S.H. Kapadia, CJI.
Heard learned counsel on both sides.
2. This civil appeal is filed by the assessee.
3. In the present case, which is a case of block assessment covering period 1977-1978 to 1985-1986, the assessee sought waiver of interest and penalty under Section 273A(1) of the Income Tax Act, 1961 [`Act', for short], which application was rejected by Commissioner of Income Tax, Patna.
4. The search took place on 15th February, 1985, at the business and residential premises of the assessee. On 1st March, 1985, the assessee made a voluntary statement under Section 273A of the Act. That application was made to Commissioner of Income Tax, Calcutta, which had no jurisdiction to waive penalty or interest because the authority vested in the Commissioner of Income Tax, Patna. The matter ultimately reached Patna High Court. Two aspects arose for determination; one was on jurisdiction and the other on merits. On jurisdiction, the High Court held that it was a hyper-technical point raised by the Department. Accordingly, the Department's plea on lack of jurisdiction was rejected. That order has not been challenged by the Department. However, on merits, the High Court came to the conclusion that the assessee had not made true and full disclosure and, consequently, the concerned Commissioner of Income Tax, Patna, was right in rejecting the application for waiver of penalty and interest under Section 273A of the Act. However, the Patna High Court did not discuss in what manner the assessee was supposed to make true and full disclosure.
5. This is a case of block assessment. Block assessment cases proceed on one major premise, namely, seizure of documents, jewellery, bullion, etc. In the present case, some slips were seized from the premises of the assessee. The Department has, on that basis, computed the taxable income. Even tax has been paid on the taxable income. However, in this civil appeal, the Court is only concerned with the question of levy of penalty and interest. As stated, the Commissioner of Income Tax, Patna, has rejected the application for such waiver, which has been affirmed by the High Court. However, neither the High Court nor Commissioner of Income Tax, Patna, has considered the scope, applicability and effect of Explanation (2), which existed on the statute book between 1st October, 1984 till 24th May, 1985. Explanation (2) reads as under:
"Explanation 2: Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing belonging to a person are seized under section 132 and within fifteen days of such seizure, the person makes a full and true disclosure of his income to the Commissioner, such person shall, for the purposes of clause (b) of this sub-section, be deemed to have made, prior to the detection by the Income-tax 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, a disclosure of
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such particulars." 6. In the circumstances, we set aside the impugned orders of the High Court and CIT(A), and remit the case to CIT(A), Patna, to consider the matter in the light of Explanation (2), as indicated above. 7. Accordingly, the civil appeal filed by the assessee is allowed with no order as to costs.