenue Authorities could not have deciphered the “Boston Diary ” and it is only because of the cooperation rendered by the Petitioners that the authorities could decipher the said diary. In our opinion, that is immaterial. The diary contained incriminating material based upon which the Additional income was disclosed. Merely because petitioners cooperated in deciphering the documents would not mean that the Respondent Revenue Authorities could not have deciphered the same. The test is whether any incriminating material was found. On the petitioner ‘s own statement the diary contained incriminating material. The application was made after that incriminating material was found. In these circumstances, in our opinion, the contention urged on behalf of the Petitioners must be rejected. It is true that the commissioner did not consider this aspect of the matter. That however, does not mean that the finding otherwise arrived at by the Commissioner that the disclosure was not voluntary can be faulted. In our opinion, considering the material on record no purpose would be served in remanding the matter back to the commissioner for reconsideration on this aspect considering the law as now understood and the facts on record.
23.According to the Petitioner, the Commissioner did not consider the various tests under section 273 A(4)for rejecting the application. The first order was made on 21.6.1993 under section 273A(4).The order in respect of section 273A(1)was made on 31.10.1994.There is no finding by the commissioner apart from hardship. Would this vitiate the order? If the Respondent No.1 considering the application holds that two predicates have been satisfied one of which was hardship. Considering the test as laid down by the Supreme Court in the case of B. M. Malani (supra),and Benara Valves (supra) the test is of undue or genuine hardship. The genuine difficulty would also mean that there is hardship that will be occasioned if the Petitioner was called upon to pay the penalty. Such hardship normally would be financial hardship that would be occasioned. The only ground made out on behalf of the Petitioner is by referring to their contention as raised in the written statement which were filed that the Petitioners had entrusted all their shares to Unit Trust of India to be sold at any available price but the petitioners in the said argument itself have thereafter stated as under :
“This evidently shows the spirit of co-operation and desire to comply the terms of Sec.273(S)”. It was not on the ground of financial hardship. Documentary evidence by way of balance sheet or any other material was not produced to show that the petitioners were not in a position to pay the penalty and if they had paid penalty, there would be adverse consequence on the petitioners. It was for the Petitioners to produce that material to discharge the burden and for the respondents to consider the same. No such material was placed by the Petitioner before Respondent No.1.In the absence of placing material, Petitioners cannot be heard to complain that there as non compliance by the respondent commissioner in considering the case under section 273A(4)nor has any material been placed before this court to show hardship that would be occasioned to the Petitioners assuming it could be placed. The learned commissioner has recorded a finding that the Petitioner did not produce any evidence to show that he did not have adequate financial resources. That by itself must have met the test. However, in the absence of the petitioners placing any other material on hardship, the findings recorded by the commissioner cannot be faulted with. At any rate, in our opinion, no purpose would be served in the exercise of our extra ordinary jurisdiction to remand the matter back to the commissioner.
24.The only other argument advanced was in respect of the penalty and interest imposed in so far as assessment year 1987-88 is concerned relying on the judgement in the case of Rohit Kumar. The returns were filed only after the seizure of the incriminating material. The issue of whether penalty or interest could be levied was in issue in proceedings for adjudication. In the instant case, the levy of penalty or interest including for the Assessment Year 1987-88 has not been challenged and has become final. Section 273A is an independent power notwithstanding anything contained in the Act. Therefore, even if interest and penalty has been levied in proceedings for adjudication, the Respondents have power under section 273A to reduce the penalty or interest under Section 273A as it then stood. The test for waiver or reduction, for exercise of discretion are different. Under Section 273(4)the party applying must make out a case of genuine hardship. The finding by the Commissioner is that the Respondent has not made out a case of genuine hardship. In so far as Section 273A(1)is concerned, the disclosure must be voluntary. The Commissioner has come to the conclusion that the declaration was not voluntary. For the Assessment Year 1987-88,it is true that the returns were filed in the ordinary course. The return was based on additional income contained in the incriminating material contained in the Boston Diary. It is obvious if the material had not been seized during search and seizure operations including the Boston Diary, the income in terms of the Diary could never have been disclosed as in the case of the past years. In the circumstances if the Respondents have come to the conclusion that it was not voluntary, and refused to grant relief, it will not be a fit case for us to exercise our extra ordinary jurisdiction.
