9911796707
TMI Blog1996 (1) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... o Rs. 30 lakhs and later on further increased to Rs. 52 lakhs plus vide letter dated 22-9-1984. This offer was not accepted by the department. In the meanwhile assessee filed a settlement petition before the Settlement Commission on 31-10-1983 pertaining to assessment years 1979-80 to 1983-84. The said petition was accepted for all the years except for assessment year 1982-83. The petition for 1982-83 was rejected on the ground that concealment was likely to be established by the department. 3. In the course of assessment proceedings the Assessing Officer asked assessee to file the details of cash creditors. Summons under section 131 were issued by him to twenty-two parties at the addresses furnished by the assessee but the same remained unserved with the remarks that such parties were not available at such addresses. The Assessing Officer vide his letter dated 17-12-1985 informed the assessee about this fact and further asked the assessee to produce the parties along with the books of account and pass books. Since the assessee was not able to produce these cash creditors except in the case of K.B. Shah HUF, it filed a revised return on 31-3-1986 under the amnesty scheme offering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was stated that she had visited the shop of the assessee but the jewellery was purchased through some other person who was introduced to her by the partner of the assessee firm Shri Vajubhai. It appears that the assessee was not asked to cross-examine her in spite of the fact that assessee's Chartered Accountant along with Shri D.M. Harish Advocate remained present till 9.00 p.m. This is seen from the letter filed by the assessee in the office of the Assessing Officer on the next day, ie., 26-3-1987 which is placed at page 60 of the compilation. 6. Faced with this situation, assessee again filed a revised return on 30-3-1987 under the amnesty scheme offering an additional income of Rs. 11.5 lakhs comprising the following : Rs. (i) 2,85,000 In respect of loans from six cash creditors. (ii) 38,047 Interest on above loans (iii) 5,50,000 Regarding Jewellery purchased by Miss Rekha Ganeshan. (iv) 2,78,788 Interest on loans taken in earlier years. --------- 11,51,835 rounded off --------- 11,50,000 --------- Finally the assessment was finalised on the total income of Rs. 26,10,123 after further disallowing interest of Rs. 1,77,212 regarding bogus loans of earlier years and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Mr. Tilakchand has assailed the order of the CIT(A) on various grounds. His first contention is that the benefits of amnesty scheme could not be provided to the assessee in as much as, there was no full and true disclosure of the income. He drew our attention to the order under section 119(2) dated 14-2-1986 passed by the CBDT which specifies the conditions for availing the immunity from levy of the penalty under section 271(1)(c) and under section 273. The said order is published in 158 ITR 162 Statute. He also drew our attention to question No. 1 provided in circular No. 451 dated 17-2-1986. According to him until and unless assessee comes forward with the clean hands and makes a true and full disclosure of its income the immunity from the levy of penalty cannot be granted. In this regard he submitted that the assessee filed its original return declaring its income at Rs. 5,63,910 on 21-9-1982 but when inquiries were started by the Assessing Officer he came forward with a revised return under the amnesty scheme offering an additional income of Rs. 7 lakhs. Since the Assessing Officer was not satisfied he started further inquiries and when assessee was unable to prove the cash c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and the parties were not available at their addresses. This information was confronted with the assessee. Since the assessee was unable to explain the genuineness of the cash credits it offered the same under the amnesty scheme. According to him the particulars supplied by the assessee in respect to such cash credits were false and, therefore, the Assessing Officer had found the cash credits as non-genuine and in order to save the penal consequences the assessee had filed the revised return. Regarding the addition made on account of sale of jewellery worth Rs. 5.5 lakhs to Miss Rekha Ganeshan, he relied upon the statement given by her in the course of search conducted at her residence wherein she had admitted that the said jewellery was purchased from the assessee. 8.2. Regarding penalty under section 273, he submitted that the CIT(A) has not decided the issue on merits and has merely deleted the penalty on the basis of filing of return under the amnesty scheme. According to him there is huge difference between the returned income and the assessed income, therefore, the penalty was leviable under section 273. 9. On the other hand, the learned counsel for the assessee Mr. Anil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue regarding non-applicability of the amnesty scheme to the present case is not without force. We have gone through the circular No. 451 dated 17-2-1986 on which heavy reliance has been placed by the assessee. We have also gone through the order of the CBDT dated 14-2-1986 passed under section 119(2)(a) which provides immunity from the levy of penalty under section 271(1)(c) and under section 273 to those assessees who had made full and true disclosure of the income between the period commencing from 15th day of February, 1985 to 31st day of March, 1986. This period was later extended upto 31st March, 1987. For the benefit of our order, we are reproducing the order of CBDT under section 119(2) which is 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 Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 986. The filing of the returns will be regularised by issue of formal notices under section 148 of the Income-tax Act/section 17 of the Wealth-tax Act. In cases 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. 21 --- Whether such a declaration by the partners could be taken as information by the Income-tax Officer for initiating proceedings under section 147A/(b) against the firm ? Answer --- Yes, unless they also choose to disclose the income of the firm. As pointed out earlier, their desire to turn honest must be full and not partial " From the combined reading of the said circular and the order under section 119, it is clear that the most important requirement is that assessee must come forward with clean hands by making a full and true disclosure of its income honestly. Answer to Question No. 21 clearly shows that partial disclosure is not covered by the scheme. Therefore, in our opinion, there cannot be any disclosure in piecemeal. 10.1 Now, let us examine whether assessee is entitled to the immunity from levy of penalty under section 271(1)(c) and under section 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing and pass a reasoned order. There cannot be any dispute with such proposition. It was a case where a full disclosure was made. The Hon'ble Bombay High Court in the case of Laxman was concerned with the request whether the return was voluntarily or not. On the contrary, this judgment goes against the assessee as it has been held in that case that one of the conditions for exercising the discretion under section 273A was making of full and true disclosure of income in good faith. We have already held that assessee had not disclosed the income truly and fully. The Hon'ble Calcutta High Court in the case of Anand Kumar Saraf was concerned with a case where the revised return was filed under the amnesty scheme after the search. At page 323 it has been mentioned that it was an admitted fact that assessee had disclosed fully and truly his income which is not the case before us. The Hon'ble Rajasthan High Court in the case of Ambassador Dry Cleaners was concerned with a case where the assessee has made full disclosure under the amnesty scheme. In the Bombay High Court decision in Bombay Cloth Syndicate's case their Lordships had held that circulars issued by the Board are bindin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particulars unless it is established on materials or evidence that income belongs to the assessee in respect of which it has to disclose the particulars. A distinction has to be drawn where the addition is made by the Assessing Officer on the basis of the material found in possession of the assessee and the addition made on the basis of material found by the revenue from extraneous sources. In the former case the assessee can be charged for concealment of particulars of income or furnishing of inaccurate particulars if it withholds the information or provides inaccurate particulars or fails to offer any explanation or if it is found that assessee is not able to substantiate the explanation in respect of the additions made. But in the latter case the question of giving any information or explanation does not arise unless it is established by the revenue that income in respect of which an addition is made actually belongs to the assessee on the basis of undisputed material or evidence found by the revenue. In the present case the stand of the revenue is that Miss Rekha Ganeshan had purchased the jewellery from the assessee. The material relied upon by the revenue is the statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been directed by the Settlement Commission to waive the penalty leviable under section 271(1)(c) and under section 273. The relevant portion of the order of Settlement Commission is being reproduced as under : " No interest is chargeable under section 139(8) for any of these four years. Interest under section 215/217/217(1A) is also not chargeable for the assessment year 1979-80. As for the other three assessment years, interest under section 215/217/217(1A) will be charged from the first April of the relevant assessment year upto a date which falls one year from the date of filing of the return. No penalty is leviable under section 271(1)(a) for any of the years. Penalties leviable under sections 271(1)(c) and 273 are waived. The petitioner is also granted immunity under section 245H from prosecution under any provisions of the Income-tax Act. " It may be mentioned that the settlement petition was concerned with assessment years 1979-80 to 1981-82 and 1983-84. The interest of justice, therefore, demands that no penalty should be levied in respect of the assessment year 1982-83. Hence, we uphold the order of the CIT(A) in respect of the aforesaid amount. 16. Now we are lef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has found that the particulars given by the assessee were inaccurate ; and second - those cash credits where particulars given by the assessee remained uncontroverted. The former category includes the cash credits appearing at serial Nos. 1 to 15 mentioned in para 16 amounting to Rs. 7.45 lakhs. This has been found by us from the perusal of the list of the parties not found on the income tax record as per the letter of the Assessing Officer dated 17-12-1985. In the second category cash credits appearing at serial Nos. 16 to 22 mentioned in para 16 are included which amounts to Rs. 3.75 lakhs. In our opinion, the revenue has been able to rebut the explanation given by the assessee by giving a finding that particulars given in respect of cash credits in the first category mentioned above are inaccurate inasmuch as on inquiries made by the Assessing Officer from their respective wards, it was found that those cash creditors did not exist. In spite of confronting such facts to the assessee it has not been able to rebut the allegation of the Assessing Officer. If the particulars were correct there was nothing which could stop the assessee in producing the proper material or evidence at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the judgment of the Supreme Court in the case of Varkey Chacko on which reliance has been placed by the assessee. In that case the Supreme Court was concerned with the issue regarding the jurisdiction of the authority who could impose the penalty. The learned counsel for the assessee relied upon certain observations to the effect that penalty could be imposed only where the Assessing Officer is satisfied that there has been concealment or furnishing of inaccurate particulars. In the present case, we have sustained the penalty only in respect of those cash credits where the Assessing Officer has found that the particulars furnished by the assessee were inaccurate. On the contrary, we have uphold the deletion of the penalty where the Assessing Officer could not find anything against the assessee in respect of the particulars furnished by it. Therefore, the conclusion at which we have arrived is fully supported by the observations of the Hon'ble Supreme Court in this case. We are also of the view that the reliance placed by the CIT(A) on the following observations of the Supreme Court in the case of Sir Shadilal Sugar & General Mills Ltd. is also misplaced. "... From agreeing to ad ..... 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