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TMI Blog1992 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ether, on the facts and in the circumstances of the case, the return of income filed by the assessee on May 24, 1971, could be treated as a revised return under section 139(5) of the Income-tax Act ? (ii) Whether, on the facts and in the circumstances of the case, the circular of the Board amounted to a promise that penalty will not be imposed if an assessee should file a revised return offering the concealed income for assessment ? (iii) Whether, on the facts and in the circumstances of the case, it was open to the Inspecting Assistant Commissioner to impose the penalty in spite of the advertisement of the Central Board of Direct Taxes issued on January 5, 1971 ? (iv) Whether, on the facts and in the circumstances of the case, penalty was imposable by the Inspecting Assistant Commissioner in relation to an income deemed to be income from undisclosed sources ? (v) Whether, on the facts and in the circumstances of the case and having regard to the amount of income declared by the assessee in the return filed by it on May 24, 1971, the provisions of the Explanation to section 271(1)(c) are not applicable ?" The basic facts are: The assessee, Bombay Cloth Syndicate, Nagpur, is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han six months which can be extended to two years. Similarly, evasion of wealth-tax is also severely punishable under the Wealth-tax Act. A minimum penalty of an amount equal to the value the asset so concealed or to the extent of understatement in the value of an asset or overstatement in the value of any debt, is prescribed. This penalty can be as high as twice this amount. In addition, there can be prosecution and conviction with rigorous imprisonment for not less than six months extendable to two years. Furnishing inaccurate particulars of any gift is punishable with a sum not less than 20 per cent. but not more than one and half times the tax which would have been avoided if the return had been accepted as correct. Apart from this, you can be prosecuted. Conviction can mean simple imprisonment extendable to one year or with fine up to Rs. 1,000 or both. If the original return filed by you is false why not file a revised return to avoid the consequences of discovery. Central Board of Direct Taxes, (Department of Revenue and Insurance), Ministry of Finance, Government of India." We see no justification for the conclusion that the return dated May 24, 1971, is not a "revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o collect more revenue by giving an incentive to the public to disclose their suppressed income, discovery of which has been found by practical experience to be an extremely difficult job for the Department. It did not deal with any particular case or appeal. It is unfortunate that having issued such a public advertisement, the Department should take a stand that it has no binding effect on the officers responsible for the execution of the Act and that they are free to exercise their discretion in the matter contrary to the letter and spirit of the relaxation announced. In this context useful reference may be made to the following observations of the Gujarat High Court pertaining to this very advertisement in the case of Taiyabji Lukmanji v. CIT [1981] 131 ITR 643 : "In our opinion, the Tribunal ought to have considered the question as regards the legality and propriety of levying penalty under section 271(1)(c) of the Act in the light of the instructions given by the Board in the advertisement referred to above. Whether or not it amounted to promissory estoppel and created a legal right apart, the question was required to be examined from the standpoint of the credibility of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gauhati High Court in the case of F. C. Agarwal v. CIT [1976] 102 ITR 408 dealing with the very circular. We see nothing in the said judgment in support of the view that the said advertisement could not have the status of a circular issued under section 119 of the Act. The question has been left undecided by the Gauhati High Court and the advertisement was held not applicable to that case since the revised return in that case was filed long before the issue of the advertisement. Does the advertisement in question operate in eternity is the next question posed before us. We do not think so. Its applicability must be confined to the original return filed before the advertisement. We now turn to the next facet of the controversy, viz., whether it contains a promise that penalty will not be imposed in case the revised return offering concealed income is filed before its discovery to avoid the consequences of discovery. The relaxation is worded thus: " If the return filed by you is false, why not file a revised return to avoid the consequences of discovery." The above representation was for direct consumption of a taxpayer and hence must be read in a manner he would understand it. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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