TMI Blog1991 (5) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... of September, 1986 a letter was issued to the Manager, United Commercial Bank Bulandshahr informing him that the prohibitory order relating to the bank account was issued in exercise of the powers under section 281B of the Income-tax Act. On 3rd of September, 1986 the assessee filed return of income, in which, apart from declaring the business income of Rs. 27,330 a sum of Rs. 3 lakhs was disclosed as income from undisclosed sources in respect of the bank account in the names of Peush Rachna in UCO Bank Bulandshahr. The assessment was completed on an income of Rs. 3,28,830 vide order dated16-2-1987. Penalty proceedings under section 273(1)(b) for assessee's failure to file the estimate of income and under section 271(1)(a) for the delay in filing the return of income, were initiated. The assessee claimed to have filed the return under Amnesty Scheme and accordingly penalty under section 273(1)(b) not attracted in this case. Similarly in respect of penalty under section 271(1)(a) the assessee claimed immunity from levy of penalty on account of the return having been filed under Amnesty Scheme. The contention on behalf of the assessee was not accepted by the Assessing Officer on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel pleaded that penalty under section 273(1)(b) was not justified even on merits. In this connection, the learned counsel pointed out that the amount of Rs. 3 lakhs had been deposited on27-3-1986i.e., after the due date for filing of estimate of income/statement of advance tax. The last assessed income of the assessee was Rs. 18,030. It was accordingly claimed that penalty under section 273(1)(b) is not attracted in this case. When the learned counsel was confronted with the footnote in the statement of income attached to the return of income wherein the assessee had disclosed that the amount of Rs. 3 lakhs was earned during the financial year 1985-86, it was contended that such a note was given so as to avoid any confusion about the other deposits made in the subsequent years to be mixed up with these deposits. Shri Bhatnagar invited our attention to the bank account to point out that the amounts of Rs. 1 lakh and Rs. 2 lakhs were deposited on27-3-1986. It was accordingly pleaded that the penalty imposed may be cancelled. 4. The learned counsel further contended that if for one reason or the other the penalty is found sustainable quantum may be reduced to 10 per cent as no re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the penalty under section 273(1)(6) be sustained and the appeal of the assessee dismissed. 7. We have given our careful consideration to the rival contentions. Following instructions had been issued by the CBDT in exercise of its powers under section 119 of the Income-tax Act, 1961: "(i) Order under section 119 of the Income-tax 1961 published in 158 ITR page 162 [F.N. 281/8/86-IT(INV. III)] dated14-2-1986reads as under: 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 or impose penalty on him for an offence under clause (a) or clause (c) of sub-section (1) of section 271 or section 273 in respect of any assessment year up to and including assessment year 1985-86 in a case, if he is satisfied that such person: (a) has prior to the detection by the Income-tax Officer, or as the case may be, the Inspecting Assistant Commissioner of Income-tax, of the concealment of particulars of Income or of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued on 1st of September, 1986 and the sequence of events would tilt the balance in favour of the revenue. For us to believe that in all probability the return was filed after the issue of notice under section 139(2). When it is held that notice under section 139(2) was issued prior to the filing of the return, one of the conditions entitling the assessee to the benefits of Amnesty Scheme of having filed the return voluntarily and in good faith, would not be satisfied. As such the benefits of the Amnesty Scheme would not be available to the assessee. 9. Even if we were to hold in favour of the assessee about the service of notice under section 139(2), the conditions of disclosing the income voluntarily is not satisfied on the facts and in the circumstances of the case. The revenue was in the knowledge of the existence of the bank account and not only had the enquiries been made but the bank account had also been attached. The assessee had no option but to admit that the account belonged to him in order to claim the ownership, in the absence of which, the entire amount of Rs. 3 lakhs would have been lost. Thus the act of disclosure by the assessee in this case in our view was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(b) is attracted in this case. However, we see no justification on record to levy penalty beyond the minim um of 10 per cent which works out to Rs. 10,072. Penalty under section 273(1)(b) has been prescribed at 10 per cent to 150 per cent left to the discretion of the Assessing Officer. Normally minimum penalty @ 10 per cent is imposed. However, where the facts and circumstances of the case justify levy of penalty at higher rate, the same is permissible subject to maximum of 150 per cent. When the Assessing Officer proceeds to impose the penalty in excess of minimum of 10 per cent, it would be necessary in the interest of justice and fair play to bring on record the material justifying higher penalty. Since no reasons have been assigned either by the Assessing Officer or by the first appellate authority justifying the penalty at higher rate than the minimum imposable in this case, we restrict the penalty to Rs. 10,072 being 10 per cent of the assessed tax. The assessee will get relief of Rs. 70,308. 12. We now deal with the penalty imposed under section 271(1)(a). It is clear from Circular No. 453, dated 4-4-1986 issued by the Central Board of Direct Taxes that the benefit of A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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