1999 (11) TMI 875 - AT - Income Tax

Summary

Issues Involved:

1. Levy of penalty under Section 271(1)(c) of the IT Act.
2. Applicability of the Amnesty Scheme.
3. Validity of revised returns filed under the Amnesty Scheme.
4. Justification of penalty on estimated income.
5. Contradiction in grounds for initiating penalty proceedings.

Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c) of the IT Act:

The main issue revolves around the levy of penalty under Section 271(1)(c) for the assessment years 1975-76 to 1980-81. The assessee argued that the revised returns filed should be considered under the Amnesty Scheme, which would exempt them from penalties. The AO did not accept this contention and levied penalties for all the years under consideration. The CIT(A) upheld the AO's decision, stating that the revised returns were filed after the concealment had been detected by the department.

2. Applicability of the Amnesty Scheme:

The assessee claimed benefits under the Amnesty Scheme, arguing that the revised returns filed after the completion of assessments should be considered under this scheme. The CIT(A) rejected this claim, noting that duplicate books of account were found during a search, indicating concealment of income. The Tribunal, however, considered whether there was actual detection of assets or income before the revised returns were filed. It was noted that the search did not result in the detection of cash or other valuables, and the duplicate books of account contained credit entries that were not necessarily indicative of concealed income.

3. Validity of Revised Returns Filed under the Amnesty Scheme:

For the assessment years 1975-76, 1976-77, and 1977-78, the Tribunal found that the revised returns should be accepted as amnesty returns. The Tribunal observed that the assessee had complied with the requirement of withdrawing the appeals and making the declaration and payment of tax on the declared income. The Tribunal noted that the search did not detect any specific concealed income, thus entitling the assessee to the benefits under the Amnesty Scheme for these years.

4. Justification of Penalty on Estimated Income:

For the assessment years 1978-79 and 1980-81, the Tribunal examined whether penalties could be justified on estimated income. For 1978-79, the AO had added Rs. 1,09,300 as undisclosed income based on unproved cash credits. The assessee later admitted this amount in the revised return. The Tribunal confirmed the penalty for this year, stating that the subsequent admission of income indicated concealment. For 1980-81, the assessment was made on an estimated income of Rs. 90,000 without a clear basis. The Tribunal canceled the penalty, noting that penalties should not be levied on estimated income without concrete evidence of concealment.

5. Contradiction in Grounds for Initiating Penalty Proceedings:

The assessee contended that the AO initially initiated penalty proceedings for furnishing inaccurate particulars of income but later levied penalties for concealment of income. The Tribunal found that for the assessment year 1978-79, the AO had not specified that the penalty was initiated for furnishing inaccurate particulars. Therefore, this contention did not apply to this year.

Conclusion:

The Tribunal allowed the appeals for the assessment years 1975-76, 1976-77, 1977-78, and 1980-81, canceling the penalties for these years. The appeal for the assessment year 1978-79 was dismissed, and the penalty was confirmed. The Tribunal emphasized that the benefits of the Amnesty Scheme should be interpreted rationally and not be denied merely due to the fact of a search, provided there was no detection of concealed income during the search.