JUDGMENT
Tirath S. Thakur, J.
1. This writ petition calls in question the validity of an order passed by the respondent–Commissioner of Income-tax declining the petitioner’s prayer for waiver of interest levied under Sections 159(8) and 217 of the Income-tax Act, 1961. The Commissioner was of the view that since the petitioner had failed to deposit the admitted tax payable on the income disclosed, he could not claim waiver or reduction in the amount of interest levied, the deposit being a condition precedent for any such waiver to be permissible.
2. For the assessment year 1987-88, the petitioner filed a return on November 10, 1989, declaring a total income of Rs. 13,220. This was followed by a revised return filed on March 16, 1990, disclosing an income of Rs. 1,26,220. The return was further revised by the petitioner on April 22, 1990, disclosing an income of Rs. 2,69,880. An amount of Rs. 1,09,190 was payable as tax on the income disclosed in the second revised return, as against which the petitioner paid along with the second revised return a sum of Rs. 1,02,180 only leaving a balance of Rs. 7,010 unpaid. The assessment was completed by the assessing authority under Section 143(3) and a demand for the balance amount of tax raised on March 29, 1990. The petitioner paid the balance amount on April 13, 1990. The assessing authority levied interest amounting to Rs. 36,821 under Section 139(8) and Rs. 47,556 under Section 217 of the Act, for the waiver whereof the petitioner filed an application before the Commissioner under Section 273A on April 25, 1990. By his order dated August 5, 1992, the Commissioner dismissed the application on the ground that the petitioner had failed to comply with the basic requirement of payment of tax on the amount disclosed and was, therefore, not entitled to claim either waiver or reduction of the amount of interest levied. Aggrieved, the petitioner has filed this petition as already indicated earlier.
3. Mr. Rao, counsel appearing for the petitioner, contended that payment of the amount of tax due on the income disclosed by the assessee at the time of filing of the return was not one of the requirements stipulated by Section 273A nor could the non-payment of any such admitted tax amount be made a basis for rejecting the petitioner’s request for waiver. He submitted that so long as the petitioner had paid the amount of tax pursuant to an order of assessment made under the Act, the requirement of
payment of the tax amount must be deemed to have been satisfied no matter that such payment was not made simultaneously with the filing of the return. There was, according to learned counsel, a contradiction in the provisions of Section 273A(1)(c) and the requirement stipulated in the section, whereunder the assessee ought to have co-operated in the enquiry relating to assessment of his income and either paid or made satisfactory arrangements for the payment of tax or interest payable in consequence of an order passed under the Act. The argument was that whereas Clause (c) of Section 273A(1) required not only a voluntary disclosure made in good faith, but the deposit of the tax on the income so disclosed, the further requirement of the “assessee having paid or made satisfactory arrangements for the payment of any tax due in consequence of an order passed under the Act” implied that the payment of tax could be even in consequence of an assessment order made under the Act. The provision contained in Section 273A being a piece of beneficial legislation argued learned counsel, the same ought to be liberally construed and the benefit of any doubt or anomaly given to the taxpayer. Reliance was in support placed by Mr. Rao upon among others, Parshottam Nagindas v. Adwalpalkar (B. R.) [1996] 218 ITR 392 (Guj); CIT v. J. K. Hosiery Factory and CIT v. Sundaram Clayton Ltd. [1989] 179 ITR 593 (Mad).
4. On behalf of the respondents, Mr. Seshachala called in aid a single Bench decision of this court in Diamond Glass Agencies v. CIT (W. P. No. 21705 of 1996 and connected matters) disposed of on November 18, 1996, where Bhaktavatsalam J., has, while dealing with a similar argument, held the payment of the admitted tax amount as an essential requirement for the assessee to be able to invoke Section 273A. It was argued that the requirement of depositing the admitted tax amount was an essential requirement, which was in no way diluted let alone contradicted by any other provisions contained in Section 273A. The so-called contradiction and anomaly did not, according to Mr. Seshachala, exist nor was there any room for any interpretative process rendering an important statutory requirement ineffective.
5. Section 273A, to the extent the same is relevant for our purposes and as it stood during the relevant period, was as under:
“273A. (1) Notwithstanding anything contained in this Act, the Commissioner may, in his discretion, whether on his own motion or otherwise,– . . .
(iii) reduce or waive the amount of interest paid or payable under Sub-section (8) of Section 139 or Section 215 or Section 217 or the penalty imposed or imposable under Section 273,
if he is satisfied that such person– , . .
(c) in the cases referred to in Clause (iii), has, prior to the issue of a notice to him under Sub-section (2) of Section 139, or where no such notice
has been issued and the period for the issue of such notice has expired, prior to the issue of notice to him under Section 148, voluntarily and in good faith made a full and true disclosure of his income and has paid the tax on the income so disclosed,
and also has, in all the cases referred to in Clauses (a), (b) and (c), co-operated in any enquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year.”
6. A plain reading of the above would show that the power to reduce or waive the amount of interest paid or payable could be invoked by the assessee upon satisfaction of the condition stipulated in Clause (c) above. One of the conditions prescribed is that the assessee should not only have voluntarily and in good faith made a full and true disclosure of his income but should have paid the tax on the income so disclosed. This requirement, it is evident, is prescribed as a condition precedent and cannot, therefore, be said to be either optional or inconsequential. The scheme underlying the provision is that it is only if the assessee, has voluntarily and in good faith made a full and true disclosure of his income and has also paid the amount of tax due on such income that he can qualify for claiming the benefit of waiver or reduction in the amount of interest payable under Section 139(8) and Section 217. The payment of any such admitted tax amount as a condition precedent for the assessee to invoke the beneficent provisions of Section 273A is even otherwise rational and fairly understandable. Parliament does not appear to have favoured the grant of concession by way of reduction or waiver of interest recoverable from an assessee, to an assessee who has not paid what is payable even according to his own admission as per the disclosures made in the return. The requirement that the assessee should have paid the entire amount due on the income disclosed can, therefore, be rightly held to be a condition precedent for the assessee to satisfy before he can invoke the power of reduction or waiver vested in the Commissioner. The words “either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act” appearing in Section 273A do not in my opinion bring about any conflict with the provisions of Clause (c) supra or create any anomaly. These words do not obviously refer to the amount of tax, which is payable by the assessee on the basis of the income disclosed by him. They refer to any amount other than the one, which is payable by the assessee on the basis of his own disclosure. The submission made by Mr. Rao was that there is no situation, in which any amount may become payable in terms of an order made under the Act in cases where the disclosure is full and true. He urged that once an additional amount of tax is held payable by the asssessee the disclosure
was neither full nor true. In other words, the payment of admitted tax could according to learned counsel as well have been made by the assessee after an order of assessment is made under the Act and within the time stipulated for doing so. I cannot subscribe to that line of reasoning. The words “in good faith, full and true disclosure” appearing in Clause (c) relate to the disclosure of the income of the assessee and not necessarily benefits or deductions which he may have claimed in the nature of depreciation, expenses, etc. An additional amount of tax may, therefore, become payable by an assessee even in cases where the disclosure of income by him has been accepted as full, but the deductions claimed are disallowed. In any such event, over and above the amount that the petitioner has admitted as payable as per the return filed by him, there may be certain additional amounts that may be held due from him on account of tax or interest. The words “paid or made satisfactory arrangements for the payment of any tax or interest” therefore refer to tax or interest payable over and above what is the admitted amount as per the return filed by the assessee. Seen thus, there is no conflict or anomaly between the provisions of Clause (c) and the remaining provisions so as to require any harmoni-sation by a process of interpretation. The two requirements, one under Clause (c) and the other regarding payment of tax or interest held payable in consequence of an order are independent of each other, both of which must be satisfied before the assessee can claim benefit of waiver or reduction. To the same effect is the view taken in B. Thangammal v. CIT and S. M. Ziaddin v. CIT , by two single Benches of the High Court of Madras. In the latter of the said two decisions, the court has observed thus (headnote) :
“The conditions precedent for the exercise of the discretion for waiver or reduction of the penalty or interest are those mentioned in Clauses (a), (b) and (c) of Section 273A(1) of the Income-tax Act, 1961. Dis-closure of income coupled with the payment of the tax admittedly due on the admitted income is a condition precedent for entitling an assessee for consideration of his claim for waiver of the penalty as well as the interest chargeable and unless the condition is satisfied the court cannot interfere with the refusal to exercise his discretion by the Commissioner of Income-tax under Section 273A.”
7. The decision of Bakthavatsalam J., relied upon by Mr. Seshachala also toes the same line.
8. In Parshottam Nagindas v. B. R. Adwalpalkar [1996] 218 ITR 392 (Guj), heavy reliance whereupon was placed by Mr. Rao, the court has proceeded on the assumption that there is no provision requiring the assessee to make payment of the admitted tax amount. It was held that in the absence of any requirement of making the payment of the admitted tax, it was not possible to interpret the said provision to mean that such payment should have been made at the time of making the disclosure. A payment made any time before the power under Section 273A was invoked could also in the opinion of the learned judges, who decided the case would suffice. With utmost respect, I find it difficult to fall in line. The provisions contained in Section 273A do not in my opinion admit of the interpretation placed upon the same by the Gujarat High Court. The requirement of paying the amount of tax due on the amount disclosed in the return cannot be made infructuous by holding that such a payment could as well have been made any time before the power to waive is invoked by the assessee. The rationale behind the requirement is to encourage prompt payment of the amount of tax, which is according to the assessee’s own showing due and recoverable from him. It only means that those who pay promptly can claim the benefit of waiver of interest also. An interpretation, according to which payment of even the admitted tax amount is not necessary till such time the power to reduce or waive the interest levied under Sections 139(8) and 217 is invoked will have the effect of negating the very purpose underlying the provision. Any such interpretation has, therefore, to be eschewed. Since the scheme underlying the provision does not envisage a benefit except in cases that fall within the four corners prescribed by it the beneficial nature of the legislation can be of no help. Payment of the admitted amount of tax along with the return being one of the requirements, non-compliance with the same would take the case of the assessee out of the purview of the said provision. The Commissioner of Income-tax was in that view perfectly justified in rejecting the petitioner’s application. There is no merit in this petition, which fails and is hereby dismissed, but in the circumstances, without any orders as to costs.