1992 (9) TMI 164 - AT - Income Tax

Summary

Issues Involved:

1. Reopening of assessment under Section 147.
2. Erroneous assessment orders under Section 263.
3. Voluntary disclosure and revised returns.
4. Initiation and imposition of penalties under Sections 271(1)(c) and 273.
5. Validity of penalties in light of voluntary disclosure.

Detailed Analysis:

1. Reopening of Assessment under Section 147:

The assessment for the assessment year (AY) 1974-75 was reopened under Section 147, leading to a revised income computation. Initially, the income was assessed at Rs. 2,73,000, which was later adjusted to Rs. 2,71,074 after rectification orders. Upon reopening, the income was computed at Rs. 2,76,574 and finally determined at Rs. 2,74,750 under Section 251.

2. Erroneous Assessment Orders under Section 263:

The Commissioner of Income Tax (CIT) found the assessment orders for AY 1977-78 and AY 1978-79 to be erroneous and prejudicial to the interests of the Revenue. The Assessing Officer (AO) had not properly investigated various credits. The CIT set aside the assessment orders for fresh investigation into the nature of advances and deposits from customers. The assessee did not appeal against these orders.

3. Voluntary Disclosure and Revised Returns:

The assessee filed a petition before the CIT, Jabalpur, citing increased agricultural activities and business, leading to administrative lapses and improper scrutiny of accounts. The assessee offered a voluntary disclosure of income for AYs 1974-75 to 1979-80, seeking to avoid litigation and penalties. Revised returns were filed, disclosing additional income for each year. The AO regularized these returns by issuing notices under Section 148 and completed the assessments by adding the undisclosed income offered by the assessee.

4. Initiation and Imposition of Penalties under Sections 271(1)(c) and 273:

The AO initiated penalty proceedings under Sections 271(1)(c) and 273 for all the years. The penalties were imposed for concealment of income, based on the AO's findings that the assessee had made cash credits in benami names and provided false explanations. The CIT(A) upheld the penalties, stating that the assessee filed revised returns only after the AO detected the concealment of income.

5. Validity of Penalties in Light of Voluntary Disclosure:

The Tribunal noted that the assessments for AYs 1974-75 to 1976-77 were completed without any pending proceedings when the petition under Section 273A was filed. The Tribunal emphasized that the Department had not conducted any specific enquiries or found definite concealment before the assessee's voluntary disclosure. The Tribunal relied on the Supreme Court decision in Sir Shadilal Sugar and General Mills Ltd. vs. CIT, which held that mere acceptance of additional income does not automatically imply concealment.

The Tribunal observed that the AO's reliance on the petition under Section 273A for making assessments indicated acceptance of the assessee's offer to buy peace. The Tribunal held that the penalties could not be imposed merely based on the voluntary disclosure without proving deliberate concealment. The decision of the Madhya Pradesh High Court in CIT vs. Punjab Tyres, which stated that surrender to purchase peace does not constitute evidence of concealment, was also applied.

Conclusion:

The Tribunal concluded that the penalties imposed for all the years were not sustainable as the Department failed to prove any deliberate concealment of income. The appeals filed by the assessee were allowed, and the penalties were canceled. The Tribunal emphasized that the Department's reliance on the assessee's voluntary disclosure without further investigation was insufficient to justify the imposition of penalties.