TaxTMI 
TaxTMI 
1992 (4) TMI 32
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....5, to January 25, 1985. A large number of documents/books of account were seized. Inspection of the documents seized was allowed in October, 1985. Explanation 2 to section 273A(1) of the Act inserted with effect from October 1, 1984, remained in force only for a short duration till May 24, 1985. It was during this period that the search and seizure operation was conducted. This Explanation provides that, where documents are seized under section 132 of the Act and the person concerned makes a full and true disclosure of his income within 15 days of such seizure such disclosure shall, for purposes of sub-clause (b) of clause (iii) of sub-section (1) of section 273A of the Act, be deemed to have been made, prior to the detection by the Income-tax Officer of the concealment, voluntarily and in good faith. The petitioner, in order to take advantage of the Explanation, filed a petition dated February 6, 1985, annexure P-1, to the Commissioner, allegedly making a full and true disclosure of his assets stating that he would agree to such reasonable assessment as may emerge after scrutiny of the seized records. After inspection of records, revised returns were filed on March 14, 1986, an....
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.... the disclosure was not full and true and, for this, reliance has been placed on the revised returns filed in February/March, 1986, after inspection of the seized account books/documents. The chart indicating the original returned income, the revised returned income and the finally assessed income reproduced in the written statement is as under : ------------------------------------------------------------------------------------------------------------------------------------------------- Amount of Amount of Amount of Year income returned income returned income finally in original return in revised return assessed ------------------------------------------------------------------------------------------------------------------------------------------------ Rs. Rs. Rs. ------------------------------------------------------------------------------------------------------------------------------------------------ 1979-80 20,070 1,49,909 1,69,620 1980-81 50,000 1,48,894 2,00,910 1981-82 50,040 1,94,787 3,61,890 1982-83 71,805 3,42,552 3,94,920 1983-84 10,425 5,97,855 9,16,510 1984-85 62,170 7,26,732 9,19,790 1985-86 2,46,109 -- 6,63,570 ---....
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....income. 273A. (1) Notwithstanding anything contained in this Act, the Commissioner may, in his discretion, whether on his own motion or otherwise,-. . . (ii) reduce or waive the amount of penalty imposed or imposable on a person under clause (iii) of sub-section (1) of section 271 ; or . if he is satisfied that such person - . . . (b) in the case referred to in clause (ii), has, prior to the detection by the Income-tax Officer of the concealment of particulars of income or of the inaccuracy of particulars furnished in respect of such income, voluntarily and in good faith, made full and true disclosure of such particulars ; ... and also has, in all the cases referred to in clauses (a), (b) and (c), co-operated in any enquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year . . . Explanation 2. -Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing belonging to a person are seized under section 132 and within 15 days of such seizure,....
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....sits with certain financial companies and some other investments have been disclosed suo motu and for which the Department according to the belief of the assessee does not have any knowledge whatsoever. 9. It is again submitted that this petition is subject to final determination of income after thorough inspection and decision by your honour in each assessment year. . . . We are willing to amend this petition and substitute any item if your honour so desires. " The petitioner herein is seeking reduction/waiver of penalty under section 273A of the Act as full and true disclosure had been made within fifteen days of the search and seizure under section 132 of the Act in terms of Explanation 2. The provision in section 273A of the Act has conferred power on the Chief Commissioner/Commissioner of Income-tax to reduce or waive penalty in situations noticed therein. Similar are the provisions of section 18B of the Wealth-tax Act, 1957. The two provisions are pari materia. Division Bench of this court in Smt. Parkash Devi v. CWT [1983] 141 ITR 122 (P & H), happened to consider the provisions of section 18B of the Wealth-tax Act and noticed the conditions precedent detailed be....
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....fit of Explanation 2 to section 273A(1) of the Act. The petitioner, in his petition, annexure P-1, relevant portion already reproduced, stated that, in case it is found that some element of income could be added or reduced, as the case may be, the same may kindly be given effect to in this application having regard to the bona fides of the petitioners. The intention of the assessee was obvious that though he had not been allowed inspection of the seized records, in order to avail of the benefit of Explanation 2, he filed a disclosure petition on the basis of his memory within the statutory period of search and seizure and undertook to accept the assessed income as the returned income even if some additions were ultimately made while framing the assessment. In order to prove his bona fides and to stick to the promise made, the assessee extended full co-operation and even liquidated the tax demands immediately. It would be apposite to notice the words of the Income-tax Officer, which read as under : " 6. It would be pertinent to point out that the assessee has extended full co-operation. The assessment proceedings required the personal presence of the proprietor for days tog....
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....xplanation 2 to section 273A(1) of the Act. The Income-tax Officer and the Chief Commissioner nowhere recorded that the disclosure made was full and true. The condition of full and true disclosure having not been satisfied, the assessee is not entitled to any relief and the Board was justified in declining the approval. Learned counsel for the petitioner made reference to the following cases : (i) Harjas Rai v. CIT [1982] 138 ITR 77 (P & H): (ii) Major Naranjan Singh v. CWT [1982] 138 ITR 88 (P & H); (iii) Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC); (iv) Navnitlal K. Zaveri v. CIT [1980] 125 ITR 385 (Guj) ; and (v) Laxman v. CIT [1988] 174 ITR 465 (Bom). In Harjas Rai v. CIT [1982] 138 ITR 77 (P & H), followed in Major Naranjan Singh v. CWT [1982] 138 ITR 88, the provisions of section 273A for reduction/waiver of penalty were considered by this court in the context of delayed voluntary returns in the following words (at page 90) : "The Legislature wanted to encourage voluntary disclosure of income. For this purpose, they provided an inducement in the form of reduction or waiver of penalty. This provision has to be liberally cons....
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....otherwise, these apply with full force. The matter whether the disclosure is full and true shall be discussed a little later. Reference to Hari Sharan Sarraf v. CIT 1991] 188 ITR 60 (All), by learned counsel for the Revenue in no way helps him.It only shows that Explanation 2 has no application to penalties or interest imposed under any provision other than section 271(1)(c) of the Act. This is not the dispute here. The facts of P. D. Varghese and E. J. Davis v. CIT [1989] 180 ITR 187 (Ker), are distinguishable in the reported case a finding had been recorded to the effect that the assessee had not co-operated with the Revenue. On this finding, the High Court declined to interfere with the discretion exercised by the Commissioner under section 273A of the Act. In the backdrop of the aforesaid factual and legal position, it is to be seen whether, in the facts of the present case, the assessee had made a full and true disclosure of his income or not. If he did, he is entitled to relief and, if he did not, the petition deserves to be dismissed, the essential conditions to Explanation 2 of section 273A(1) not having been satisfied. The disclosure made in the petition under sectio....
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....er report as under : "The intention of the assessee after the search was to make complete disclosure of his income. As such, as and when the Income-tax Officer detected any discrepancy or inaccuracy, the assessee immediately agreed to surrender the same. " The Chief Commissioner, while requesting the Board to grant approval to waive penalty, specially noticed that the assessee was entitled to the benefit thereof. In the opening part of the letter, he noticed that the assessee was not allowed any access to the seized books of account and that the assessee had claimed that any further amount which is found by the Income-tax Officer will also be surrendered by him for assessment. From this, the Chief Commissioner meant nothing else but that the assessee made a full and true disclosure of his income. The stand of the Revenue in the written statement that the assessee was never refused inspection of the documents seized is also proved to be wrong. The recommendations made by the authorities as noticed above have not been set aside by the Board or found to be perverse. All the authorities on their part recommended that the case was covered by Explanation 2 to section 273A. After th....