1998 (6) TMI 103 - AT - Income Tax

Summary

Issues Involved:
1. Confirmation of addition of Rs. 1 lakh as concealed income.
2. Denial of benefits under the Amnesty Scheme.
3. Charging of interest under sections 139(8) and 217 of the IT Act.
4. Initiation of penalty proceedings under sections 271(1)(a), 271(1)(c), and 273(1)(b) of the IT Act.

Issue-Wise Detailed Analysis:

1. Confirmation of Addition of Rs. 1 lakh as Concealed Income:
The learned CIT(A) confirmed the addition of Rs. 1 lakh made by the AO, treating it as concealed income. The AO held that the assessee was involved in a bogus havala entries racket, and the Rs. 1 lakh introduced in the bank account was not a genuine gift but was arranged through bogus bank drafts. The AO added Rs. 1 lakh to the total income, treating it as concealed income, and initiated penalty proceedings.

2. Denial of Benefits under the Amnesty Scheme:
The CIT(A) and the AO denied the benefits of the Amnesty Scheme to the assessee, arguing that the returns were filed after the Department had conducted enquiries and detected concealment. The assessee contended that the returns were filed voluntarily and in good faith under the Amnesty Scheme, and no enquiry or detection of concealed income was made before the filing of the returns. The Tribunal found no material on record to show that any query or enquiry regarding the disputed gift was raised before the returns were filed. The Tribunal held that the returns should be accepted as valid under the Amnesty Scheme, as the assessee made a full and true disclosure of his income.

3. Charging of Interest under Sections 139(8) and 217 of the IT Act:
The CIT(A) confirmed the AO's action of charging interest under sections 139(8) and 217. However, the Tribunal held that since the returns should be treated as valid under the Amnesty Scheme, the charging of interest was not proper or justified. Therefore, the Tribunal allowed this ground in favor of the assessee.

4. Initiation of Penalty Proceedings under Sections 271(1)(a), 271(1)(c), and 273(1)(b) of the IT Act:
The CIT(A) held that no appeal against the initiation of penalty proceedings could be filed before him and dismissed the ground of appeal regarding the AO's action in issuing penalty notices. The Tribunal, however, found that the returns should be accepted under the Amnesty Scheme, which would entitle the assessee to immunity from penalties. Therefore, the initiation of penalty proceedings was not justified.

Conclusion:
The Tribunal concluded that the returns filed by the assessee should be accepted as valid under the Amnesty Scheme. The addition of Rs. 1 lakh as concealed income was deleted, and the charging of interest under sections 139(8) and 217 was also set aside. The initiation of penalty proceedings was deemed unjustified. The appeal was allowed in favor of the assessee.