Section 273A empowers the Principal Commissioner or Commissioner to waive
or reduce penalty levied under the Income-tax Act as well as to stay or compound any proceeding for the recovery of penalty. Section 273A
was substituted by the Taxation Laws (Amendment) Act, 1975, with effect from 01.10.1975.
Mainly there are two provisions under section 273A which provides power to the Principal Commissioner or
Commissioner to
reduce or waive penalty i.e. sub-sections (1) and (4). Both are independent of
each other.
Text of Section 273A
POWER TO
REDUCE OR WAIVE PENALTY, etc., IN CERTAIN CASES.
273A. (1) Notwithstanding anything
contained in this Act, the Principal Commissioner or Commissioner may, in his
discretion, whether on his own motion or otherwise,—
(i) [Omitted by the Direct Tax Laws (Amendment) Act, 1989,
with effect from 01.04.1989]
(ii) reduce or waive
the amount of penalty imposed or imposable on a person under section 270A or clause (iii) of sub-section (1)
of section 271; or
(iii) [Omitted by the Direct Tax Laws (Amendment) Act, 1989,
with effect from 01.04.1989]
if he is satisfied that such person—
(a) [Omitted by the Direct Tax Laws (Amendment) Act, 1989,
with effect from 01.04.1989]
(b) in the case referred
to in clause (ii), has, prior to the detection by the Assessing Officer,
of the concealment of particulars of income or of the inaccuracy of particulars
furnished in respect of such income, voluntarily and in good faith, made full
and true disclosure of such particulars,
(c) [Omitted by the Direct Tax Laws (Amendment) Act, 1989,
with effect from 01.04.1989]
and also has, in the case referred
to in clause (b), 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.
Explanation .—For the purposes of this
sub-section, a person shall be deemed to have made full and true disclosure of
his income or of the particulars relating thereto in any case where the excess
of income assessed over the income returned is of such a nature as not to
attract the provisions of section 270A or clause (c) of sub-section (1) of
section 271.
(2) Notwithstanding anything
contained in sub-section (1),—
(a) [Omitted by the Direct Tax Laws (Amendment) Act, 1989,
with effect from 01.04.1989]
(b) if in a case
falling under section 270A or clause (c) of sub-section (1) of section 271, the amount of income in respect of which the penalty
is imposed or imposable for the relevant assessment year, or, where such
disclosure relates to more than one assessment year, the aggregate amount of
such income for those years, exceeds a sum of five hundred thousand rupees,
no order reducing or waiving the
penalty under sub-section (1) shall be made by the Principal Commissioner or
Commissioner except with the previous approval of the Principal Chief
Commissioner or Chief Commissioner or Principal Director General or Director
General, as the case may be.
(3) Where an order has been made
under sub-section (1) in favour of any person, whether such order relates to
one or more assessment years, he shall not be entitled to any relief under this
section in relation to any other assessment year at any time after the making
of such order :
Provided that where an order has been
made in favour of any person under sub-section (1) on or before the 24th day of
July, 1991, such person shall be entitled to further relief only once in
relation to other assessment year or years if he makes an application to the
income-tax authority referred to in sub-section (4) at any time before the 1st
day of April, 1992.
(4) Without prejudice to the powers
conferred on him by any other provision of this Act, the Principal 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:
Provided that where the amount of any
penalty payable under this Act or, where such application relates to more than
one penalty, the aggregate amount of such penalties exceeds one hundred
thousand rupees, no order reducing or waiving the amount or compounding any
proceeding for its recovery under this sub-section shall be made by the
Principal Commissioner or Commissioner except with the previous approval of the
Principal Chief Commissioner or Chief Commissioner or Principal Director
General or Director General, as the case may be.
(4A) The order under sub-section
(4), either accepting or rejecting the application in full or in part, shall be
passed within a period of twelve months from the end of the month in which the
application under the said sub-section is received by the Principal
Commissioner or the Commissioner:
Provided that no order rejecting the
application, either in full or in part, shall be passed unless the assessee has
been given an opportunity of being heard:
Provided further that where any application is
pending as on the 1st day of June, 2016, the order shall be passed on or before
the 31st day of May, 2017.
(5) Every order made under this
section shall be final and shall not be called into question by any court or
any other authority.
(6) The provisions of this section
as they stood immediately before their amendment by the Direct Tax Laws
(Amendment) Act, 1989 shall apply to and in relation to any assessment for the
assessment year commencing on the 1st day of April, 1988, or any earlier
assessment year, and references in this section to the other provisions of this
Act shall be construed as references to those provisions as for the time being
in force and applicable to the relevant assessment year.
(7) Notwithstanding anything
contained in sub-section (6), the provisions of sub-section (1), sub-section
(2), or, as the case may be, sub-section (4) as they stood immediately before
their amendment by the Direct Tax Laws (Amendment) Act, 1989 (3 of 1989), shall
apply in the case of reduction or waiver of penalty or interest in relation to
any assessment for the assessment year commencing on the 1st day of April, 1988
or any earlier assessment year, with the modifications that the power under the
said sub-section (1) shall be exercisable only by the Principal Commissioner or
Commissioner and instead of the previous approval of the Board, the Principal
Commissioner or Commissioner shall obtain the previous approval of the
Principal Chief Commissioner or Chief Commissioner or Principal Director
General or Director General, as the case may be, while dealing with such case.
Principal Commissioner or Commissioner
may reduce/waive penalty [Section
273A(1)]
Section 273A(1) empowers the Principal Commissioner or Commissioner to reduce or waive the amount of
penalty imposed or imposable on a person under section 270A (i.e.,
penalty for under-reporting and misreporting of income) or under section 271(1
)(c) (i.e., penalty for concealment of particulars of income or furnishing
inaccurate particulars of income).
The power under this section 273A() can be exercised either before or
after levy of penalty, as the section uses the term ‘imposed’ or ‘imposable’.
Waiver may be suo moto or
otherwise [Section 273A(1)]
The waiver or reduction under section 273A(1) can be granted by the
Principal Commissioner or Commissioner either on his own motion or otherwise,
i.e., on an application made by the taxpayer.
Conditions necessary to be
satisfied for the waiver or reduction of penalty under section 273A(1)
The power to reduce or waiver the penalty under section 271(1)(c) or 270A
can be excercised by the Principal Commissioner or Commissioner on his own motion or on an application
made by the assessee, if the Principal
Commissioner or Commissioner id satisfied that the assessee has :
(i) prior
to the detection by the Assessing Officer, of the concealment of particulars of income or of the
inaccuracy of particulars furnished in respect of such income, voluntarily and in good faith, made full and true
disclosure of such particulars;
(ii) co-operated
in any enquiry relating to the assessment of his income; and
(iii) has
either paid or made satisfactory arrangements for the payment of any tax or
interest payable in consequence of an order passed under the Income-tax Act,
1961 in respect of the relevant assessment. ie the assessment year(s) for which
application is made under section 273A.
If the assessee satisfied all the above
three conditions, then the Principal
Commissioner or Commissioner shall ( ie he is duty bound) waive the penalty and
in that case there is no discretion.
Deemed case of true disclosure
[Explanation to Section 273A(1)]
For
the purposes of section 273A(1), a person shall be deemed to have made full and
true disclosure of his income or of the particulars relating thereto in any
case where the excess of income assessed over the income returned is of such a
nature as not to attract the provisions of section 270A or section 271(1)(c).
Prior approval of Principal Chief
Commissioner or Chief Commissioner or Principal Director General or Director
General necessary where aggregate concealed income exceeds Rs. 5,00,000
[Section 273A(2)]
According to section 273A(2), no order under section 273A(1) for reducing
or waiving the penalty shall be made by the Principal Commissioner or Commissioner
except with the prior approval of the Chief Commissioner/Director General, as
the case may be, in a case falling under section 270A or 271(1)(c) where the
amount of income in respect of which the penalty is imposed or imposable for
the relevant assessment year, or, where such disclosure relates to more than
one assessment year, the aggregate amount of such income for those years,
exceeds a sum of Rs. 5,00,000.
Relief available only once in life
time where an order has been made under section 273A(1) [Section 273A(3)]
According to section 273A(3), where an order has been made under section
273A(1) in favour of any person, whether such order relates to one or more
assessment years, he shall not be entitled to any relief under section 273A(1)
in relation to any other assessment year at any time after the making of such
order.
Power to reduce or waive any
penalty {Section 273A(4)]
Section 273A(4) empowers the Principal Commissioner or Commissioner to
waive or reduce any penalty imposable under the Income-tax Act, 1961 as well as
to stay or compound any proceeding for the recovery of any such amount provided certain conditions are
satisfied.
Waiver only when application is
made by the assessee [Section 273A(4)]
The waiver or reduction of penalty under section 273A(4) is possible only
when an application for the same is made by the assessee. It cannot be done suo
moto by the Principal Commissioner or Commissioner.
Conditions to be satisfied for waiver or
reduction of penalty under section 273(4)
Such
power shell be excercised by the Principal
Commissioner or Commissioner if he is satisfied that
(i) to do otherwise levy of penalty would cause
genuine hardship to the assessee, having regard to the circumstances of the
case; and
(ii) the taxpayer has co-operated in any inquiry
relating to the assessment or any proceeding for the recovery of any amount due
from him.
Previous approval of Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General where amount of such penalties exceeds Rs. 1,00,000 [Proviso to Section 273A(4)]
Where the amount of any penalty
payable under the Income-tax Act, 1961 or, where such application relates to
more than one penalty, the aggregate amount of such penalties exceeds Rs.
1,00,000, no order reducing or waiving the amount or compounding any proceeding
for its recovery under section 273A(4) shall be made by the Principal
Commissioner or Commissioner except with the previous approval of the Principal
Chief Commissioner or Chief Commissioner or Principal Director General or
Director General, as the case may be.
Opportunity of being heard [First Proviso
to Section 273A(4A)]
No order rejecting the application, either in full or in part, shall be
passed unless the assessee has been given an opportunity of being heard.
Time-limit for passing order under
section 273A(4) [Section 273A(4A)]
The Principal Commissioner or Commissioner, as the case may be, shall
pass order, either accepting or rejecting assessee’s application in full or in
part, shall bepassed within a period of 12 months from the end of the month in
which application under section 273A(4) is
received by the Principal Commissioner or Commissioner, as the case may be.
However, order shall be passed on or before May 31, 2017 in case of application
pending as on June 1, 2016.
Interest under section 234A, 234B
and 234C can not be waived or reduced by the Principal Commissioner or
Commissioner
Interest under section 234A, 234B and 234C can not be waived or reduced
by the Principal Commissioner or Commissioner under section 273B.
Difference between the waiver of
penalty under section 273A(1) and section 273A(4)
Besides the conditions to be satisfied, following are the differences between
under section 272A(1) and 273A(4) :
S. No.
|
Section 273A(1)
|
Section 273A(4)
|
(i)
|
Under section 273A(1), the Principal Commissioner or Commissioner can
reduce or waiver the penalty imposed under section 271(1)(c) or under section 270A.
|
Under section 273A(4), the Principal Commissioner or Commissioner can
reduce or waiver any penalty imposed.
|
(ii)
|
Once in a life time in case of section 273A(1) waiver is possible.
|
Any number of times in case of section 273A(4) waiver is possible
|
(iii)
|
In case of section 273A(1), the Principal Commissioner or Commissioner
can reduce or waive the penalty either suo moto or on an application made by
the assessee.
|
In case of section 273A(4), the Principal Commissioner or Commissioner
can reduce or waive the penalty only on an application made by the assessee
and suo moto is not permissible.
|
(iv)
|
Prior approval of Principal Chief Commissioner or Chief Commissioner or
Principal Director General or Director General is required under section
273A(1) if the concealed income exceeds Rs. 5,00,000.
|
Prior approval of Principal Chief Commissioner or Chief Commissioner or
Principal Director General or Director General is required under section
273A(4) if any penalty exceeds Rs. 1,00,000.
|
(v)
|
The Principal Commissioner or Commissioner has no power under section 273A(1) to stay or compound the proceeding
for recovery.
|
Whereas it is possible under section 273A(4).
|
Finality of the order [Section
273A(5)]
Every order
made under section 273A shall be final and shall not be called into question by
any Court or any other authority
Order under section 273A is not
appealable
Every order made under section 273A shall be final and shall not be
called into question by any court or any other authority. However, the assessee
can file a writ with the High Court under Article 226 of the Constitution and
thereafter a special leave petition to the Supreme Court.
The whole
concept under section 273A is that the assessee admits his liability to the
penalty but relies upon certain mitigating circumstances specified in the
section for the purpose of getting the interest or penalty waived or reduced.
Under section 273A the Commissioner is given the discretion, when the requisite
conditions envisaged by section 273A are satisfied, that he may waive or reduce
the penalty or interest imposable under the various sections of the Act.
However, such discretion must be exercised judiciously by taking into
consideration all the relevant facts and not arbitrarily or capriciously. - [K.S.N. Murthy v Chairman, CBDT (2001) 252
ITR 269 (AP)]
The Principal
Commissioner or commissioner must give his reasons while passing an order on
waiver of 18 penalty under section 273A: The power under section 273A is a
quasi-judicial power and, therefore, it is desirable for the Commissioner to
reason his decision in every case. In this case the Commissioner while reducing
the penalty by 50% did not give any reason for his action. The order was therefore
quashed. - [Shri Ganesh Trading Co. v CIT
(2004) 134 Taxman 441 (P&H)]
