TMI Blog1994 (12) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... s under :-- Rs. 30,000 : A.Y. 1982-83 Rs. 30,000 : A.Y. 1983-84 Rs. 60,000 : A.Y. 1984-85 Rs. 30,000 : A.Y. 1985-86 ---------------------- Rs. 1,50,000 ---------------------- 2. On 19th Feb., 1985, the assessee had filed a petition before CIT u/s 273A making prayer for the spread over of the abovesaid income as already indicated earlier. This petition was not decided and in the meantime the assessee had filed revised return for the said assessment years under the Amnesty Scheme by making addition of the value of the excess stock as already stated above and deposited the tax thereon. 3. The Income-tax Officer did not accept the assessee's claim that the income of Rs. 1.50 lakhs offered by the assessee has to be spread over a number of years. He was of the view that the said Income pertains to the assessment year 1985-86. Since part of the income was offered for taxation in the assessment years 1982-83, 1983-84 and 1984-85, the ITO had included the offered income as a protective measure with the observation that this income would be considered for assessment in the assessment year 1985-86. In addition to the income offered by the assessee, as stated above, the ITO, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty. Thus, the entire penalty levied in the three years under consideration was cancelled. 6. Aggrieved, the Revenue is in appeal before the Tribunal. 7. Ld. Departmental Representative has argued that the returns filed by the assessee were not voluntary. He has highlighted the point that the income on account of excess stock was disclosed by the assessee, after the same was detected in the search operation and as such concealment is fully established and, therefore, the Assessing Officer was justified in levying the penalty. He has also submitted that penalty is leviable even if an addition is made on the basis of estimate. In that connection, reference was made to the decision of the Hon'ble Madhya Pradesh High Court in the case of CIT (Addl.) v. Smt. Chandrakanta [1994] 205 ITR 607 (MP). 8. The ld. counsel for the assessee has submitted that the addition of Rs. 82,275 made in the assessment year 1984-85 has been deleted by the Tribunal vide order dated 22-7-1992 in ITA No. 343 /Ind. /1989. A copy of that order has been placed on record. Thus, in the appeals under consideration, we have to consider the levy of penalty in respect of the addition made on account of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty can be levied. In support of this contention, reference was made to the decision of the Calcutta High Court in the case of CIT v. Super Steel (Sales) Co. [1989] 178 ITR 451, and the decision of Gauhati High Court In Metal Stores v. CIT [1990] 186 ITR 612. (v) That since the Assessing Officer was of the opinion that the income offered by the assessee does not pertain to the assessment years under consideration, the initiation of penalty itself was bad in law and no penalty can be levied on that basis. (vi) In the alternative, it was submitted that the assessee had also filed returns under the Amnesty Scheme and by virtue of the application moved under section 273A within the time stipulated in Explanation 2 to that section, it has to be held that there was no detection of any concealment of income and as such the benefit of Amnesty Scheme is also available to the assessee and for that reason also, the penalty is not leviable. 10. In rejoinder, the ld. DR has submitted that vide order dated 22nd February, 1989, in the appeal filed by the assessee, the CIT(A) hadheld that the assessment should be considered as substantive instead of protective and he had accepted the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, the person makes a full and true disclosure of his income to the Commissioner such person shall, for the purposes of clause (b) of this sub-section, be deemed to have, 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, a disclosure of such particulars." 14. The scope and intendment of the Explanation was explained by the Central Board of Direct Taxes in Circular No. 394 dated 14th September, 1984. (See 150/ITR : 23 (Statute Section). Paragraph 37.2 of the said circular reads as under : 'Under one of the amendments, a new Explanation 2 has been inserted in section 273A(1) of the Act. The new Explanation provides that 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 of the Income-tax Act and within 15 days of such seizure, the person makes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out to Rs. 6,92,064. As against the above figure of stock the assessee estimated the excess stock as on 5-2-1988 at Rs. 1,50,000 and spread over the said amount in 4 years. In respect of the assessment year under consideration the amount of Rs. 30,000 has been offered as Income being portion of the unexplained excess stock found on 5-2-1985. The claim of the assessee for spread over has no force. Unexplained excess stock found on 5-2-1985 has to be dealt within the assessment for assessment year 1985-86 as per the provisions of the IT Act. No part of the unexplained excess of stock as on 5-2-1985 can be considered for assessment in this year. However, as the assessee has indicated income of Rs. 30,000, the same will be considered for assessment as a protective measure." Similar observations were made in the assessment orders for the assessment years 1983-84 and 1984-85. From these observations, it is evident that the ITO was not satisfied that the income pertains to the assessment years under consideration. The income was assessed in the hands of the assessee for the reason that the same was offered by the assessee. Since it was not assessed on substantive basis, we are of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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