Law:

Section:

Section 18(2A) [now section 18B] of the Wealth-tax Act, 1957-Penalty-Commissioner's power to waive or reduce-Assessee filed returns voluntarily but beyond prescribed time-WTO levied penalty under section 18(1)(a)-Though commissioner found that all conditions precedent for exercise of power under section 18(2A) were fulfilled yet he reduced penalty only by 25 per cent and gave no reason for doing so-Whether commissioner justified-Held, on facts, on Facts The assessee submitted its wealth-tax returns voluntarily but beyond the prescribed time. The WTO levied penalty under section 18(1)(a). On the assessee's application under section 18(2A), the Commissioner held that since the assessee submitted returns voluntarily and made all disclosures in good faith and further extended all co-operation during the enquiry, the assessee was entitled to relief under section 18(2A) and reduced the penalty by 25 per cent of the minimum imposable under the Act. On writ, the petitioner challenged the Commissioner's order claiming that all the conditions of section 18(2A) having been fulfilled, the Commissioner had acted illegaly and in an arbitrary manner in not waiving the entire amount of penalty. Held The power of the Commissioner to waive or reduce the penalty under section 18(2A) is a quasi-judicial power. Where an authority makes an order in exercise of quasi-judicial function, it must record its reasons in support of its order. The rule requiring reasons to be given in support of an order is like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process. The rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. In the instant case, the Commissioner was fully satisfied, that all the conditions precedent to waiver under section 18(2A) were fulfilled, yet he did not waive the entire amount of penalty, neither did he record any reasons for not doing so. Accordingly, the Commissioner's order was set aside. Case review Baidyanath Sarma v. CWT decided on 4-2-1982 and Sardar Kartar Singh v. CWT [1982] 135 1 ITR 379 (Gauhati) followed. Cases referred…

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