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TMI Blog1983 (1) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... essee did not have to be acted upon or inquired into by the assessing officer, because even before the officer could take them up, the assessee had made a voluntary disclosure under s. 68 of the Finance Act, 1965, and also filed revised returns for the two assessment years in question. It was on the basis of the revised returns that the Department pursued the voluntary disclosure proceedings and completed the assessments on estimates which, in appeal, were substituted by lesser estimates by the AAC. In the, penalty proceedings, however, the IAC took the view that for imposing penalties on an assessee, it was enough that the initial returns filed by the assessee were proved to be false returns even if the Department did not have to take note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of the licences had, therefore, to be made only on estimates based chiefly on the market quotations for premia on licences during the material period. According to the Tribunal, the course of assessment proceedings showed that they were only based on the assessee's own representation of the real nature of his business as well as the true source of his profits and, further, even the quantification of the assessments was made only on the basis of mere estimates and not on the basis of any actual discovery of concealed income. These were the considerations which weighed with the Tribunal when they cancelled the penalties, holding that no concealment had been made out by the IAC. The question is whether the cancellation of the penalties, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pandia Nadar Co. v. ITO [1975] 101 ITR 390 pointed out that the gist of the offence under s. 277 was a verification made by an assessee which is false and which he either knows or believes to be false or does not believe to be true. According to this court's decision in that case, the fact that an assessee, after filing a return, agrees to an addition in the assessment does not falsify the return; nor does it operate in the other way and exonerate the assessee from prosecution. The false verification must be held to be indictable on its own terms. Section 271(1)(c), on the contrary, enables the officer to levy penalty only if he is satisfied, in the course of any Proceedings, that the assessee has concealed particulars of his income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of assessment proceedings. For, the return is but the starting point of the proceedings, and even in the best of assessments, the return alone cannot give a true indication of the course and thrust of the proceedings. When, therefore, s. 271(1)(c) speaks about the ITO having to be satisfied " in the course of any proceedings it means that the officer's satisfaction must be obtained on an appraisal of the stand taken by the assessee in the whole course of the proceedings and not merely in his formal return of income. In the present case, it is quite true that the assessee was found to have filed his original returns which could, by no means, be regarded as true returns, even on a mere comparison with what the assessee himself subsequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion of the Tribunal in this case would be to go against an earlier decision of this court in CIT v. Subramania Chettiar [1977] 110 ITR 602 (Mad). In that case, an assessee against whom penalty action was started under s. 271(1)(c) contended that penalty proceedings should not be proceeded with since he had moved the Commissioner of Income-tax for relief under s. 271(4A) of the Act. This objection was overruled, and a penalty was levied under s. 271(1)(c) of the Act. This court upheld the penalty, holding that the considerations which are relevant for s. 271(4A) are foreign to the scope of s. 271(1)(c) of the Act. Another point raised before the court by the assessee in that case was that in the connected assessment proceedings, he had fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in deleting the penalty of Rs. 5,00,000 levied for the assessment year 1963-64 under section 271(1)(c) of the Income-tax Act, 1961, on the round that there was no concealment of income ? Whether, on the facts and in the circumstances of the case, and having regard to the Explanation to section 271(1)(c) of the Income-tax Act, 1961, the Appellate Tribunal was justified in deleting the penalty of Rs. 36,712 levied for the assessment year 1964-65 under section 271(1)(c) of the Income-tax Act, 1961, on the ground that there was no concealment of income ? " Since the Department has lost in both the references, we award costs to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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