Law:

Section:

Section 18(2A) (Now section 18B) of the Wealth-tax Act, 1957 - Penalty - Reduction or waiver of - Assessment year 1971-72 - Whether where assessee made an application for waiver of penalty under section 18(2A) and Commissioner, in exercise of his discretion, reduced penalty without recording any reasons therefor, order of Commissioner was to be struck down for breach of principle of audi alteram partem - Held, yes FACTS The petitioner applied to the Commissioner under section 18(2A) for waiver of the penalty of Rs. 58390 under section 18(1)(a) because, according to him, the conditions required for the exercise of discretion were satisfied. The Commissioner passed an order to the effect that the conditions of section 18(2A) were satisfied in this case. He also held that the minimum penalty leviable under section 18(1)(a) be reduced to Rs. 7,500. On special civil application: HELD When the Commissioner exercised his discretion under section 18(2A), he acted in a quasi-judicial manner because, in exercise of his discretion, he can reduce or waive the amount of the minimum penalty imposable under sub-section (1) of section 18. It is settled law that where an authority makes an order in exercise of a quasi-judicial function, it must record its reasons in support of the order it makes. Every quasi-judicial order must be supported by reasons. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principal of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. Therefore, the failure to give reasons, reasons which are substantial and not an apology for reasons, is now treated as necessary requirement for compliance with the principle of audi alteram partem. In the instant case the Commissioner had not disclosed how his mind worked in law under section 18(2A), having come to the conclusion that the requirement 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…

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