1985 (1) TMI 112 - AT - Income Tax

Summary

Issues Involved:
1. Cancellation of penalty u/s 271(1)(c) and 271(1)(a) of the Income-tax Act for the assessment years 1980-81, 1981-82, and 1982-83.
2. Validity of reassessment proceedings based on the survey report.
3. Applicability of the amnesty scheme to the assessee's case.
4. Bar of limitation u/s 275 of the Income-tax Act for levying penalty.

Summary:

Issue 1: Cancellation of Penalty u/s 271(1)(c) and 271(1)(a)
The revenue appealed against the orders of the CIT (Appeals) canceling the penalty levied u/s 271(1)(c) and 271(1)(a) for the assessment years 1980-81, 1981-82, and 1982-83. The assessee, a partnership firm engaged in printing and publishing, had initially filed returns on an estimate basis. A survey conducted u/s 133A led to the reopening of assessments and subsequent penalties. The CIT (Appeals) found no conscious concealment of income and held that the returns were filed under the amnesty scheme, thus canceling the penalties.

Issue 2: Validity of Reassessment Proceedings
The survey report, which led to the reopening of assessments, was criticized for being more like a preliminary assessment order rather than a mere collection of information. The Tribunal noted that the survey party exceeded its jurisdiction by drawing inferences and conclusions, which should have been left to the Assessing Officer. The Tribunal upheld the CIT (Appeals) decision, emphasizing that the survey report was based on conjectures and surmises, and did not establish deliberate concealment of income by the assessee.

Issue 3: Applicability of the Amnesty Scheme
The Tribunal upheld the CIT (Appeals) finding that the returns filed after the survey were under the amnesty scheme. The assessee had voluntarily filed returns admitting higher income before the issue of notice u/s 148. The Tribunal noted that the amnesty scheme was intended to allow assessees to reform themselves and that there was no prior detection of concealment by the department. Therefore, the benefits of the amnesty scheme were applicable to the assessee.

Issue 4: Bar of Limitation u/s 275
The Tribunal upheld the CIT (Appeals) decision that the penalty levied in the reassessment proceedings was barred by limitation u/s 275. The original assessments were completed on 23-12-1982, and the time limit for levying penalty expired on 31-3-1985. However, the penalty was imposed on 17-3-1989, which was clearly beyond the permissible time limit.

Conclusion:
The Tribunal dismissed the revenue's appeals, upholding the CIT (Appeals) orders canceling the penalties for the assessment years 1980-81, 1981-82, and 1982-83. The Tribunal found that the assessee was entitled to the benefits of the amnesty scheme and that the penalties were barred by limitation.