1992 (1) TMI 137 - AT - Income Tax

Amnesty Scheme Income From Undisclosed Sources Penalty For Concealment Penalty Proceedings

Summary

Issues Involved:
1. Validity of returns filed under the Amnesty Scheme.
2. Levy of interest u/s 139(8) and 217.
3. Imposition of penalty u/s 271(1)(c).

Summary:

1. Validity of Returns Filed Under the Amnesty Scheme:
The appellants, Shri S. R. Chandel and Shri C. V. Gaba, disclosed income from bogus bank drafts after a search was conducted at the premises of V. C. Shroff and A. L. Ghael. The Income Tax Officer (ITO) concluded that these disclosures were not in consonance with the Amnesty Scheme's intention, as they were made after the search proceedings. However, the Tribunal held that the returns filed for the assessment year 1985-86 were valid under the Amnesty Scheme as they were filed voluntarily and in good faith before any specific detection by the department. The Tribunal referred to Circular No. 451, which clarified that disclosures made after investigations in other cases indicating concealment by the assessee are still eligible for immunity.

2. Levy of Interest u/s 139(8) and 217:
The Tribunal ruled that the interest levied u/s 139(8) and 217 for the assessment year 1985-86 should be canceled, as the returns were validly filed under the Amnesty Scheme. However, for the assessment year 1987-88, the returns were not considered under the Amnesty Scheme as they were filed after the scheme's expiry on 31st March 1987. Consequently, interest u/s 217 should be recalculated considering the advance tax paid, and interest u/s 139(8) in the case of S. R. Chandel was upheld due to the delay in filing the return without a reasonable cause.

3. Imposition of Penalty u/s 271(1)(c):
The Tribunal canceled the penalties imposed u/s 271(1)(c) for the assessment year 1985-86, stating that the returns filed under the Amnesty Scheme should not attract penalties. The income declared in the returns was the same as the income assessed, indicating full and true disclosure. For the assessment year 1987-88, the penalties were not explicitly discussed, but the implication is that the returns did not qualify for the Amnesty Scheme, and thus, penalties could be considered valid.

Conclusion:
The appeals for the assessment year 1985-86 were allowed, granting relief from interest and penalties under the Amnesty Scheme. The appeals for the assessment year 1987-88 were partly allowed, providing partial relief from interest but maintaining the validity of penalties and interest where applicable.