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1986 Supreme(All) 418
High Court of Allahabad
A. Banerji, Virendra Kumar, JJ.
Satish Chandra Agarwal – Appellant
Versus
Commissioner of Income-Tax And Anr. – Respondent
Civil Misc. Writ Petition 1006 of 1986
Decided On : Dec 19, 1986
The Commissioner of Income-tax does not have the power to extend the time limit for making a full and true disclosure of income under Explanation 2 to Section 273A of the Income-tax Act, 1961.
Headnote:
INCOME TAX - Section 273A - Explanation 2 - Voluntary disclosure of income - Time limit - Extension of time - Power of Commissioner - Whether the Commissioner of Income-tax has the power to extend the time limit for making a full and true disclosure of income under Explanation 2 to Section 273A of the Income-tax Act, 1961.
Fact of the Case:
The petitioner, a businessman, failed to file his income tax return within the time allowed and a raid was conducted by the Income-tax Department. He subsequently filed his return and made a disclosure of additional income. The Commissioner of Income-tax held that the disclosure was not made within the time limit prescribed in Explanation 2 to Section 273A and therefore, the petitioner was not entitled to the benefit of the deeming clause in the Explanation.
Finding of the Court:
The court held that the Commissioner of Income-tax did not have the power to extend the time limit for making a full and true disclosure of income under Explanation 2 to Section 273A of the Income-tax Act, 1961. The court observed that the Explanation clearly stipulated a time limit of fifteen days from the date of the search and there was no provision in the Act for extending this time limit.
Issues: Whether the Commissioner of Income-tax has the power to extend the time limit for making a full and true disclosure of income under Explanation 2 to Section 273A of the Income-tax Act, 1961.
Ratio Decidendi: The court interpreted Explanation 2 to Section 273A of the Income-tax Act, 1961 and held that it did not confer any power on the Commissioner of Income-tax to extend the time limit for making a full and true disclosure of income. The court observed that the Explanation clearly stipulated a time limit of fifteen days from the date of the search and there was no provision in the Act for extending this time limit.
Final Decision: The court dismissed the petitioner's writ petition, holding that he had made out no case for interference by the court.
1. THE petitioner, Satish Chandra Agarwal, carried on business in the name and style of " Diamond Jewellers " in Sarrafa Bazar, Meerut. He has filed this writ petition praying that the order of the Commissioner of Income-tax, Meerut, dated July 10, 1986, be quashed and the subsequent penal proceedings as well. It was further prayed that a writ of mandamus be issued commanding the respondents to drop the penalty proceedings initiated against the petitioner and not to give effect to the notice served by the Department.
2. THE petitioner had failed to file a return for the assessment year 1984-85 within time. A raid was organised by the Income-tax Department into both the business as well as residential premises of the petitioner on February 8, 1985. THE petitioner had thereafter on January 28, 1986, voluntarily filed his income-tax return under Section 139(4) of the Act for the assessment year 1984-85. THE petitioner also filed the income-tax return for the year 1985-86 on January 28, 1986, within 35 days from the service of notice under Section 139(2) of the Act. THE Income-tax Officer accepted the returns of the petitioner and determined the amount of tax payable for the two assessment years. But the Income-tax Officer directed the Department to issue penalty notice under Sections 271(1)(a), 271(1)(c) and 273 of the Act in respect of both these assessment years. Thereupon, notices have been served upon the petitioner and the Income-tax Officer, Central Circle, Meerut, is proceeding in the matter. During the search, valuable ornaments, papers and account books were seized by the Department and it was found that there was unaccounted business and money to the tune of Rs. 1,11,000 which has not been explained and disclosed by the petitioner. Thereupon, the Income-tax Officer, vide his letter dated February 11, 1985, invited the petitioner's attention to the Explanation 2 to section 273A of the Act which reads as under :
"Explanations.--Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing belonging to a person 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 purposes 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 petitioner thereupon requested the Department to allow him to scrutinise his account books and papers so as to enable him to file a proper disclosure. He filed a disclosure petition on February 23, 1985, i.e., within 15 days before the Commissioner of Income-tax, Meerut. Subsequently, he disclosed an additional income of Rs. 30,000 on June 3, 1986, and the matter came up before the Commissioner who by the impugned order held that since the petitioner-assessee has without reasonable cause failed to furnish the return within the time allowed, he could not be permitted to furnish further particulars beyond that date. Any explanation submitted by him beyond the said period was unacceptable as the facts of the case reveal that it was not a voluntary disclosure but was made when it was found by him that the Department is possessed of all the material with it.
3. SECTION 273A requires the assessee to make a full and true disclosure. Whether it is a full or true disclosure is to be determined by the Income-tax Officer and the higher officers on appeal or revision. This court in exercise of its power under Article 226 of the Constitution cannot adjudicate into the question whether the disclosure is full and true. The Commissioner of Income-tax has taken a view that a full and true disclosure has not been made in this case.
4. THE principal question before us was whether subsequent disclosure made by the a
