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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 ..... us penalties relate to Assessment Years 1982-83 to 1985-86. 3. Originally when the appeals had come up for hearing, the following question was proposed by appellant-revenue: "Whether the Appellate Tribunal is right in law and on facts in cancelling the penalty levied under sections 271(1)(c), 271(1)(a) and 273(2)(a) of the Income-tax Act, on the ground that benefit under the Amnesty scheme was available to the Assessee, when subsequent to search operation, 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, Ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the above chart with relevant documents we are of the view that the above question needs to be considered by the High Court. Accordingly, the impugned order is set aside and the matters are remitted to the High Court for fresh consideration in accordance with law. Accordingly the Tax Appeal Nos.281-288 of 2005 stand restored to the file of the High Court. The appeal is disposed of with no order as to costs. (Sd) ..........) S.H. KAPADIA (Sd)............) B. SUDERSHAN REDDY NEW DELHI, FEBRUARY 12, 2008." 5. In light of the aforesaid directions made by Supreme Court whereby substantial question of law under Section 260A of the Act has been formulated the Court has not found it necessary to make any formal order of admission as the appeals have already been admitted by the Apex Court. 6. Though in the order the Apex Court has formulated the question, it appears that due to typographical error Section 271(1)(c) of the 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: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, from the perusal of above details, it reveals that returns in different years were revised on number of occasions. In Asst. Year 1984-85, the original return was filed on 28-06-1985 declaring total income at Rs.60,200. wherein the assessee has disclosed salary income, interest on securities, income from house property, business income and income from other sources. A search and seizure operation was carried out at the residential and business premises of the assessee alongwith the premises of connected entities on 20-2-1984. As a result of search, certain incriminating materials were found. During the investigation for Asst. Years 1982-83 to 1984-85 it reveals that amounts received by the assessee in his name or in the name of the family members or in the names of the company in which the assessee or his family members were having substantial interest from M/s. Patel Glass Corporation and M/s. Sunlight Enterprises were shown as either interest free loans or withdrawals, although these amounts were in the nature of income. The assessee had utilized these amounts for investment in income yielding moveable or immovable assets as well as for meeting personal obligations. On such i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out at the residential and business premises of the respondent-assessee along with premises of connected entities on 20.02.1984. That the original return was filed on 28.06.1985 for Assessment Year 1984-85, namely, subsequent to the date of search under Section 132 of the Act and return of income was revised on 28.11.1985, 31.03.1986, 29.09.1986 and 26.02.1987 which indicated that the original return and the revised returns could not be considered to be voluntary returns bearing in mind the date of search i.e. 20.02.1984. In this context the learned counsel extensively read from the order of the Assessing Officer and Commissioner (Appeals) for Assessment Year 1984-85 to submit that in 1986 the Assessing Officer had issued show cause notice dated 19.02.1986, permitted cross-examination of certain persons between 06.03.1986 to 08.03.1986 as requested by the assessee, the assessee had filed reply on 19.03.1986 and after considering all these the Assessing Officer had come to the conclusion that neither were the returns voluntary nor was there full and true disclosure. That in fact the Assessing Officer had detected material pursuant to search forcing the assessee to revise ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the department was not shown to be satisfied. Placing reliance on Bombay High Court judgment in case of Commissioner of Income Tax v. Attar Mohd. Dawood Bros. , [2004] 267 ITR 436 (Bom.) it was submitted that identical controversy was there before Bombay High Court and the only distinguishing feature, if one can term the same to be so, was that in the case before the High Court of Bombay there is only one revised return while in the case of the assessee return was revised on a number of occasions, but the said distinction was without any difference because as submitted, the only requirement was that the return had to be voluntary and in good faith and before detection by the department. That on facts the Tribunal had found in no uncertain terms that there was no material recovered during search to which the returns filed by the assessee were relatable and, therefore, the case of the assessee was directly governed by Answers to Question Nos.19 and 30 of Circular No.451. It was, therefore, urged that the appeals were required to be dismissed. 13. In relation to the alternative contentions it was submitted that none of the alternative contentions merited acceptance in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following requirements emerge: (i) For any Assessment Year, up to and including Assessment Year 1985-86, if a person makes full and true disclosure of concealed income or inaccurate particulars which are furnished in a return of income between 15.11.2005 and 31.03.1986, coupled with the disclosure being voluntary and in good faith and prior to detection by the Assessing Authority; (ii) the person has paid the tax on the income so disclosed on or before 31.03.1986; and (iii) the person has co-operated in any enquiry relating to the assessment of such income, the Assessing Authority is under a mandate not to initiate any proceedings for imposition of a penalty or not impose a penalty for any of the offences stipulated by Section 271(1)(a), or Section 271(1)(c) or Section 273 of the Act. Therefore, if the assessee shows compliance with the three conditions cumulatively, the Assessing Authority is not empowered to either initiate or levy penalty under any or all of the three provisions stipulated by the order. 1. Rest of the circulars issued by CBDT from time to time are admittedly clarificatory in nature and, therefore, the clarifications have to be read and understood in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the assessments are pending, the taxpayer should file revised return before the Income-tax Officer along with evidence of payment of taxes....... Question No. 4.- The income-tax circulars are not very clear as to whether the immunity from penalty and prosecution is guaranteed to the assessee unlike the circular in respect of wealth-tax which appears to be clear on this point? Answer.- The immunity from penalty and prosecution applies in all cases whether of income-tax or wealth-tax where the assessee admits the truth and pays taxes properly. Question No. 12.- Can immunity given by the circulars be availed of by assessees whose premises have been searched by the tax authorities? Answer.- No. Question No. 19.- Kindly clarify the expression "before detection by the department"? Answer.- If the Income-tax Officer has already found material to show that there has been concealment, that would mean the Department has detected the concealment. If the Income-tax Officer only had prima facie belief, that would not mean concealment has been detected. Question No. 26.- Where an order has been set aside on appeal or assessment proceedings are pending under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition to make out a case for a lenient view in such circumstances. Thus, in juxtaposition to Question No.19, Question Nos.26 and 28 and the respective Answers indicate as to what is the meaning of the expression 'before detection by the department'. When these Questions and their respective Answers are read and appreciated in conjunction it is indicative of the fact that not only a revised return is permissible but in a given set of facts and circumstances of the case the return could be revised on a number of occasions, the only caveat being the item in question should not have been found to have been concealed. In other words, if only a suspicion exists in so far as the Assessing Officer is concerned, namely a prima facie belief, an assessee cannot be prevented from either making a declaration or revising a declaration. Only further requirement being the declaration has to be suo motu, namely voluntarily and in good faith, the assessee must pay tax thereon by the stipulated date and co-operate in any inquiry which the department may undertake after the declaration. At the cost of repetition, one needs to advert back to the order dated 14.02.1986 only to emphasis the fact that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon by the Assessing Officer were subject to the cross examination. Thus, conclusively it cannot be said that Assessing Officer was in possession of certain material which can establish the concealment by this date. After filing the reply on 19-03-1986 to the show-cause notice of the Assessing Officer, the assessee had revised his return on 31-03-1986 and availed the benefit of amnesty scheme. On perusal of the assessment order, it reveals that additions on the basis of show-cause notice have not been made. Therefore, it indicates that sufficient material was not with the Assessing Officer which exhibit in the existence of concealed income. We also find that in spite of search operation carried out at the assessee's premises neither any incriminating material was found nor any addition was made on the basis of seized material. In view of reply of question No.30, benefit of amnesty scheme cannot be denied to the assessee merely on the basis of search was carried out at the premises of the assessee. As far as the 3rd condition is concerned, i.e. co-operation of the assessee, we are of the view that the assessee has declared an income more than Rs.117 lacs alongwith his wife and paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a position to point out any concrete material to establish concealment. 23. In light of the aforesaid findings of fact based on appreciation of evidence on record, it is not possible to hold that the impugned order of Tribunal suffers from any legal infirmity so as to warrant interference. 24. As against that in case of Deepak Construction Company [2007] 293 ITR 285 on which reliance has been placed by Revenue the High Court noticed following facts (page 289): "A perusal of the notice dated February 24, 1986, would show that the Assessing Officer had already detected concealment of the income. He had made the following observation: 'on scrutiny of squared up accounts and details filed by you it is noticed that following new deposits have been received and paid back by you during the accounting year itself'. He also observed that, 'detailed scrutiny of the above data makes it crystal clear that you have introduced unaccounted money on various dates as under and taken out of books before close of the accounting year'. He lastly observed that, 'I intend to add this cash credit of Rs.1,64,500 to the income disclosed by you, as income from undisclosed sources'. on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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