2001 (6) TMI 30 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the addition made by the Income-tax Officer to the returned income.
2. Applicability of the Amnesty Scheme to the revised return filed by the appellants.
3. Legitimacy of the prosecution proceedings initiated by the Department.
4. Authority of the court to direct withdrawal of a criminal complaint.
5. Consideration of the petition filed before the Central Board of Direct Taxes (CBDT).

Detailed Analysis:

1. Validity of the Addition Made by the Income-tax Officer:
The first appellant firm filed a return declaring an income of Rs. 1,04,951 for the assessment year 1983-84. The Income-tax Officer completed the assessment on a total income of Rs. 2,64,090 by adding Rs. 1,47,888 due to excess stock of copra. The addition was confirmed by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal. The Department argued that the addition was based on evidence of concealed income.

2. Applicability of the Amnesty Scheme to the Revised Return Filed by the Appellants:
The appellants filed a revised return declaring the assessed income of Rs. 2,64,090 under the Amnesty Scheme, seeking immunity from penal proceedings. The Department rejected this request, stating that the concealment had already been detected. The court noted that Circular No. 451 allowed for the filing of revised returns even in cases where assessments were completed and appeals were pending, provided the appeal was withdrawn and a declaration was made before the Administrative Commissioner. The court observed that the Administrative Commissioner did not consider the matter in light of the circulars and that the appellants were entitled to a lenient view under the scheme.

3. Legitimacy of the Prosecution Proceedings Initiated by the Department:
The Department initiated prosecution proceedings against the firm. The court noted that the main relief sought by the appellants was to accept the revised return under the Amnesty Scheme. The decision on the criminal case would depend on the outcome of this relief. The court did not delve into the correctness of the findings regarding the withdrawal of the criminal case but focused on the applicability of the Amnesty Scheme.

4. Authority of the Court to Direct Withdrawal of a Criminal Complaint:
The learned single judge held that there was no provision in the Code of Criminal Procedure for withdrawing a private complaint and that an accused person had no right to seek such withdrawal. The court did not address this issue in detail, as it was contingent on the decision regarding the Amnesty Scheme.

5. Consideration of the Petition Filed Before the Central Board of Direct Taxes (CBDT):
The court directed the CBDT to consider the petition filed by the appellants on October 8, 1987, in light of the observations and directions provided. The CBDT was instructed to consider the following:
- The assessment for 1983-84 included an addition of Rs. 1,47,888 based on the statement furnished to the Union Bank of India.
- The appeal against the assessment was withdrawn to avail of the Amnesty Scheme.
- Circular No. 451 provided for lenient treatment in cases where assessments were completed or pending in appeal.
- Penalty proceedings under section 271(1)(c) were dropped after the revised return was filed.
- The Department accepted revised returns for other years under the Amnesty Scheme, except for 1983-84.

The court allowed the writ appeal and directed the CBDT to dispose of the petition within four months, providing the appellants an opportunity to be heard. An interim stay on the criminal proceedings was ordered to continue until the petition was resolved.