TaxTMI 
TaxTMI 
2008 (9) TMI 162
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.... 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, 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....
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....und 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: "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 ....
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....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 investigation, it was concluded that the assessee had used M/s. Patel Glass Corporation and Sunlight Enterprises as a conduit for siphoning the funds from Vallabh Glass Works Ltd. When the assessee was confronted with this incriminating 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,....
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....icer 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 returns from time to time. That even Commissioner (Appeals) had, after considering the facts, come to the conclusion that the revised returns could not be said to have been filed under Section 139(5) of the Act and the assessee had not 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 rea....
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....s, 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 facts and circumstances of the case and the Court should hold accordingly. 14. For appreciating the various circulars issued by Central Board of Direct Taxes (CBDT) which go to form the Amnesty Scheme (the Scheme) it is necessary to consider order dated 14.02.1986 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....
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....e 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 context of the fundamental requirements of the aforesaid order. The clarifications cannot be permitted to override or cannot be given precedence over the basic requirements envisaged by the aforesaid order dated 14.02.1986. Therefore, the impugned order of Tribunal and the challenge thereto by Revenue 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 particularl....
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....x 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 section 147(a)(b), whether the assessee can surrender the amount which is the subject-matter of dispute. Whether such a surrender would be taken as a suo motu declaration before the detection by this Department? Answer.- Such a surrender cannot be taken as a suo motu declaration but naturally a lenient view will be taken if an assessee decides 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 Q....
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....-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 the declaration has to be full and true in relation to concealed income or income of which inaccurate particulars have been furnished in a return already filed. 18. Therefore, the stand of the department that merely because a concealed income is disclosed and amnesty claimed under the Scheme an assessee becomes ineligible cannot be accepted. In fact the 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 bec....
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....essee. 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 tax of Rs.97 lacs. From the very right he has been knocking the door of Department for granting the amnesty scheme. The additions have been made in the assessment orders only on the declaration made by the assessee with some minor variation, otherwise department was unable to lay his hand on the concealed income of the assessee. Hence, it cannot be said that assessee 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 tha....
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....ore 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 of which the High Court come to the conclusion that the disclosure made by the said assessee was not voluntary and there was detection by the department in the said case. Therefore, though there is no conflict as to the principles of law the said decision primarily turned on the facts found in the said case, namely, there was detection by the department as reproduced in the extracted 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 ....