2014 (5) TMI 709 - HC - Income Tax

Scope and benefit of amnesty scheme of 1986 Penalty u/s 271(1)(c) of the Act or u/s 273(2)(a) of the Act Held that - The claim for investment allowance and depreciation which was otherwise inadmissible, the assessee surrendered the amount on 25.3.1987 - It is perhaps possible to take either view as to whether the assessee in the circumstances of the case in fact, surrendered the amounts after detection, which would of course justify the penalty - the Tribunal in its earlier order have concluded that the penalty was not justified u/s 273 (2) could not have, without distinguishing that reasoning, upheld the penalty u/s 271 (1) (c) Decided in favour of Assessee.

Summary

Issues: Interpretation of Amnesty Scheme under Income-tax Act, 1961 for penalty under sections 271 (1) (c) and 273(2)(a) - Consistency in Tribunal's decisions for the same assessment year.

Interpretation of Amnesty Scheme under Income-tax Act, 1961:
The High Court considered whether the Tribunal was correct in holding that the appellant's case was not covered under the 1986 amnesty scheme, leading to the imposition of a penalty under section 271 (1) (c) of the Income-tax Act, 1961. The appellant had filed returns for AY 1983-84 and later sought to avail the benefit of the amnesty scheme by surrendering certain amounts towards investment allowance and depreciation. The Tribunal had previously allowed the benefit of the amnesty scheme for penalty under section 273(2)(a) for the same assessment year. The Court analyzed the circumstances surrounding the surrender made by the appellant on 25.03.1987, considering whether it was voluntary or after detection of wrongful claims. The appellant argued that the surrender was voluntary based on specific answers in Circular No.451 dated 17.2.1986. Conversely, the Revenue contended that the surrender was made after detection of wrongful claims, thus disqualifying the appellant from the benefit of the amnesty scheme to escape penalty.

Consistency in Tribunal's decisions for the same assessment year:
The Court noted the inconsistency in the Tribunal's decisions for the same assessment year regarding penalties under sections 271 (1) (c) and 273(2)(a) of the Income-tax Act, 1961. While the Tribunal had previously deleted the penalty under section 273(2)(a) citing the benefit of the amnesty scheme, it upheld the penalty under section 271 (1) (c) in the impugned order. The Tribunal justified the penalty under section 271 (1) (c) by concluding that the revised return filed by the appellant was not voluntary, indicating concealment of income. The Court observed that the Tribunal's decision to uphold the penalty under section 271 (1) (c) was in error, especially considering its earlier ruling on the penalty under section 273(2)(a). The Court found that the Tribunal's inconsistency in reasoning warranted a decision in favor of the appellant and against the Revenue, ultimately allowing the appeal.

In conclusion, the High Court interpreted the provisions of the Income-tax Act, 1961 concerning the amnesty scheme and penalties under sections 271 (1) (c) and 273(2)(a) for the appellant's case. The Court highlighted the voluntary nature of the surrender made by the appellant and the Tribunal's inconsistent decisions for the same assessment year. By analyzing the circumstances and previous rulings, the Court ruled in favor of the appellant, emphasizing the need for consistency and adherence to legal principles in penalty assessments under the Income-tax Act, 1961.