JUDGMENT
1. Heard counsel for the parties.
2. The petitioner seeks quashing of impugned order dated December 15, 1984, annexure-6 to the writ petition passed by the Chief Commissioner of Income-tax, Lucknow, under Section 273A of the Income-tax Act, 1961 (briefly "the Act"), in so far it relates to the assessment year 1977-78.
3. The facts, as briefly stated, are that return for the assessment year 1977-78 became due on June 30, 1997, but that was filed by the petitioner on September 4, 1978, that is, with a delay of 14 months.
4. The petitioner then made an application under Section 273A(1) of the Act for waiver of the penalty imposable under Sections 271(1)(i) and 271(1)(iii) and the interest under Section 139(8) of the Act, which was rejected by the Commissioner for the reason that an addition of Rs. 5,000 on ground of unexplained investment was made in the assessment.
5. From a perusal of the assessment order, it appears that during the scrutiny of the account books of the assessee, a deposit of Rs. 8,000 by the petitioner in the uchanti account was noticed and the petitioner was called upon to explain the same. The assessee then filed a reply stating that deposits in that account are covered from the past savings of agricultural income and business income. The assessing authority accepted the explanation of the assessee partially that the petitioner would have saved from agricultural income to the extent of Rs. 1,000 and Rs. 2,000 from past savings of the business income. So that explanation was accepted only to the extent of Rs. 3,000 and an addition for the unexplained amount of Rs. 5,000 was made. The Commissioner took the view that since the addition to the extent of Rs. 5,000 was made in the assessment of the petitioner, the petitioner was not entitled to waiver.
6. 'The submission of counsel for the petitioner is that since the petitioner filed the return voluntarily and in good faith making full and true disclosure, it is entitled to waiver.
7. The question for consideration is whether waiver can he refused simply on the ground that some addition was made in the assessment.
8. In Sardar Gur Iqbal Singh v. CIT (Wealth-tax) [1992] 197 ITR 269, this court considering the analogous provision of the Wealth-tax Act held that for any disclosure to be "full and true" the requirement of law is that it must be honest. The court stated that the expression "good faith" has relevance to the frame of mind of the person at the relevant time when he furnished voluntarily the return making the disclosure of his net wealth.
9. The submission of learned counsel for the petitioner is that addition on account of unexplained investment may have been made in the assessment, but the petitioner to its honest belief made full and true disclosure at the time when the return was filed. There is no finding by the Commissioner that the disclosure was not made in the return by the petitioner . in good faith. An assessee may have filed a return in good faith making full and true disclosure to his honest belief and yet addition may be made by the assessing authority rejecting the explanation furnished by the assessee. Addition being made in the assessment of the petitioner on partial rejection of its explanation does not mean that the return was not filed by the petitioner in good faith. In the absence of a finding of lack of good faith, the benefit of waiver cannot be refused simply on the ground that some addition was made on account of unexplained investment in the petitioner's assessment.
10. For the reasons, the writ petition succeeds and is allowed. The impugned order, in so far as it relates to the assessment year 1977-78 refusing waiver, is quashed with the observation that the Commissioner will pass an order afresh in the light of the observations made herein-above allowing the waiver.