1996 (12) TMI 90 - AT - Income Tax

Summary

Issues Involved:
1. Applicability of the Amnesty Scheme to the assessee.
2. Additions made by the AO on account of unexplained investments and other transactions.
3. Validity of the order passed under sections 143(3) r/w 147 of the IT Act.
4. Legality of the notices issued under section 148 of the IT Act.

Issue-wise Detailed Analysis:

1. Applicability of the Amnesty Scheme to the Assessee:
The primary issue was whether the Amnesty Scheme was applicable to the assessee, who had undergone a search on 1st June 1984, during which certain diaries were seized. The assessee declared additional income under the Amnesty Scheme for the assessment years 1982-83, 1983-84, and 1984-85. The Income Tax Officer (ITO) rejected the returns under the Amnesty Scheme, leading to interest charges and penalty proceedings.

The CIT(A) ruled in favor of the assessee, stating that the Amnesty Scheme benefits were applicable as no positive detection of concealed income had been made by the ITO before the assessee filed the revised returns. The Tribunal upheld this decision, referencing Circular No. 451 and the Madhya Pradesh High Court decision in Jaykishan Gopikishan & Sons vs. CIT, which clarified that the Amnesty Scheme could be availed if the asset or income declared was not the subject-matter of seizure and there had been no positive detection of concealment by the ITO.

2. Additions Made by the AO:
For the assessment years 1982-83, 1983-84, and 1984-85, the AO made various additions based on entries in the seized diaries, including unexplained investments and unaccounted payments. The CIT(A) set aside these additions and remitted the matter back to the AO, directing that the peak credits as per the seized diaries should be considered and adequate opportunity should be given to the assessee.

The Tribunal found no infirmity in the CIT(A)'s decision to set aside these issues and restore them to the AO, emphasizing that the peak credit method was the only scientific and accepted method.

3. Validity of the Order Passed Under Sections 143(3) r/w 147:
In the cross-objections, the assessee contended that the order passed under sections 143(3) r/w 147 was bad in law and without jurisdiction. The Tribunal restored this issue to the file of the AO for fresh adjudication after giving the assessee an opportunity to be heard.

4. Legality of the Notices Issued Under Section 148:
The assessee argued that the notice issued under section 148 was illegal and void, and that the order passed by the AO was influenced by higher authorities. The Tribunal dismissed these objections, stating that the notices issued by the ITO were legal and the orders passed were valid.

Conclusion:
The Tribunal dismissed the Revenue's appeals and upheld the CIT(A)'s decisions, granting the benefits of the Amnesty Scheme to the assessee. The cross-objections filed by the assessee were allowed for statistical purposes, except for those challenging the legality of the notices under section 148, which were dismissed.