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TMI Blog2008 (9) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, the Assessee itself had revised it's returns on a number of time, which would go to show that the return was not voluntary?" 4. After hearing the parties vide order dated 25.10.2005, the appeals came to be rejected by the High Court holding that no substantial question of law arose from the impugned common order of the Tribunal dated 28.05.2004. Revenue carried the matter in appeal before the Apex Court and the following order has been made by the Apex Court on 12.02.2008 and, therefore, the appeals have been heard once again: "IN THE SUPREME COURT OF INDIA Civil Appellate Jurisdiction Civil Appeal No. 1252 of 2008 (Arising out of Special Leave Petition (C) No.19088-2006 Commissioner of Income Tax, Ahmedabad ... Appellant Versus C.A. Taktawala ...Respondent ORDER 1. Delay condoned. 2. Leave granted. 3. Having heard learned counsel for the parties, we are of the view that the High Court had erred in not answering the question which, in our opinion, was the substantial question of law under section 260A of the Income Tax Act, 1961. 4. We quote hereinbelow for the sake of convenience the said question: "Whether on the facts and circumstances of the case, the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act has not been incorporated in the question but the parties have been permitted to address the Court in relation to penalties levied under all the three provisions and hence, the following question has been considered: "Whether, on the facts and circumstances of the case, the Tribunal was right in law and on facts in cancelling the penalty levied under Sections 271(1)(a), 271(1)(c) and 273(2)(a) of the Income-tax Act, on the ground that benefit under the Amnesty Scheme was available to the assessee, particularly when subsequent to search operation the assessee itself had revised its returns on a number of occasions, which would go to show that the return was not voluntary?" 7. As can be seen from the impugned order of the Tribunal the facts recorded by the Tribunal are taken from the order of the Commissioner (Appeals) for assessment year 1984-85. In Paragraph No.3 the Tribunal has reproduced a chart showing the position of various returns filed for Assessment Years under appeal, which is as under: Assessment year 1982-83 1983-84 1984-85 1985-86 1. Original return filed on 3.3.83 12.7.84 28.6.85 28.6.85 Income declared Rs. 1,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minating material and outcome of the investigation he filed a revised return of income for Assessment Year 1984-85 on 31-03-1986 wherein additional income of Rs.9,99,743 was disclosed as amounts received from M/s. Patel Glass Corporation. In support of his return, the assessee wrote a letter to the Commissioner of Income tax, Gujarat requesting him that return was filed under amnesty scheme and benefit of that scheme should be extended to him. However, the Assessing Officer has recorded a finding that the assessee was informed that his so-called disclosure made by him was largely as a result of search and subsequent investigation by the Income Tax Officer, the declaration in his case would not be covered by the amnesty scheme. Against this, additional declared income of Rs.9,99,743 the assessee claimed deduction of Rs.8,71,000 on the ground that this amount was referable to the loans by M/s. Patel Glass Corporation from the bank against the assessee's personal bank guarantee. This claim of the assessee was rejected and his total income was determined by the Assessing Officer on Rs.11,70,540. However, subsequently in the proceedings under section 264 of the Act, the learned Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot made full and true disclosure. The learned counsel placed reliance on decision of this Court in case of Deepak Construction Co. v. Commissioner of Income-tax, [2007] 293 ITR 285 (Guj.) to submit that in similar circumstances the Court had categorically held that the assessee was not entitled to benefit under the Amnesty Scheme. 10. An alternative contention was raised based on the following two decisions of this Court: (i) Rameshchandra M. Luthra v. Assistant Commissioner of Income-tax, [2002] 257 ITR 460 (Guj.) ; and (ii) S.J. and S.P. Family Trust v. Deputy Commissioner of Income-tax, [2005] 277 ITR 557 (Guj.) to submit that the impugned order of Tribunal was also bad in law because the Tribunal had failed to give any reason as to how the order of Commissioner (Appeals) was bad in law. That the Tribunal was required to deal with the reasons recorded by Commissioner (Appeals) and could not have made an order without first recording as to why the order of first appellate authority could not be sustained. 11. Lastly, it was contended that if the Court came to the conclusion that the facts recorded by the Assessing Officer and Commissioner (Appeals) were insufficient or defic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 issued by CBDT under Section 119(2)(a) of the Act. The said order reads as under: "Order dated February 14, 1986 (F. No.281-8-86-I.T. (INV.III) Income-tax Act, 1961: Order under section 119(2)(a): Direction to ITO and IAC not to initiate penalty proceedings under section 271(1)(a) or 271(1)(c) or 273 in respect of any assessment year up to and including assessment year 1985-86 ORDER In exercise of the powers conferred by clause (a) of sub-section (2) of section 119 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby directs that the Income-tax Officer and the Inspecting Assistant Commissioner of Income-tax shall not initiate any proceeding for imposition of a penalty on a person or impose penalty on him for an offence under clause (a) or clause (c) of sub-section (1) of section 271 of section 273 in respect of any assessment year up to and including assessment year 1985-86 in a case, if he is satisfied that such person: (a) has prior to the detection by the Income-tax Officer, or, as the case may be, the Inspecting Assistant Commissioner of Income-tax, of the concealment of particulars of income or of the inaccuracy of particulars furnished in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue has to be appreciated in light of the aforesaid legal requirements. 2. Before proceeding further it is necessary to take note of the fact that the second termini of 31.03.1986 was extended initially upto 30.09.1986 and thereafter upto 31.03.1987. [Ref.: CBDT Circular No.453 dated 04.04.1986 and CBDT Circular No.472 dated 15.10.1986]. Therefore, any disclosure made either by way of a solitary return or by way of revised return between 15.11.1985 and 31.03.1987 will have to be tested on the basis of the conditions stipulated by the aforesaid order dated 14.02.1986. 3. In this context one may consider Circular No.451 dated 17.02.1986 [Ref.: 168 ITR Statute 135], more particularly the following Questions and Answers: "Circular No.451, dated February 17, 1986. Subject: Clarification regarding the Press note and circulars issued by the Ministry of Finance regarding declaration of higher income or wealth: Following clarifications are hereby issued on the questions raised at different places on the press note of the Central Board of Direct Taxes and the Circular No.423 dated June 26, 1985, and Circulars Nos.432, 439, 440 & 441 dated November 15, 1985, issued by the Central Board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecides to turn honest even at this stage. Question No. 28.- Where an addition is contested in appeal, whether an assessee could make a declaration and agree to pay tax thereon? Answer.- Yes, the assessee should withdraw that appeal and make a declaration before the administrative Commissioner. In such a case, a lenient view will be taken, though such a declaration cannot be taken as entirely voluntary. Question No. 30.- Whether an assessee could make a declaration in respect of assets or income which is not the subject-matter of seizure? Answer.- Yes, if it has not been already found out in the course of the search." 17. The aforesaid Questions and Answers as appearing in Circular No.451 indicate firstly that there is no prohibition for filing a revised return in a case where assessments are pending. The immunity from penalty and prosecution is guaranteed in all cases under the Income-tax Act or the Wealth Tax Act where the assessee admits the earning of income or obtaining of wealth and pays proper taxes. However, prima facie, immunity may not be available to an assessee whose premises have been searched by the tax authority, but this has to be understood in context of the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire Scheme is in relation to assessees who have concealed income which has not been detected by the department and who intend to disclose the same before such detection. 19. The second set of Questions and Answers as made up by Question Nos.12 and 30 and their respective Answers relates to a case of an assessee against whom proceedings under Section 132 of the Act have been taken. If one reads Question and Answer No.12 in isolation it might indicate that every person who is subjected to search proceedings has rendered himself ineligible to opt for the benefit under the Scheme. However, when one reads Question and Answer No.30 it becomes clear that the bar is not absolute and even in a case of a person who has been subjected to search proceedings unless and until either concealed assets or concealed income have been subject matter of seizure during course of the search the assessee will not be prohibited from making a declaration. In order words, in respect of assets or income which are not subject matter of seizure during search proceedings an assessee would be entitled to make a declaration qua the concealed assets or the concealed income. 20. The findings of the Tribunal wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was not co-operative with the Department........... On appreciation of facts, we arrived at a conclusion that before detection of concealment, the assessee has filed his revised return under the amnesty scheme and fulfill all the requisite conditions for which the benefit should be granted to him." 21. The aforesaid findings of the Tribunal establish that pursuant to show cause notice dated 19.02.1986 and cross-examination of certain persons between 06.03.1986 to 08.03.1986 the assessee filed a reply on 19.03.1986 responding to the show cause notice. The Tribunal, on appreciation of the aforesaid evidence, has recorded that conclusively it could not be said that the Assessing Officer was in position of certain material which could establish concealment by the said date. The Tribunal thereafter goes on to observe that on perusal of the assessment order the proposed additions on the basis of show cause notice have not been made when the assessment was finalized. The Tribunal, therefore, once again reiterates that the Assessing Officer did not have sufficient material to establish existence of concealed income. The Tribunal further finds that in spite of search operation carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracted portion. 25. In light of what is stated hereinbefore none of the alternative contentions raised by the Counsel for Revenue merit acceptance. The two decisions in the case of Rameshchandra M. Luthra [2002] 257 ITR 460 (Guj) and S.J. and S.P. Family Trust [2005] 277 ITR 557 (Guj.) have to be appreciated in light of the fact that the orders made by the Tribunal therein were not reasoned speaking orders whereas in the facts of the present case it cannot be stated that the impugned order of the Tribunal suffers from the said vice. In fact the impugned order of Tribunal has not only succinctly set out the position in law but recorded findings of facts after appreciating evidence on record, the same record on which reliance has been placed by Revenue authorities while levying penalties. 26. Similarly, the second alternative contention to remit the matter back to the Assessing Officer for undertaking the entire process de novo also cannot be accepted considering the fact that this is not a case where the Revenue was not having sufficient time or opportunity to make out its case. In fact both the Assessing Officer and the appellate authority have made elaborate orders but without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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