1994 (12) TMI 122 - AT - Income Tax

Amnesty Scheme, Levy Of Penalty, Penalty For Concealment, Protective Penalty, Revised Returns

Summary

Issues Involved:

1. Whether the income of Rs. 1.50 lakhs offered by the assessee should be spread over multiple assessment years.
2. Whether the penalty under section 271(1)(c) of the Income-tax Act, 1961, is leviable for the assessment years 1982-83, 1983-84, and 1984-85.
3. Whether the disclosure made by the assessee was voluntary and within the stipulated period under section 273A of the Act.
4. Whether the income offered pertains to the assessment years under consideration.
5. Whether the penalty can be levied on a protective basis.

Detailed Analysis:

1. Spread Over of Income:

The assessee requested to spread the income of Rs. 1.50 lakhs found during the search operations over four assessment years (1982-83 to 1985-86). The Income-tax Officer (ITO) did not accept this claim, asserting that the income pertains to the assessment year 1985-86. The ITO included the income as a protective measure for the years 1982-83, 1983-84, and 1984-85, with the observation that it would be considered for assessment in 1985-86.

2. Levy of Penalty:

The ITO initiated proceedings under section 271(1)(c) and levied penalties for the assessment years 1982-83, 1983-84, and 1984-85. The CIT(A) canceled the penalties, noting that the disclosure was made within 15 days of the search operations and was accepted by the Department. The CIT(A) also pointed out that the actual excess stock was Rs. 68,890, against which the assessee had disclosed Rs. 1.50 lakhs, indicating no concealment.

3. Voluntary Disclosure under Section 273A:

The assessee filed a petition under section 273A within 15 days of the search, requesting the spread over of the disclosed income. The CIT(A) held that the benefit of Explanation 2 to section 273A cannot be denied, as the disclosure was made within the stipulated period and accepted by the Department. The Tribunal agreed, noting that the assessee should not suffer due to the Commissioner's inaction in disposing of the application.

4. Pertinence of Income to Assessment Years:

The Tribunal found no material evidence to prove that the income of Rs. 1.50 lakhs pertained to the assessment years 1982-83, 1983-84, and 1984-85. The ITO himself was not satisfied that the income pertained to these years, as evidenced by his protective assessment. The Tribunal relied on the Gujarat High Court's decision in CIT v. Navnittal Pochalal, which held that penalty cannot be levied without proving that the income pertains to the concerned assessment year.

5. Protective Penalty:

The Tribunal held that penalty cannot be levied on a protective basis. The ITO's assessment was protective, indicating he was not certain the income pertained to the assessment years under consideration. The Tribunal cited decisions from the Calcutta High Court and Gauhati High Court, which established that there cannot be a protective penalty.

Conclusion:

The Tribunal dismissed the appeals, upholding the CIT(A)'s order canceling the penalties. It concluded that the levy of penalty was not justified as the income offered by the assessee did not pertain to the assessment years under consideration, the disclosure was made voluntarily within the stipulated period under section 273A, and the penalty cannot be levied on a protective basis.