1992 (7) TMI 347 - AT - Income Tax

Summary

Issues Involved:
1. Legitimacy of the gold acquisition claims by the assessee.
2. Validity of the assessments under the Amnesty Scheme.
3. Jurisdiction of the Commissioner of Income Tax (CIT) under section 263 of the IT Act and section 25(2) of the WT Act.
4. Applicability of CBDT circulars and their binding effect on the assessments.

Detailed Analysis:

1. Legitimacy of the Gold Acquisition Claims by the Assessee:
The primary issue was whether the assessee's claim of possessing gold ornaments since 1971 was legitimate. The Department contended that the gold was purchased much later and the returns for assessment years 1976-77 to 1978-79 were filed to falsely claim possession of the gold in earlier years. The CIT concluded that the gold was not available with the assessee in 1971 and that the declarations were made to regularize subsequent acquisitions. The CIT's order emphasized that the year of possession was yet to be established and that the ornaments might not belong to the assessee but to someone else, thus causing prejudice to the Revenue.

2. Validity of the Assessments under the Amnesty Scheme:
The assessee argued that the returns were filed under the Amnesty Scheme, which assured that no proof of acquisition was required and no subsequent enquiries would follow. The assessments were completed under sections 143(1) of the IT Act and 16(1) of the WT Act. The assessee relied on various CBDT circulars, particularly Circular No. 451, which stated that once the terms of the Amnesty Scheme were fulfilled, no roving enquiries could be made. The Tribunal found that the CIT's orders were based on assumptions and lacked material evidence, thus violating the assurances provided under the Amnesty Scheme.

3. Jurisdiction of the CIT under Section 263 of the IT Act and Section 25(2) of the WT Act:
The CIT issued notices under section 263 of the IT Act and section 25(2) of the WT Act, asking the assessee to show cause why the assessments should not be modified. The CIT held that the acceptance of the returns without verification was prejudicial to the Revenue's interest. However, the Tribunal noted that the CIT's orders were stereotype and based on conjectures. The Tribunal referenced the decision in Anurag Agarwal vs. ITO, which held that the CIT could not take action under section 263 for assessments completed under the Amnesty Scheme. The Tribunal concluded that the CIT acted beyond his jurisdiction as his orders were not based on any material evidence.

4. Applicability of CBDT Circulars and Their Binding Effect on the Assessments:
The assessee argued that the CBDT circulars issued under section 119 of the IT Act were binding on the Assessing Officer and the CIT. These circulars assured that no enquiries would follow the disclosures made under the Amnesty Scheme. The Tribunal agreed, citing the Gujarat High Court's decision in Rajan Ramkrishna vs. CWT, which held that circulars are binding even if they deviate from the legal position. The Tribunal also referenced the letter from Member (Investigation), Shri S.K. Roy, which stated that roving enquiries were contrary to the spirit of the Amnesty Scheme. The Tribunal concluded that the CIT's orders violated the directives of the CBDT circulars and were thus invalid.

Conclusion:
The Tribunal allowed the appeals, holding that the CIT's orders under section 263 of the IT Act and section 25(2) of the WT Act were not based on any material evidence and violated the assurances provided under the Amnesty Scheme. The assessments completed under sections 143(1) of the IT Act and 16(1) of the WT Act were upheld as valid.