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TMI Blog1991 (7) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... that the returns were filed under Amnesty Scheme and so the penalty proceedings should be dropped. The Assessing Officer observed that the Amnesty Scheme envisaged that the returns filed should be full and true and the said conditions were not satisfied in the assessee's case as the returned incomes had not been accepted as such. He also observed that the returns filed could not be termed as voluntary in nature as they were filed after a search in the case of the assessee's husband Shri T.V. Augustine. Hence he held that the penalty proceedings could not be dropped. In that view, he levied the penalties as under: Assessment year Penalty levied under s. 271(1)(a) Penalty levied under s. 273(1)(b) 1983-84 Rs. 49,720 Rs. 4,446 1984-85 Rs. 41,327 Rs. 5,166 1985-86 Rs. 28,218 Rs. 5,879 1986-87 Rs. 20,985 Rs. 11,242 Aggrieved with the said penalties the assessee carried the matters in appeal before the CIT(A). 3. Before the CIT(A) the assessee's counsel urged that the returns were filed under the Amnesty Scheme and the assessee co-operated with the Department and paid the taxes and so the Assessing officer should not have levied the penalties. The CIT(A) observed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penal provisions of the law do apply in such cases, such as failure to comply with statutory obligations relating to filing of estimates and payment of advance tax, filing of returns in time, etc., instruction were issued to all officer of the Department that they should adopt a liberal and sympathetic approach where the assessee has come forward suo motu and co-operates with the Department. In circular No. 441 dt. 15th Nov., 1985 (1986) 59 CTR (St) 2 : 156 ITR 165 (St) it was again stated that old as well as new assessees should avail themselves of the Amnesty Scheme by voluntarily filing returns of income and wealth without fear of any penal consequences such as penalty or prosecution. In para 3 of the said circular it was clearly mentioned that the Amnesty Scheme applies to filing of return after being caught also. In Circular No. 451 dt. 17th Feb., 1986 (1986) 51 CTR (St) 82 : 158 ITR 135 (St) in answer to question No. 4 it was clarified that the immunity from penalty and prosecution applied in all cases whether of income-tax or wealth tax where the assessee admitted the truth and paid taxes properly. In answer to question No. 7 it was clarified that the assessee would be enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made on the basis of the wealth statements filed by the assessee only. Thus, there was full and true disclosure from the assessee. Hence all penalties are liable to be quashed. 5. The Departmental Representative filed photostat copy of letter dt. 8th Jan., 1987 from the Asstt. Director of Inspection (inv) addressed to the ITO, B-Ward, Alwaye, wherein the information about the possession of certain assets by the assessee was given to the ITO. The arguments of the Departmental Representative were to the following effect. The three essential conditions under the Amnesty Scheme are (i) the return should be voluntary, (ii) the return should be filed in good faith and (iii) the income declared should be true and full. In the present case whether returns were filed voluntarily or not should be tested against the mental state of the assessee. Merely because they were filed before the issue of notices under s. 139(2) or under s. 148 will not be enough. The Tribunal should look to the circumstances that prompted the assessee to file the returns. The investments made by the assessee came to the notice of the IT Department as can be seen from the letter dt. 8th Jan., 1987 filed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a full and true disclosure of her income. In fact, the incomes returned were accepted as such in the asst. yrs. 1984-85 and 1985-86. Only in the asst. yrs. 1983-84 and 1986-87 the incomes assessed were higher than the income returned. But, as held by the Hon'ble Andhra Pradesh High Court in the decision reported in 127 ITR 579 the mere fact that the incomes disclosed have not been accepted by the ITO would not disentitle the assessee from the immunity under the Amnesty Scheme. Further, enquiries and search were conducted in the case of the assessee's husband and the departmental representative's contention was that voluntaries was absent in the filing of the returns by the assessee. But the Kerala High Court in the case of A.V. Joy, Alukkas Jewellery vs. CIT held that merely because returns were filed after the search they will not cease to be voluntary of a bona fide disclosure. In these circumstances, we hold that the immunity under the Amnesty Scheme is clearly available to the assessee and the penalties are not at all leviable. 8. Further s. 271(1)(a) envisages the satisfaction of the Assessing Officer that assessee has without reasonable cause failed to furnish the returns ..... 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