1996 (9) TMI 175 - AT - Income Tax

Summary

Issues Involved:
1. Levy of penalty under section 271(1)(c) for various assessment years.
2. Applicability of the Amnesty Scheme.
3. Distinction between survey and search.
4. Validity of penalty proceedings without specifying relevant clauses.
5. Arguments on the non-detection of concealed income.

Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c):
The primary issue pertains to the levy of penalties under section 271(1)(c) for the assessment years 1979-80, 1980-81, 1983-84, 1984-85, and 1986-87, where the DC(A) confirmed the penalties, whereas for the assessment year 1982-83, the CIT(A) canceled the penalty. The ITO levied penalties for concealment, asserting that the revised returns did not fall under the Amnesty Scheme due to a survey under section 133A revealing incriminating documents. The Tribunal noted that the penalties were not justified as the returns were filed under the Amnesty Scheme and were within the stipulated time.

2. Applicability of the Amnesty Scheme:
The Tribunal emphasized that the returns filed by the assessee were under the Amnesty Scheme, which was valid till 31-3-1987. The CIT(A) had canceled the penalty for the assessment year 1982-83, noting that the returns were filed within the Amnesty Scheme's timeframe. The Tribunal upheld this view, stating that the returns should be treated as filed under the Amnesty Scheme, providing immunity from penalties.

3. Distinction between Survey and Search:
The Tribunal highlighted the difference between a "survey" under section 133A and a "search." It was noted that the survey did not result in the detection of concealed income. The Tribunal referred to CBDT Circular No. 451, which clarified that immunity under the Amnesty Scheme is not available if the premises have been searched, but a survey does not equate to a search. Hence, the returns filed post-survey were still eligible for the Amnesty Scheme.

4. Validity of Penalty Proceedings without Specifying Relevant Clauses:
The Tribunal considered the argument that non-specification of the relevant clause of section 271(1)(c) in the penalty notices vitiated the proceedings. The Tribunal agreed that penalty proceedings are distinct from quantum proceedings and the lack of specificity in the penalty notices was a valid ground for canceling the penalties.

5. Arguments on the Non-Detection of Concealed Income:
The Tribunal noted that the revenue did not provide conclusive evidence of concealed income detected during the survey. The variations in income were due to estimations and disallowances, not concealment. The Tribunal reiterated that a mere belief does not amount to detection of concealment, as clarified in CBDT Circular No. 451. The Tribunal concluded that the penalties under section 271(1)(c) were not warranted as the returns were filed honestly under the Amnesty Scheme.

Conclusion:
The Tribunal confirmed the order of the CIT(A) for the assessment year 1982-83, canceling the penalty under section 271(1)(c), and applied the same reasoning to cancel the penalties for the other assessment years. The Tribunal also canceled the penalties under section 271(1)(a) for the assessment years 1985-86 and 1986-87, as they were based on the same facts. The appeal filed by the revenue was dismissed, and all appeals filed by the assessee were allowed.