1993 (2) TMI 159 - AT - Income Tax

Summary

Issues Involved:
1. Penalty under Section 271(1)(a) of the Income-tax Act, 1961.
2. Penalty under Section 273(1)(b) of the Income-tax Act, 1961.
3. Applicability of the Amnesty Scheme, 1985 to the assessment years 1978-79, 1979-80, and 1980-81.

Issue-wise Detailed Analysis:

1. Penalty under Section 271(1)(a) of the Income-tax Act, 1961:
The department initiated penalty proceedings under Section 271(1)(a) for delayed submission of returns for the assessment years 1978-79, 1979-80, and 1980-81. The assessee argued that fresh returns were filed under the Amnesty Scheme, thus no penalty should be levied. The Assessing Officer rejected this argument, stating that the returns filed on 19-2-1982 could not be considered under the Amnesty Scheme and imposed a penalty at 2% per month of the tax payable for the period of default.

2. Penalty under Section 273(1)(b) of the Income-tax Act, 1961:
The Assessing Officer also imposed penalties under Section 273(1)(b) as the assessed income was significantly higher than the income returned, indicating that the estimate of advance tax filed by the assessee was untrue. The assessee again claimed that the returns were filed under the Amnesty Scheme, but the Assessing Officer found this explanation untenable and proceeded with the penalty.

3. Applicability of the Amnesty Scheme, 1985:
The assessee appealed to the DC (Appeals), who cancelled the penalties, accepting that the fresh returns filed under the Amnesty Scheme should be considered. The DC (Appeals) verified the receipts issued by the Income-tax Department and concluded that no penalty could be levied as per CBDT Circulars when returns are filed under the Amnesty Scheme. The department appealed to the Tribunal, arguing that the Amnesty Scheme could not be applied to the assessment years in question as the original returns were filed before the Scheme's introduction and assessments were already completed.

Tribunal's Judgment:
The Tribunal carefully considered the facts, arguments, and relevant CBDT Circulars. It found considerable force in the assessee's arguments and concluded that the Amnesty Scheme and various Circulars issued by the CBDT were applicable. The Tribunal noted that the Scheme allowed for higher income disclosure even in cases where assessments were completed, provided that the taxpayer filed fresh returns and paid the due taxes.

The Tribunal referred to specific questions and answers from the CBDT Circulars, which clarified that:
- Higher income could be declared even for completed assessments.
- Fresh returns should be filed including the additional income.
- Immunity from penalty and prosecution was guaranteed if the taxpayer admitted the truth and paid taxes properly.

The Tribunal observed that the assessee had complied with these requirements by filing fresh returns and paying the taxes. The Assessing Officer's failure to issue a notice under Section 148 could not be held against the assessee. The Tribunal emphasized that the Amnesty Scheme was intended to encourage taxpayers to disclose concealed income without facing penalties and should be interpreted liberally.

Conclusion:
The Tribunal upheld the DC (Appeals) decision to cancel the penalties under Sections 271(1)(a) and 273(1)(b), finding that the assessee's case was fully covered by the Amnesty Scheme and relevant CBDT Circulars. The appeals by the department were dismissed.