9911796707
TMI Blog1999 (11) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... 1977-78 33,870 1978-79 16,900 1980-81 17,500 The assessments were completed under s. 144 of the IT Act on total income as under : Asst. yr. Rs. 1975-76 10,05,900 1976-77 3,08,470 1977-78 2,81,350 1978-79 1,32,900 1980-81 90,000 The assessment orders were made on 27th March, 1986, for all the 5 years under consideration. The assessee later filed returns of income on 17th March, 1987, showing the total income as under : Asst. yr. Rs. 1975-76 10,19,063 1976-77 3,23,470 1977-78 2,19,350 1978-79 1,36,900 1980-81 1,00,000 The assessee's claim was that the revised returns f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee could not claim the immunity under the Amnesty Scheme. The CIT(A) further held that on merits also penalty could be levied as the AO had sufficient materials before him to come to the finding that in the returns filed originally there was concealment of income. The CIT(A) thus confirmed the levy of penalty for all the 5 years under appeal. Aggrieved with the order of the CIT(A), the assessee has filed these appeals before the Tribunal. 4. On behalf of the assessee Shri S.S. Phadkar Advocate, submitted before us that the CIT(A) was not correct in confirming the penalty without giving due consideration to the claim for the benefits available under the Amnesty Scheme. The learned counsel pointed out that the assessee filed the revised returns for the asst. yrs. 1975-76 to 1980-81 on 17th March, 1987, admitting incomes higher than what had been assessed, and that he had also withdrawn the appeals filed before the Tribunal against the assessments. It was his contention that as the revised returns admitting higher incomes had been filed when the Amnesty Scheme was in force, there was no justification for denying the assessee the benefits available under the scheme. Shri Phadkar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding of the CIT(A) that the assessments had been made without giving the assessee adequate opportunity to furnish evidence regarding the credits. According to the learned counsel after cancelling the assessments under s. 146, the AO had taken the case for re-assessment in the month of March just before the time barring date after giving a short notice for hearing. It was stated that as the assessee was not given adequate time the confirmation letters could not be furnished to prove the genuineness of the credits. It was his contention that in such a case of estimated addition without valid grounds there could be no levy of penalty under s. 271(1)(c). 5. The learned counsel has also raised another contention that as could be seen from the assessment orders penalty proceedings had been initiated on the ground that the assessee had furnished inaccurate particulars of income. Before issuing the notice under s. 271(1)(c) the AO felt that the default on the part of the assessee was in furnishing inaccurate particulars in the returns but in the orders passed by him penalty was levied for the default of concealment of income. The learned counsel contended that after initiating penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns declaring lower income the assessee was concealing the income liable to fix in his hands. The learned Departmental Representative submitted that though the assessee was asked to confirm the credits as appearing in the accounts as genuine, he did not prove the genuineness with confirmation letters or other evidence. According to Shri Meena though the letters of confirmation had been filed in regard to a few credits, the assessee failed to furnish necessary evidence to prove that those were genuine credits. Shri Meena contended that even in a case of estimate of income penalty could be levied under s. 271(1)(c). For that contention he has placed reliance on the decision of the Madras High Court in CIT vs. S. Krishnaswamy Sons (1996) 219 ITR 157(Mad). The learned Departmental Representative further stated that filing of revised returns showing higher incomes also would not exonerate the assessee from charge of concealment of income as held by the Kerala High Court in the case of CIT vs. K. Mahim (1984) 39 CTR (Ker) 337: (1984) 149 ITR 737(Ker). Relying on the number of judicial decisions the learned Departmental Representative contended that in view of the fact that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefits of the Amnesty Scheme. The appeal filed by the assessee before the Tribunal had not been withdrawn by him and the Tribunal has decided the appeal on 19th Feb., 1991, for the asst. yrs. 1975-76 to 1977-78 as discussed in the earlier para. The assessee's case is also not covered by the reply to the query No. 12 in Board's Circular cited above. (vide para 6) 10. The learned counsel for the assessee submitted before us that as early as on 30th March, 1987, the assessee had made a request before the Tribunal for permission to withdraw the appeal with a view to avail of the concessions under the Amnesty Scheme and that the Tribunal had disposed of the appeals ex parte by the order dt. 19th Feb., 1991. Later the assessee made a miscellaneous application before the Tribunal and then the Tribunal passed the order on 20th May, 1993, allowing the assessee to withdraw the appeals for the asst. yrs. 1975-76, 1976-77 and 1977-78. A copy of the order of the Tribunal in ITA Nos. 260-262/Bom/1987, dt. 20th May, 1993, is available in the paper book on p. 7. Though the assessee thereafter made a petition before the CIT under s. 273A(1) the CIT dismissed the same on the reasoning t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search and from which no concealment was detected. The question will arise whether the doors of the Amnesty Scheme will be closed in these situations also. A search without detection of any concealment, in our opinion, is of no consequence and, therefore, the assessee should not be deprived of the benefit of the Amnesty Scheme merely by the factum of search, but if the raiding party had detected some concealment, then the position would have been different. We are fortified in this view by question No. 30 and answer thereto, which are reproduced below [see 1986, 158 ITR (St) 135, 139] . 12. In the light of the above observation of the High Court we have to see whether there was actual detection of assets or income before the assessee filed the revised returns claiming as amnesty returns. It must be made clear that in the search conducted in the assessee's premises on 2nd Dec., 1977, there was no detection of cash or other valuables. Though there was, later a survey made under s. 133A of the IT Act that action also did not bring out any asset or income of the assessee. In the appellate order (p. 6) the CIT(A) has dealt with this matter as under : Thus, the crux of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. But does it mean that those entries showed the income of the assessee introduced in the name of bogus parties. If that was the case, we do not see the reason as to why the entries were appearing in the books of account which were (according to the Department) not meant to be produced before the Department. The case of the Department appears to be that, the assessee was bringing into the accounts his own income in the name of bogus parties. In that case, it was more likely that the credits would have been entered in the regular accounts. Further if we analyse the addition for various years, it can be seen that the AO was not quite sure as to what was the undisclosed income of each year. For the asst. yr. 1975-76, he makes addition of ₹ 5 lakhs for the following reason : In this case a raid was conducted a few years back and some duplicate books of account were seized in which cash entries in numerous names are mentioned which do not find place in what the assessee calls regular books of account. The assessee was given time and again asked to submit explanation regarding these entries but he has constantly refused to do so. In these circumstances addition of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me amount had already been assessed in the assessee's hands, is not quite relevant. The assessee has complied with the requirement of withdrawing the appeal, and making the declaration and the payment of tax on the declared income (vide Q. No. 28 in the Circular No. 451). 17. In the asst. yrs. 1976-77 and 1977-78 also we have to hold that the revised returns filed on 5th Feb., 1987, should be accepted as amnesty returns. For these two years also the Tribunal had passed the orders giving permission to the assessee to withdraw the appeals. For the asst. yr. 1976-77, as against the addition of ₹ 2 lakhs made in the order dt. 7th March, 1979, in the later order dt. 27th March, 1986, the addition was to the extent of ₹ 2.5 lakhs. For the asst. yr. 1977-78 there were two additions, ₹ 75,000 as estimated income from the proprietary business and ₹ 1,86,500 as unexplained cash credits. It is not clear from the assessment orders as to whether the duplicate sets of accounts related to all the assessment years. As a matter of fact in the assessment orders for the asst. yrs. 1976-77 and 1977-78 there is no mention about any duplicate set of accounts. That means th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was not entitled to immunity from levy of penalty for those 2 years. 20. Now considering the merit of the case, it is the contention of the learned counsel for the assessee that there could be no penalty leviable under s. 271(1)(c) for the asst. yrs. 1978-79 and 1980-81, for the reason that there was no concealment of income established by the AO. For the asst. yr. 1978-79 there was addition of ₹ 1,09,300 as undisclosed income on account of the unproved cash credits in the assessee's accounts. From the assessment order it can be seen that the AO examined the books of account produced by the assessee's representative Shri V.K. Sethi and found that there were credits totalling ₹ 1,09,300 appearing in the name of 8 persons. The AO issued a detailed letter on 8th Feb., 1985, to prove the genuineness of the cash credits. Though further opportunities were given, on various dates, the assessee made no attempt to show that the credits were genuine. The total income assessed for this year is ₹ 1,32,898 including other additions as disallowances. For this year the assessee later filed the revised return (claiming as amnesty return) declaring income of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sst. yr. 1980-81, we are guided by the following observation of the Kerala High Court in the case of CIT vs. India Sea Foods (1997) 137 CTR (Ker)(FB) 553: (1996) 218 ITR 629(Ker)(FB) : Penalty proceedings are penal in nature. The elementary principles of criminal law will apply. It is a quasi-criminal proceeding. There should be conscious concealment. The provisions should be construed strictly. Even after the addition of the Explanation to s. 271(1)(c) of the IT Act, 1961, conscious concealment is necessary and the presumption under Explanation to s. 271(1)(c) can be displaced by the assessee proving that the failure to return the correct income did not arise from any fraud or gross or wilful neglect and the quantum of proof necessary would be that required in a civil case, namely, preponderance of probabilities. We accordingly cancel the penalty for the asst. yr. 1980-81. 22. Before concluding, we find it necessary to clarify that for the asst. yr. 1978-79 as can be seen from the assessment order while initiating penalty proceedings under s. 271(1)(c), the AO has not made any observation that penalty has been initiated for default in furnishing inaccurate particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X
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