Clarifications regarding scope & applicability of Sec.271(4A)/273A(1). - Income Tax - 1433/CBDT

INSTRUCTION NO. 1433/CBDT Dated: November 26, 1981 Several references have been received by the Board pertaining to the clarifications given by the Board in various Instructions on the scope and applicability of sec.271(4A)/273A(1) of the I.T.Act. The instructions on the subject have been reviewed and the decisions of the Board are given below:- 1) Board's Instructions contained in confidential letter F.NO.1/33/68- IT(INV)., dated 29th September, 1969- The clarifications in the said instructions are in conformity with the legal position contained in sec.271(4A)/273A(1) of the I.T.Act. Certain aspects thereof however require further elucidation and are explained below:- i) PARA 16(xix) and 16(x): In para 16(xix) it was inter alia stated that there may be allegations of tax evasion, which prima facie establish concealment and that in such cases it would be impossible to take the view that there was no detection of concealment. In order that they may be considered as prima facie establishing concealment the allegations of evasion should be supported by evidence justifying a reasonable belief of concealment of the items referred to in the allegations. If in the assessment order the items referred to in the allegations have not been included, then the allegations need not be a bar to the grant of relief u/s.273A in respect of the disclosure made by the assessee. The above clarifications will apply to para 16(x) also. That is to say if the petition is to be rejected, the information about wrong totalling should be supported by evidence justifying a reasonable belief of concealment and in the relevant assessment order the items on account of wrong totalling and referred to in the statement of the informant have been included. ii) Paras 16(ix),16(xi) and 16(xii): The clarifications relate to the question (a) whether the disclosure can be accepted if the ITO has already in his possession a confessional statement by the alleged lender that he did not lend any money to the assessee . In these cases the question whether the disclosure was prior to detection would finally depend on the finding given in the relevant assessment order regarding the amount covered by such confessional statements. That is to say, disclosure after the receipt of such confessional statements would still be regarded as prior to detection if the amounts covered in the confessional statements are not included as income in the relevant assessment orders. iii) Para 16(vii): The clarifications in this paragraph relate to the question whether the penalty can be waived or reduced where the disclosures are made after a search in which unaccounted cash or other incriminating documents are discovered. The question whether the disclosure was voluntary and prior to detection would again depend on the finding in the relevant assessments completed after the search in the course of which cash/jewellary/other valuables/books of accounts/documents have been seized, A disclosure u/s.273A(1) made after the search but before the examination of the seized material cannot be entertained if in the relevant assessments concealment of income is established as a result of the scrutiny of the seized material. However if no additions have been made on the basis of search/ seizure the case should be regarded as eligible for relief u/s.273A(1) subject to other conditions being fulfilled. (2) A reference was received as to whether provisions of sec.271(4A)/sec.273A(1) would apply in the case of a new assessee whose locality is being surveyed and who hastens to file returns voluntarily before the survey team makes enquiries about him. It is clarified that on the facts stated and if the Department has no prior knowledge about the assessee's affairs he can be considered to have made a voluntary disclosure. (3) The Board also examined a reference regarding the lack of statutory power for settlement of cases by the Commissioners. U/s.119(3) of the I.T.Act the CIT can give only general guidance to an ITO. The question of amendment of law to give Commissioners the power to direct the ITO to complete a particular assessment or pass any other statutory order in the manner laid down by him is under consideration. Pending amendment of the law the existing practice of the Commissioners giving advice to the subordinate officers in the disposal of complicated matters thus giving them the benefit of their experience may continue. This advice should be kept in view by the authority concerned in coming to a decision on the merits of the case in the light of his own judgement. While there can be no objection to such authority adopting the reasoning contained in the advice as his own quoting or referring to the advice in the order that may be passed should be avoided.