TMI Blog1997 (8) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... h, the key of the locker which was in the name of Smt. Jasbir Kour in Bank of India,Arya Samaj Road,New Delhiwas found. Jewellery worth of Rs. 9,81,662 was-found in the locker. Smt. Jasbir Kour in her statement stated that the jewellery partly belongs to Shri Mahan Singh her father and partly to others. Notice under section 16(2) was issued to the assessee to enquire about the source of acquisition of iewellery in question. She explained that it emanated from the disclosure of Rs. 86,472 disclosed as income in the assessment year 1972-73 under the Amnesty Scheme. It was stated that the income disclosed has been invested in the jewellery. It represents the sale proceeds of the primary gold belonged to the father Mahan Singh which was earlier seized by the customs authorities and later on released with minor penalty. The customs authorities ordered to convert this primary gold into jewellery and according to that order, the assessee contends that the gold was converted into jewellery. However, no evidence to this effect was brought on records. The assessee was able to produce evidence for having sold the primary gold for Rs. 76,846 dated10-12-1971to M/s Perumal Shaman Dass of Bombay. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized and which was eventually sold by S. Sangat Singh weighed 4175 gms. Thus, according to Smt. Jasbir Kour's explanation, the said gold belongs to the HUF to which her father was a member. In fact, S. Mahan Singh, her father was the karta and S. Sangat Singh his brother was only a co-parcener in the family. She also submitted that the assessee-HUF had filed wealth-tax returns before the WTO, Distt. VI(9), New Delhi including the value of jewellery found in locker No. 817 with Bank of India, Karol Bagh, New Delhi for assessment years 1978-79 to 1986-87. It is further stated that after selling away the primary gold belonging to the family, the jewellery found in Locker No. 817 with Bank of India, Karol Bagh,New Delhiwas purchased. The assessee-HUF requested the ADI to release the jewellery in its favour by passing an appropriate order under section 132(5) of the Income-tax Act, 1961. Ultimately on11-2-1987, the ADI passed an order under section 132(5) of the Act to the effect that Smt. Jasbir Kour had not been able to establish that the jewellery belongs to assessee-HUF. Against that order, the assessee-HUF filed an appeal under section 132(11) of the Act and till now the CIT did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly in respect of assessment order for assessment year 1984-85 to which the reply dated27-3-1990was issued by the assessee, a copy of which is provided at page 15 of the first paper book. It is significant to note that notice was given under section 271(1)(a) of the Income-tax Act but not under section 18(1)(a) of the W.T. Act, 1957. A point taken was that in view of initiation of penalty proceedings under wrong provisions of law, it vitiates the whole proceedings and for that reason penalty cannot be levied. It is further stated as one of the points before the CWT(A) was that notice of penalty dated15-3-1990fixed up the date of hearing as22-3-1990but the notice was served on the assessee on23-3-1990and, therefore, it was urged that no opportunity of being heard was granted to the assessee. This would make the proceedings illegal. Another point was taken up that the returns filed for assessment years 1982-83 to 1984-85 were all amnesty returns. The period of amnesty was extended up to31-3-1987. Under the clarification given while extending the amnesty provisions, the CBDT clarified several points regarding levy of penalty. The case of the assessee is fully covered by those amnesty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that when the Assessing Officer had found full material on which he can establish and justify the assessments, having found no other way except to surrender itself, the assessee-HUF in compelling circumstances had surrendered and filed returns on 9-121986. In those circumstances, the amnesty provisions declared by the CBDT from time to time do not extend the benefit of those provisions to the assessee. He also further contended that the assessee did not take up the question of limitation either before the Assessing Officer or before the CWT(A) in the first appeal. Having not taken such plea before either of them, it is not open to the assessee-HUF to raise the said contention for the first time in the second appeal. With regard to other contentions, the learned Departmental Representative heavily depend upon the orders of the lower authorities. 6. The learned counsel for the assessee filed two paper books, the first containing 91 pages and the second containing pages 92 to 101. Now let us take up the contention of the assessee that the penalty proceedings were barred by time for each of three assessment years under consideration. In order to appreciate this contention fully, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the Appellate Tribunal under sub-section (2) of section 24 after the expiration of period of-- (i) two years from the end of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated are completed, or (ii) six months from the end of the month in which the order of the DCIT(A) or Commissioner (Appeals) or as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner whichever period expires later ; (b) in any other case, after the expiration of two years from the end of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed ; Explanation : In computing the period of limitation for the purposes of this section :-- (i) any period during which the immunity granted under section 22H remained in force, (ii) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 39; and (iii) any period during which a proceeding under this section for the levy of penalty is shall be excluded." According to us, the law of limitation which was in vogue prior to 1-4-1988 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty proceedings were completed on23-3-1990. Thus to our mind the penalty proceedings for assessment years 1982-83 and 1983-84 would not appear to have been barred by time. 7. Now let us take up the issue whether for assessment year 1984-85 what are the provisions under which the penalty notice was given to the assessee. In this connection, the learned counsel for the assessee contended that notices initiating penalty proceedings were issued relating to assessment year 1984-85 was only issued under section 271(1)(a) of the Income-tax Act, 1961. In this connection, he had already replied to the WTO by his letter dated27-3-1990a copy of which is furnished at page 15 of the 1st paper book filed on behalf of the assessee. Copy of the letter sent by the assessee to the WTO, Ward-II(5),New Delhion27-3-1990is as follows :-- "Reg : Surjeet Singh Mahan Singh C/o S. Kuldeep Singh, 12/3, WEA, Karol Bagh, New Delhi . Sub : Penalty proceedings under section 271(1)(a) of the Income-tax Act for assessment year 1984-85. In the above-mentioned proceedings with reference to your notice dated 15-3-1990 received on 23-3-1990 it is submitted that the penalty proceedings seem to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for his agricultural lands vested in the Government under section 72 of the Kerala Land Reforms Act, 1963." In the above case, the notice contained all the grounds on which the penalty can be sustained but the particular ground on which the penalty sought to be levied was not specifically intimated by striking out the other unnecessary grounds. However, in the case before us, the impugned notice is said to be given under the Income-tax Act, 1961 under section 271(1)(a) which is quite different from section 18(1)(a) of the W.T. Act, 1957. Further the mistake was pointed out but a correct notice was not sent and the earlier notice was not withdrawn. Under these circumstances, following the Kerala High Court decision, it should be held that the penalty notice issued for assessment year 1984-85 is invalid and the whole penalty proceedings for that year also become invalid. In this regard we may also cite a decision rendered by the Hon'ble Punjab Haryana High Court in CIT v. Smt. Saraswati Bai [1982] 137 ITR 656. The validity of notice issued under section 148 was challenged in a reference. The question referred in that case was the following :-- "Whether, on the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or clause (c) of sub-section (1) of section 18 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 detection by the WTO or as the case may be, the IAC of the Wealth-tax, the concealment of particulars of assets or of the inaccuracy of particulars furnished in respect of any asset or debt, voluntarily and in good faith made between 15-11-1985 and 31-3-1986 fill and true disclosure of such net wealth ; (b) as on or before 31st March, 1986 paid the tax on the net wealth disclosed ; and (c) has co-operated in any enquiry relating to assessment of his net wealth. The assessee in this case has fulfilled all the conditions mentioned in the above circular. The amnesty period was later extended up to31-3-1987. It is contended by the learned D.R. that the so-called amnesty returns were filed after the detection of jewellery on 4-2-1986 whereas the returns were filed on 8-12-1986, the Department seized the jewellery which was in the locker No. 817 in Bank of India, Karol Bagh, New Delhi which stood in the name of Smt. Jasbir Kour, as well as her father S. Mahan Singh on 4-2-1986 and, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee to safeguard him from penalties and prosecution. The assessee provided at pages 45 to 47, of the 1st Paper Book, the additional benefits of amnesty and assurance given by the CBDT under various amnesty circulars. Point No. 7 extracted above, is specifically found at page 46 of the assessee's paper book No. 1. It is also contended on behalf of the assessee that the WTO must be presumed to have accepted the returns filed by the assessee as amnesty returns. The very fact that the procedure of completing the assessment under section 16(5) was adopted shows that the returns were all amnesty returns. In elaboration of this argument, Shri S.L. Batra submitted that in ordinary course, the wealth-tax returns for assessment years 1982-83 to 1984-85 should have been filed long back and by 8-12-1986 the only way of regularising the returns would have been by issuing notice under section 17(1)(a) or (b). It is fact that the assessments were completed under section 16(5) of the W.T. Act, 1957. Therefore, these facts would clearly show that the WTO should have accepted the wealth-tax returns as valid returns. How they can be valid unless they are accepted as amnesty returns ? Mr. Bat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refunded and on that account a sum of Rs. 4,498 was received by the firm in 1967 and credited to the account of L S in equal shares. This amount was not shown as income of the firm in the assessment year 1968-69 and was included in its income by the assessing authority. Simultaneously penalty proceedings for concealment of income were initiated and penalty was imposed by the IAC. The Tribunal deleted the penalty. On a reference : Held : that the penalty was imposed by the IAC as a protective measure because a similar penalty had already been imposed on the two partners. Under law a protective order of assessment can be passed but not a protective order of penalty. That apart no finding had been recorded by the IAC that there was any concealment of income. Moreover, the amount received had been credited to the accounts of L S who were partners in the earlier firm. The assessee-firm, therefore, did not treat the said amount as its own and it being a firm different from the one to whom the refund had been made could not be held guilty of any concealment. No penalty could be imposed on the firm." Similarly our attention was also drawn to a decision in the case of Metal Stores v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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