1991 (8) TMI 125 - AT - Income Tax

Summary

Issues Involved:
1. Penalty under section 271(1)(c) of the Income-tax Act, 1961.
2. Voluntary disclosure under the Amnesty Scheme.
3. Validity of returns filed in response to notice under section 148.
4. Binding nature of CBDT circulars.

Issue-wise Detailed Analysis:

1. Penalty under section 271(1)(c) of the Income-tax Act, 1961:
The assessee was penalized under section 271(1)(c) for the assessment years 1983-84 and 1984-85, with penalties amounting to Rs. 2,20,952 and Rs. 2,69,954 respectively. The penalties were confirmed by the CIT (Appeals). The Assessing Officer initiated penalty proceedings because the returns were filed in response to a notice under section 148 following a search operation under section 132. The AO treated the income declared in the final return as concealed income and levied penalties accordingly. The CIT (Appeals) upheld the penalties, referencing the Supreme Court decision in ITO v. Rattan Lal and the Bombay High Court decision in Mrs. Pushpa Kalyanmal Singhvi v. Union of India.

2. Voluntary disclosure under the Amnesty Scheme:
The assessee argued that the revised returns were filed voluntarily under the Amnesty Scheme, which should exonerate them from penalties. The assessee's representative, Shri Gautam Doshi, cited various High Court decisions to support the claim that the revised returns were voluntary and not a result of any investigation or enquiry by the department. The Tribunal noted that the revised returns disclosed additional income of Rs. 1,00,000 for 1983-84 and Rs. 2,00,000 for 1984-85, which were accepted by the department without further enquiry. The Tribunal concluded that the income disclosed in the revised returns could be considered voluntary.

3. Validity of returns filed in response to notice under section 148:
The Tribunal examined whether the returns filed in response to the notice under section 148 could be considered voluntary. The departmental representative argued that the returns were not voluntary because they were filed in response to a notice issued after a search operation. However, the Tribunal found that no incriminating evidence was discovered during the search, and no order under section 132 was passed. The Tribunal concluded that the revised returns were filed voluntarily and not as a result of any detection of concealed income by the department.

4. Binding nature of CBDT circulars:
The Tribunal considered the binding nature of the CBDT circulars, particularly Circular No. 281 dated 14-2-1986, which directed that no penalty should be imposed if the disclosure was made voluntarily and in good faith before detection by the Assessing Officer. The Tribunal noted that the circular did not refer to returns filed in response to notice under section 148. The Tribunal also referenced several High Court and Supreme Court decisions affirming the binding nature of CBDT circulars on the revenue authorities. The Tribunal concluded that the revised returns satisfied the conditions laid down in the amnesty circulars, and there was no evidence of detection of concealment by the Assessing Officer.

Conclusion:
The Tribunal held that the penalties under section 271(1)(c) were wrongly imposed and confirmed by the CIT (Appeals). The Tribunal directed that the penalties for the assessment years 1983-84 and 1984-85 be deleted, allowing the appeals by the assessee. The Tribunal emphasized that the revised returns were filed voluntarily under the Amnesty Scheme and were not a result of any detection of concealed income by the department. The Tribunal also highlighted the binding nature of CBDT circulars, which supported the assessee's case for voluntary disclosure.