The Income-tax Act has empowered the Chief Commissioner or the Commissioner to reduce or waive the penalty etc. in certain cases. Section 273 (1) says that notwithstanding anything contained in this Act, the Chief Commissioner or the Commissioner, may, at his discretion, whether on his own motion or otherwise, reduce or waive the penalty in the following cases
(a) The Chief Commissioner, or the Commissioner may reduce or waive the penalty leviable under Section 271 (1) (iii) for assessee’s failure to disclose all the facts and particulars of his income.
(b) The Chief Commissioner, or the Commissioner shall exercise power to reduce or waive the penalty only if he is satisfied that the assessee has disclosed all the facts of his income, before any detections made by the Assessing Officer, voluntarily and in good faith and he has made a true disclosure of all the relevant particulars.
The point to be noted in this connection is that the assessee must have co-operated in any inquiry 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.
Board’s permission [Section 273 A (2b)]. In the following cases, the Chief Commissioner, or the Commissioner has to seek Board’s permission before any order to reduce or waive the penalty is made by him if the amount of income in respect of which the penalty is imposed or imposable or
where such disclosure relates to more than one assessment year and then the aggregate amount of such income of those years, exceeds Rs. 5,00,000.