SECTION 273A l POWER TO REDUCE OR WAIVE PENALTY

1303. Whether discretion of Commissioner under the section is fettered by any advice/directions from any authority

The various instructions issued by the Board contain only clarifications on the scope and applicability of section 271(4A)/273A of the Income-tax Act and the corresponding provisions under the Wealth-tax Act. These clarifications have been given in consultation with the Ministry of Law and relate to the conditions stipulated in section 271(4A)/273A of the Income-tax Act/section 18(2A)/18B of the Wealth-tax Act which are to be satisfied before any waiver/reduction as envisaged in these provisions could be granted by the Commissioner. While the Commissioner should examine the applicability of section 273A of the Income-tax Act/18B of the Wealth-tax Act in the light of these clarifications, once the stipulated conditions are satisfied the discretion of the Commissioner is not fettered by any advice/directions from any authority. The Commissioner being a quasi-judicial authority for the purposes of these sections should apply his mind to the facts of the case and pass an order on merits. In this connection reference may be made to Board’s Instruction No. 1377 [F. No. 281/40/79-IT (INV.)], dated 27-1-1981 in which the Board has brought to the notice of the Commissioners its earlier instructions and the decisions of the High Courts, and has advised the Commissioner that as the orders under section 271(4A)/273A of the Income-tax Act and 18(2A)/18B of the Wealth-tax Act are quasi-judicial orders, they should be supported by reasons with reference to the facts of the case.

Instruction : No. 1417 (relevant extracts) [F. No. 281/36/81-IT(INV.)], dated 29-9-1981. [Source : 115th Report (1982-83) of the Public Accounts Committee, pp. 22-23].

Note : See also Sl. No. 1243, 1244.

1304. Whether “genuine hardship” should be existing at time of assessment or levy of penalty or at time of making of application under section 273A(4)

1. Section 273A(4) of the Income-tax Act, 1961 provides that the Commissioner of Income-tax may, on an application by an assessee, and after recording his reasons for so doing, reduce or waive the amount of any penalty payable by the assessee under the Income-tax Act or stay or compound any proceedings for recovery of any such amount if he is satisfied that :—

  (i)  to do otherwise would cause genuine hardship to the assessee, having regard to the circumstances of the case; and

(ii)  the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him.

2. Representations have been received with regard to the point of time at which the existence of “genuine hardship” would entitle the assessee to relief under the above sub-section i.e., whether the “genuine hardship” should be existing at the time of assessment or levy of penalty or at the time of making of application under section 273A(4).

3. In this regard, it is hereby clarified that the “genuine hardship” referred to in the provisions of section 273A(4) should exist at the time at which the application under section 273A(4) is made by the assessee before the Commissioner and should so exist even at the time of passing of order under section 273A(4) by the Commissioner.

Circular : No. 784, dated 22-11-1999.