JUDGMENT
Tipnis, J.
1. The order dated March 31, 1982, passed by the Commissioner of Income-tax, Vidarbha, Nagpur, under section 273A(4) of the Income-tax Act is impugned by this petition.
2. The petitioner is a partnership firm. The petitioner-firm as well as its partners were assessed to income-tax and the firm was assessed from nearly 1922. Since about 1962, the firm started facing financial difficulties. While completing the assessments for the assessment years 1966-67 to 1974-75, the Income-tax Officer levied penalties under sections 271(1)(a), 271(1)(c) and 273(a) of the Income-tax Act. The petitioner has averred that there were heavy sales tax dues and the bankers of the petitioner also filed a suit for recovery against the petitioner-firm. Being in extreme financial difficulties, the petitioners filed a petition under section 273A(4) of the Income-tax Act before the Commissioner of Income-tax, Nagpur, in January, 1981, seeking waiver of the amount of penalties on the ground that the same would cause genuine hardship to the petitioner-firm.
3. The Commissioner of Income-tax heard the representative of the petitioner and ultimately, by the impugned order dated March 31, 1982, was pleased to reduce the penalty by restricting it to 50 per cent. of the penalties levied by the Income-tax Officer. Subsequently, it also appears that the Income-tax Officer, Circle III(1), Nagpur, calculated the amounts due including interest under section 220 and gave a notice which is annexure E to the petition which is termed as giving effect to the order of the Commissioner of Income-tax, Vidarbha, Nagpur, passed under section 273A(4) of the Act.
4. Being aggrieved by these two orders, the petitioner had preferred this writ petition.
5. Shri Manohar, learned counsel appearing for the petitioner, in support of the petition, contended that the order is not in accordance with the express provisions of section 273A(4) of the Act inasmuch as the Commissioner has not given reasons for his conclusions. Shri Manohar contended that, having been satisfied with this case of genuine hardship, the Commissioner ought to have waived the penalties entirely. The Commissioner has not given reasons as to why he has reduced the penalty only by 50 per cent. Shri Manohar further contended that after the original demands, the petitioner preferred an application for waiver of penalty under section 273A(4) of the Act and neither did he pay nor were any recovery proceedings taken against him. Thereafter, during the pendency of this petition, there was stay granted by this court. Shri Manohar, in that behalf, relied upon the judgments in Rasiklal Ranchhodbhai Patel v. CWT [1980] 121 ITR 219 (Guj), Madhukar Manilal Modi v. CWT [1978] 113 ITR 318 (Guj), S. Sannaiah v. CIT [1974] 95 ITR 435 (Mys) as also Shakuntala Mehra v. CWT [1976] 102 ITR 301 (Delhi).
6. Shri Shelat, learned counsel appearing for the respondent, on the other hand, contended that the order was a reasoned order as required by the provisions of section 273A(4) of the Act. In fact, Shri Shelat contended that there is no obligation on the Commissioner of Income-tax to give detailed reasons. Shri Shelat in that behalf relied upon its judgments in Dr. Brij Mohan Bhargava v. CIT [1984] 150 ITR 300 (P & H) and Sanyasi and Sons v. CIT [1979] 118 ITR 459 (Orissa).
7. In Rasiklal Ranchhodbhai Patel v. CWT [1980] 121 ITR 219, a Division Bench of the Gujarat High Court was dealing with a case where an order under section 18(2A) of the Wealth-tax Act for waiver of the penalty was passed by the Commissioner of Wealth-tax. The actual order passed is reproduced in the judgment which reads as under (at p. 221) :
“I have carefully considered the facts and circumstances of this case and also the submission made before me. I find that the conditions of section 18(2A) of the Wealth-tax Act are satisfied in this case. Looking to this fact and other facts of this case, I reduce the minimum penalty leviable under section 18(1)(a) to Rs. 7,500.”
8. Dealing with such an order, the Division Bench of the Gujarat High Court found that the Commissioner has not disclosed how his mind worked in law under section 18(2A), having come to the conclusion that the requirements of section 18(2A) were satisfied. He had to make up his mind as to whether the minimum penalty should be waived or reduced. Why he decided not to waive, And if he decided to impose penalty, why he decided upon the figure of Rs. 7,500 when the minimum penalty as shown by the order was Rs. 58,390 does not emerge from his order. It is to the order alone that we have to look for finding out whether reasons have been properly set out in the order or not, and the order in each of these three cases is totally silent on this point. It is in these circumstances that the Gujarat High Court struck down the order and directed the Commissioner to pass appropriate orders. For the reasons which will follow, we are of the opinion that the facts before us are substantially different. In Madhukar Manilal Modi v. CWT [1978] 113 ITR 318 (Guj), it is held that (head-note) :
“Where a power is vested in a public authority for the purpose of being used for the benefit of persons who are specifically pointed out, and the Legislature has prescribed the conditions upon which they are entitled to call for its exercise, if the conditions laid down for the exercise of discretion are satisfied, the authority cannot refuse to exercise the discretion. The authority is under a statutory duty to exercise the discretion. If there is omission to exercise discretion, inter alia, on account of the failure on the part of the authority to genuinely address itself to the matter before it or due to misconception of the scope of its power under the statute, mandamus can issue directing such authority to rehear and determine the matter afresh according to law.”
9. In Sannaiah (S.) v. CIT [1974] 95 ITR 435 (Mys.), it is similarly held that (headnote) :
“If the conditions laid down in clauses (a),(b) and (c) of section 271(4A) of the Act are satisfied, the Commissioner has no discretion to refuse to reduce or waive the amount of minimum penalty imposable, but he is under a statutory duty to exercise his discretion of either reducing or waiving the penalty.”
10. So is the case in Brij Mohan Bhargava (Dr.) v. CIT [1984] 150 ITR 300 (P & H) which lays down that (headnote) :
“A perusal of section 273A of the Income-tax Act, 1961, shows that the Commissioner is given the discretion when the requisite conditions envisaged by the section are satisfied that he may reduce or waive the penalty or interest imposable under the given sections of the Act. However, even when the requisite conditions are made out for the exercise of discretion under section 273A, it is not incumbent upon the Commissioner to exercise his discretion to give relief and he does not have to give reasons either while declining relief or giving only partial relief. He, has, however, to give reasons when he exercises his discretion in order to give relief.”
11. There can hardly any dispute with the principles of law enunciated by the aforesaid cases.
12. Section 273A(4) of the Income-tax Act, 1961, is as under :
“Without prejudice to the powers conferred on him by any other provisions of this Act, the Chief Commissioner or Commissioner may, on an application made in this behalf by an assessee, and after recording his reasons for so doing, reduce or waive the amount of any penalty payable by the assessee under this Act or stay or compound any proceeding for the 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.”
13. Thus, it is clear that a very wide discretion is given to the Commissioner either to reduce or waive the amount of any penalty on his satisfaction of the circumstances mentioned in the said section. viz., as regards genuine hardship being caused and the assessee co-operating in the inquiry or in the proceedings for recovery and this power he exercises after recording his reasons for so doing. If we turn to the impugned order passed by the Commissioner, it is a detailed order unlike an order which was subject-matter before the Division Bench of the Gujarat High Court. The order mentions the fact that the income-tax practitioner, Shri Pincha, was heard on behalf of the assessee. The order also mentions the details regarding the firm. In paragraph 3, the order clearly indicates the arguments advanced on behalf of the assessee-firm. It was contended on behalf of the assessee-firm before the Commissioner that the firm is in existence for nearly a century and had been assessed from 1922 and that it fell into financial difficulties due to several reasons. It was submitted that the assessee has far more liabilities than assets and that the value of the assets works out to about Rs. 5.5 lakhs whereas the liabilities to the Allahabad Bank, the Sales Tax Department and Income-tax Department amount to nearly Rs. 20 lakhs. It was also stressed that besides these, there are several other liabilities. The representative also pointed out that the accounts of the partners show debit balances. In fact, in paragraph 3 of the order of the Commissioner, the details so pointed out are specifically mentioned. In paragraph 4 of the order, the connection of behalf of the assessee is also referred to to the effect that all the partners have become very old and they are eager to liquidate their liabilities before death. It mentions the argument that the firm and its partners were co-operative with the Department in payment of tax dues and that, therefore, the request was made that the penalties be waived completely.
14. It is after mention of these arguments and facts that, in paragraph 5 of the order, the Commissioner has observed as under :
“I have considered the submissions made by Shri Pincha, on behalf of the assessee. While the estimate of value of the properties by Shri Pincha is very low, its value may be at least about Rs. 14 lakhs. The liability to the bank works out to about Rs. 12 lakhs and to the sales tax department Rs. 9 lakhs. Thus, after liquidating the liabilities, the assessees would be left over with practically nothing for their old age. In these circumstances, I consider that the payment of penalties levied on the assessee would cause genuine hardship. I, therefore, direct that the amount of penalties be restricted to 50 per cent. of the penalties levied under sections 271(1)(a), 271(1)(c) and 273 for the assessment years 1958-59 to 1974-75 and the balance be waived.”
15. The Commissioner also observed that, for the sake of convenience, a consolidated order be passed for all the years.
16. This order, properly read, in our opinion, completely satisfies the requirements of a reasoned order as required by the provisions of section 273A(4). The Commissioner has referred to the submissions made before him. In fact, the contents of the order reflect the fact that he has applied his mind to the relevant material and on the basis thereof, he comes to the conclusion that the payment of penalties levied on the assessee would cause genuine hardship and, thereafter, he reduced it to 50 per cent. In our opinion, no fault could be found on any ground whatsoever with the said order. The order is a reasoned order as required by law. It has to be noted that the section gives wide discretion to the Commissioner, either to reduce or waive the amount of penalty. On the basis of the material and on application of mind, the Commissioner has thought it fit to reduce the amount of penalty by 50 per cent. and we see no good reason to find any fault with the said order.
17. In the result, we do not find any merit in the petition and the same is liable to be dismissed. Rule is discharged with costs.