9911796707
TMI Blog1991 (8) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, the appellant filed his return showing income from property, business income and share of profit from M/s. K.K. Traders. The return was revised twice. The first revised return was filed on 19th March, 1986 showing income of Rs. 2,65,594 and another revised return was filed on 21st March, 1986, showing income of Rs. 3,68,400. This second revised return was said to have been filed under the Amnesty Scheme, then in force and in terms of CBDT circular. The Assessing Officer observed that since the return had been filed in response to notice under section 148, the claim of the assessee that the return was filed under the Amnesty Scheme was not tenable. He determined the total income for assessment year 1983-84 at Rs. 3,68,404. Similarly, for the assessment year 1984-85, the assessment was completed on the returned income which was also revised twice and which, as per the second revised return filed, indicated income of Rs. 4,33,885. The Assessing Officer started penalty proceedings under section 271(1)(c) of the Act for both the years. He noted that different returns were filed on different dates by the assessee consequent to the notice under section 148. The last two returns were ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2,52,584 in the second return filed on 18-3-1986. Therefore, the first revised return was filed consequent to the assessment of the firm which had the effect of changing the figure of share income that the assessee had from the firm K.K. Traders. It was in the third revised return filed on 21-3-1986 that an additional income of Rs. 1,00,000 was shown. The total income declared was Rs. 3,68,400 for assessment year 1983-84 and this income was virtually accepted by the Assessing Officer who made assessment on Rs. 3,68,404 for assessment year 1983-84. Similarly, for the assessment year 1984-85, the first retrurn was filed showing share income of Rs. 43,992. The first return was revised showing share income of Rs. 2,17,252 and the second revised return was filed in which separate proprietary business income was revised to Rs. 2,14,883 as against Rs. 14,883 shown in the first two returns. Thus, in both the years in the last revised return filed, the asessee had disclosed additional sum of Rs. 1,00,000 for 1983-84 and Rs. 2,00,000 for assessment year 1984-85. This the assessee had done voluntarily. Shri Doshi argued that the ITO had not initiated any enquiry whatsoever or made any inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levying penalty under section 271(1)(c) in the light of the instructions given by the Board in the advertisement, whether or not it amounted to promissory estoppel and created a legal right, the question was required to be examined from the standpoint of the credibility of the department, had to be considered in its entire context. As regards the binding nature of the Amnesty Scheme, Shri Doshi referred to the decision of the Andhra Pradesh High Court in CIT v. T.V. Ramanaiah Sons [1986] 157 ITR 300, where the court held that the Amnesty Scheme was not binding on the Tribunal and, in that judgment, the High Court held that wherever instructions given by the CBDT to relieve hardship were issued in exercise of the powers vested in the CBDT under section 119 of the Act, it is certainly open to the court to compel the ITO to follow the instructions of the CBDT. That is to say, the court is not bound by the instructions of the Board. All that is required to be said is that so far as officials of the department are concerned, it is not open to them to say that they would not follow the instructions of the CBDT. He also referred to a decision of the Calcutta High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to file return of income and not to bring to tax any definite item of concealed income. Mere failure to file return, according to Shri Doshi, did not amount to concealment for these years and, in support of this proposition, he relied on the decision in S. Narayanappa Bros. v. CIT [1961] 41 ITR 125 (Mys.). For these reasons, Shri Doshi pleaded that the penalty be quashed. 6. The departmental representative argued that the issue to be decided was whether the return was really voluntary and whether the disclosure was voluntarily made. The firm in which the assessee was a partner as well as the appellant's income were subjected to search and seizure proceedings under section 132. Notice under section 148 was issued in 1984 consequent to the search conducted in 1983. The return was filed in 1985. The return in response to notice under section 148 could not be said to be a voluntary return. There was concealment in the first return because that return was not filed voluntarily. All the cases cited by the Ld. counsel for the assessee, according to the departmental representative, were not relevant in view of the amendment of provisions of section 271(1)(c) and he relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recent decision of the Supreme Court in the case of Keshavji Ravji Co. v. CIT [1990] 183 ITR 1 in which one of the issues that the Supreme Court had to consider was the binding nature of the circulars of the CBDT. The Supreme Court observed at page 17 that the circulars beneficial to the assessee and which tone down the rigor of the law, issued in exercise of the statutory power under section 119 of the Act, or under the corresponding provisions of the predecessor Act, are binding on the authorities in the administration of the Act. The Tribunal, much less the High Court, is an authority under that and the circulars do not bind them, but the benefits of such circulars to the assessee have been held to be permissible even though the circulars might have departed from the strict tenor of the statutory provisions and mitigated the rigours of the law. That is not the same thing as saying that such circulars will have either binding effect in the interpretation of the provisions or that the Tribunal and the High Court are supposed to interpret the law in the light of the circular. There is, however, support of certain judicial observations for the view that such circulars constituted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. In that sense, the revised income which was claimed to have been filed as part of Amnesty Scheme could be said to be .return' in which income was voluntarily disclosed. The papers filed before us support the stand of Shri Doshi that nothing was done by the department either between the first return and the first revised return or the second revised return to indicate that any enquiry was started or any investigation carried out resulting in the discovery of concealed income. Even the search conducted earlier did not disclose any concealed income. Therefore, the assessee, in the second revised return which was finally accepted by the department, could be said to have voluntarily disclosed the additional income of Rs. 1,00,000 and Rs. 2,00,000 for the respective two years under appeal and which income was accepted by the department without any further enquiry or questioning. Therefore, the question that arises for consideration is whether the assessee could be penalized merely because notice under section 148 was issued consequent to the proceedings under section 132 and in response to such a notice, the assessee disclosed in the various returns filed, income from business, partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished in respect of such income, voluntarily and in good faith, made between the 15TH day of November, 1985 and 31st day of Much, 1986, a full and true disclosure of such income ............... 14. It will be seen that there is no reference in this circular to notice under section 148 or return filed in response to the proceedings under that section. Having stated these facts, we are of the view that the assessee had made voluntary disclosure of income which was not detected by the Assessing Officer who had not initiated any enquiry or embarked upon any investigation and who had, under proceedings under section 132, not found any concealed income. The assessee having made disclosure of concealed income in the second revised return, which was accepted by the department for both the years, could not be accused of having concealed any income and could not be penalised for such concealment. The assessee has made good in the revised return what it had omitted to disclose in the original return and the filing of the revised return would seem to exonerate the assessee from any default in the original returns, as has been observed by the Madras High Court in the case of K.P. Kandasami M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are binding on the revenue authorities. The departmental representative cannot be said to argue that the authority though acting under delegated power, cannot override the statutory provisions. In the amnesty circular, in reply to Q. No. 30, it was clarified, as we have seen above, that assets or income not detected in the search could be disclosed in a voluntary disclosure. The Board's circular No. 281, discussed above, does not refer to proceedings under section 148. The facts indicate that the disclosure made in the second revised return have been found to be true and complete by the department inasmuch as they have accepted the returns so disclosed. Therefore, in our opinion, there is nothing on record to indicate that the ITO had, without carrying out any investigation or enquiry, detected any concealment to merit levy of penalty under section 27 1(1)(c) of the impugned amounts. Reference in this regard may be made to the old decision of the Madras High Court in the case of CIT v. Ramdas Pharmacy [1970] 77 ITR 276. The court, after considering the decision of the Supreme Court in the case of CIT v. S. Raman Chettiar [1965] 55 ITR 630 observed that it was not correct to state t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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