JUDGMENT
1. All the respondents (respondents Nos. 1 and 2) represented by Sri R. K. Upadhyay.
2. As contemplated under the rules of the court, and as there are no disputed facts, as a consequence whereof no counter and rejoinder affidavit is required, this petition is being decided finally at the admission stage.
3. To appreciate the facts (as pleaded by the petitioner), paras. 3 to 8 of the writ petition are quoted below:
3. That, the petitioner is an individual. On March 30, 1992, he filed his returns of income for the assessment years 1990-91 to 1992-93. Also, he filed an application under Section 273A of the Income-tax Act, 1961, (hereinafter referred to as 'the Act'). The said application was allowed.
4. That, in the returns of income for the assessment years 1990-91 to 1992-93, thus filed the petitioner disclosed certain income and investment representing income, which he had not disclosed earlier. The petitioner filed the above returns voluntarily prior to detection by the Assessing Officer.
5. That, thereupon, the assessment proceedings for the assessment years 1990-91 to 1992-93 were completed under Section 143(3) of the Act, interest under Sections 234A, 234B and 234C of the Act was also imposed for the assessment years 1990-91, 1991-92 and 1992-93.
6. That, on May 23, 1996, the Central Board of Direct Taxes issued instructions under Section 119 of the Income-tax Act, 1961 to provide for waiver of interest under Sections 234A, 234B and 234C of the Act. Photo copy of the instructions of the Central Board of Direct Taxes dated May 23,1996, is marked and annexed as annexure 1 to this writ petition.
7. That on January 3, 1997, the petitioner moved an application before respondent No. 2 for waiver of the interest imposed under Sections 234A, 234B and 234C of the Act for the assessment years 1990-91 to 1992-93. The claim was made under the instructions of the Central Board of Direct Taxes dated May 23, 1996.
8. That, by order dated January 31, 2000 the above application of the petitioner dated January 3, 1997 was rejected by the Chief Commissioner of Income-tax, Kanpur.
4. Earlier also the petitioner filed Writ Petition No. 353 of 2000-(Om Prakash Trivedi v. Chief CIT), wherein the main relief claimed was to the effect that "issue a writ, order or direction in the nature of certiorari and quash the order dated January 31, 2000, passed, by the Chief Commissioner of Income-tax, Kanpur... to grant benefit under Section 119(2)(a) of the Act read with circular of the Central Board of Direct Taxes dated May 25, 1996."
5. The said writ petition, after hearing the parties, was allowed by means of judgment and order dated August 5, 2005, by a Division Bench of this Court (annexure 2 to the writ petition). The relevant passage from the said judgment is reproduced below:
From a bare reading of the aforesaid clause, it is clear that the detection is to be made by the Assessing Officer and not by any other officer. In the present case we find that the detection as mentioned by the Chief Commissioner of Income-tax, Kanpur, has been made by the Additional Director of Income-tax (Investigation), Unit-I, Kanpur, who is not the Assessing Officer of the petitioner. Further, in view of the Full Bench decision of this Court in the case of Bhairav Lal Verma v. Union of India , the word 'voluntarily' occurring in Section 273A of the Act has been interpreted to mean 'out of free will without any compulsion' and it cannot be held as a principle of law that the disclosure of concealed income after the raid or search cannot be said to be voluntary. In the present case as we have held that the detection was not made by the Assessing Officer but by a different officer and, therefore, the precondition mentioned in Clause (e) stands fulfilled the return of income would be treated to have been filed voluntarily and without detection by the Assessing Officer. Further, we find that reduction/ waiver of interest is permissible under all the sections, namely, Section 234A of the Act. Since the Chief Commissioner of Income-tax had rejected the application for waiver on the only ground that the return was filed after the detection by the Additional Director of Income-tax (Inv.), Unit-I and, therefore, it cannot be said to have been filed voluntarily is on an erroneous assumption of facts of law, the same cannot be sustained in the eyes of law.
In view of the foregoing discussion, the order dated January 31, 2000 cannot be sustained and is hereby set aside. As the petitioner has fulfilled the condition mentioned in Clause (e) of the Board's instructions dated May 23, 1996, the petitioner has made out a case of reduction/waiver of the interest. The Chief Commissioner of Income-tax shall now pass a fresh order within a month from the date a certified copy of this order is filed before him exercising his discretion for reduction/waiver of interest.
In the result, the writ petition succeeds and is allowed.
6. In pursuance of the aforesaid direction of this Court, the Chief Commissioner of Income-tax, Kanpur, again passed order dated December 22, 2005, with regard to the assessment years 1990-91, 1991-92, 1992-93 rejecting the petition filed by the assessee requesting for waiver of interest under Sections 234A, 234B and 234C (annexure 4 to the writ petition).
7. The concluding part of the aforesaid impugned order dated December 22, 2005, is reproduced:
In the present case, the assessee had filed his returns of income as above only after detection of incriminating materials in respect of huge investments/expenditures by the ADIT (Inv.) resulting in such riling or revising of return of income under compulsion after the detection of such materials and thus cannot be said such returns to be filed voluntarily. It is pertinent to mention here that clause 2(e) of the Board instruction dated May 23, 1996, is not applicable in this case on the basis of grounds mentioned as above in this order depriving the assessee to take the benefit of the said the Board's instruction.
In view of the above, the petition having no merit is accordingly rejected.
8. A bare reading of the concluding para, of the impugned order (quoted above) shows that the Chief Commissioner of Income-tax, Kanpur (Sri B. K. Srivastava) has rejected the petition dated January 3, 1997 (filed by the assessee requesting for waiver of interest) by recording his "finding" ignoring the "categorical finding" recorded by the Division Bench in its judgment and order dated August 5, 2005, quoted above.
9. The High Court, after hearing the parties, having recorded categorical findings to the effect "as the petitioner has fulfilled the condition mentioned in Clause (e) of the Board's instructions, dated May 23, 1996, the petitioner has made out a case of reduction/waiver of the interest... "it was not open to the aforesaid officer to sit in appeal over the judgment and order passed by this Court; thus circumvent the said judgment and render the same ineffective and redundant. If the Department felt aggrieved, it should have challenged the said judgment but the same having become final and binding inter se the parries. The judgment and order dated August 5, 2005, passed by the Division Bench of this Court in Writ Petition No. 353 of 2000 (referred to above), having attained finality, the same is now binding upon the Department and could not be hoodwinked. By entertaining the "petition" of the assessee in pursuance of this judgment dated August 5, 2005, the Department-respondent clearly acquiesced to the same.
10. It is no pleasure for this Court to comment or pass strictures. But a glaring infraction of settled principle of law by the higher authorities of the Department of Revenue cannot be ignored. The higher the authority/ officer, the more onerous duties and expectancy to act cautiously so that the faith of the public in the administration is not jeopardised and there is no breach of settled principle of procedural rules/laws.
11. It is made clear that the authority/officer, who may be called upon to decide the petition dated January 3, 1997, for requesting waiver of interest, shall not be competent to decide the issue as to whether clause 2(e) is applicable since this question is no more res integra having been decided by this Court vide judgment and order dated August 5, 2005, (referred to above) and that the said authority shall decide the quantum while considering the question of waiver.
12. In view of the above, the impugned judgment and order dated December 22, 2005/annexure 4 to the writ petition cannot be sustained. Consequently, the impugned judgment and order dated December 22, 2005/ annexure 4 to the writ petition is hereby set aside with the direction that the petition of the assessee dated January 3, 1997, praying for waiver of interest under Sections 234A, 234B and 234C of the Income-tax Act shall now be decided by a competent authority/officer other than Sri B. K. Srivastava, Chief Commissioner of Income-tax, Kanpur.
13. Subject to the above directions, the writ petition stands allowed with costs which we quantify at Rs. 10,000.