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1997 (7) TMI 675 - ITAT MUMBAI

1997 (7) TMI 675 - ITAT MUMBAI - [1998] 62 TTJ 101, [1998] 65 ITD 73 - ITA Nos. 1528 to 1534/Bom/1991, etc. - Dated:- 24-7-1997 - R. P. Garg (Accountant Member (As Third Member)), G. E. Veerabhadrappa (Accountant Member) and I. S. Verma (Judicial Member) For the Appellant : C. V. Kothari For the Respondent : S. U. Pathak ORDER I. S. Verma (Judicial Member) All these appeals by the 20 appellants are against the penalty orders under s. 271(1)(c) and the facts, circumstances and grounds being the s .....

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rious submissions made by the parties, through, are mentioned at the relevant place, yet, we would like to extract a brief before we proceed to discuss and decide various solutions. The facts of the case are that as a result of search warrants and subsequent authorisations dt. 19th Aug., 1986 in the name of 4 individuals'(1) Purshottamdas F. Jhunjhunwala, (2) Kishorilal F. Jhunjhunwala, (3) Niranjan P. Jhunjhunwala, and (4) Nirmal P. Jhunjhunwala. Search was conducted at the premises called .....

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8377; 7,25,000 (3) Ornaments and jewelleries valued at ₹ 11,34,280 (4) Silver utensils valued at ₹ 2,70,000 As per 4 Panchnamas in the case of persons in whose names search warrants were issued (copies of which have been furnished by the assessee), the person-wise seizure was as under : In the case of Nirmal P. Jhunjhunwala, certain papers/documents, files were seized and there was no seizure of any valuables/cash/jewellery/assets. In the case of Purshottamdas Jhunjhunwala, there was .....

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seized, jewellery found was not seized. After the search, the group wrote letters to the ADI (Inv.) and CIT, Bombay City VIII, Bombay, on 28th Aug., 1986, and 7th Nov., 1986, respectively showing the intention of the aforesaid assessees to make disclosure under the Disclosure Scheme, 1986, generally known as Amnesty Scheme. Thereafter, all the aforesaid assessees made a petition extracted below, in which a total amount of ₹ 2,29,90,529 was disclosed in the hands of various persons, HUFs, .....

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1st ITO C-III Ward, Bombay. 2. An action under s. 132 of the IT Act was taken out against our clients on 22nd Aug., 1986. 3. Thereafter, for the first time in the 2nd and 3rd week of Nov., 1986, our clients were supplied with xerox copies of the papers seized so as to enable them to prepare necessary petitions. 4. On receipt of xerox copies of papers seized, our clients have worked out a balance sheet as on 22nd Aug., 1986 (A date of an action under s. 132 of the Act). 5. The total of investmen .....

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head "K.F." during the previous years to asst. yrs. 1970-71 to 1987-88 (family members of Jhunjhunwala). 8. A sum of ₹ 13,71,933 is shown to have been received under the head "P.F." during the previous years to asst. yrs. 1970-71 to 1987-88. 9. Similarly, a sum of ₹ 6,66,889 is shown to have been received under the head 'Miscellaneous' during the previous years to asst. yrs. 1970-71 to 1987-88. (This sum of ₹ 6,66,889 includes a sum of ₹ 78,182 .....

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petition under s. 173A of the IT Act adding this sum of ₹ 1,55,000 in their hands. The said petition is submitted to the CIT, B.C. III Bombay. 13. As such, our clients shall declare an additional income of ₹ 2,29,90,529. 14. As regards the place of assessments of this sum of ₹ 2,29,90,529, we have to say and submit as under : A. The group of firms and the individuals had made borrowings from their parties totalling to a sum of ₹ 54,15,000. This included the loans borrowed .....

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l be declared by the respective firms as individuals as capital gains on purchase and sale of properties. (please see pp. 5 & 6). D. This leaves a balance of ₹ 1,49,40,733 (Rs. 2,29,90,529 ₹ 47,50,000 ₹ 33,01,521 which members of J. group shall declare in their personal assessments. (Please see pp. 7 & 8). E. Each firm and the member of J group shall submit individual petitions along with the returns of income and wealth. These petitions will be submitted to the Departm .....

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that the individual positions are : (1) commensurate with the investments made by the Group, (2) commensurate with the expenses incurred on household expenses, marriages, or purchase of jewelleries, charity and donations. 18. We submit to your honour on behalf of our clients that at the time of an action under s. 132 of the Act, our client had submitted in the statements recorded under s. 132(A) of the Act, that they shall submit full and true disclosures and shall pay the taxes. 19. Under the c .....

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re petitions were furnished in the case of the persons of the Group on 3rd March, 1987, under the Amnesty Scheme. The disclosure was discussed by the CIT with the assessee and ultimately the matter was finalised as per so-called Discussion Note, details of which are extracted wherever necessary. During the course of consideration of disclosure, the CIT had required the assessee to disclose the further amount of more than ₹ 20 lakhs to which the assessee had agreed and the reason for agreei .....

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initiation, imposed penalties in all these cases. While passing the penalty order, the Asstt. CIT in last para of the said order has stated that while granting spread over the CIT has directed that penalty proceedings should be initiated against the assessee. All the appellants went in appeal before the CIT(A) but failed as the orders of the Asstt. CIT were confirmed. Aggrieved with the order of the CIT(A), the appellant came in appeal before the Tribunal. The Tribunal vide its order dt. 26th N .....

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0-71 to 1986-87 in the case of all the 20 appellants furnished on 3rd March, 1987, were as a result of voluntary disclosure which they were entitled to make under Circular Nos. 423, 432, 439, 440, 441, 451, 472, 475 (hereinafter called the Amnesty Scheme) and, therefore, they were entitled to immunity from penalty under s. 271(1)(c) of the IT Act, 1961. 4. When the assessee's counsel sought to raise this ground, the learned Departmental Representative first tried to raise some objections aga .....

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e revised returns and it has been duly acknowledged by the Addl. Director of Income-tax as well as the CIT(A). In support of this submission, the assessee's counsel referred to various letters written by the appellant to the Addl. Director of Income-tax and CIT, copies of which have been filed before us, last but one para at page No. 3 of the penalty order, and top sentence at page No. 5 of the order of the CIT(A). From these documents, he submitted that it is very much clear that the revise .....

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lty order and top sentence at p. 5 of the order of the CIT(A)], in view of decisions relied upon by the counsel for the assessee, and no objection by the Departmental Representative, we are of the opinion that the assessee can raise the issue even at this stage. Even otherwise, the circulars under which the assessee is claiming the benefit are of benevolent nature and, therefore, claim under such circulars can be made even before the Tribunal. In this respect, we would like to refer to the decis .....

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the assessee will be entitled to the benefit of the circular. The Court is bound to take note of the circular. The relevant para from the head note is reproduced hereunder : "Circular issued by the CBDT are binding on all officers of the IT Department. Benevolent circulars are in the nature of administrative relief and they assist the assessee. They supplant the law and do not supplement it. Even if circulars are relied on for the first time before the High Court during the course of heari .....

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to the merits of the assessee's claim under the Amnesty Scheme, the counsel for the assessee submitted that Amnesty Scheme was available upto 31st March, 1987, and the revised return making the disclosure of amounts representing expenses and investments were filed on 3rd March, 1987, so, the benefits of Amnesty Scheme were very much available to the appellants. He further submitted that as far as cases of 16 (sixteen) appellants other than Purshottam F. Jhunjhunwala, Kishorilal R. Jhunjhunw .....

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ubmitted that out of these 4 appellants no valuables such as cash, jewellery, ornaments or any other asset were found in the case of Nirmal P. Jhunjhunwala and there was no seizure in his case. As regards to other three, he submitted that : (i) in case of Purshottam F. Jhunjhunwala, most of the jewellery found was not seized. A part of the jewellery was seized and that too because of difference in valuation; (ii) in case of Kishorilal R. Jhunjhunwala, some cash and a part of jewellery found were .....

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was found in accordance with the statement of the appellants was not seized, whereas part of the jewellery was seized only because of difference in valuation. To support this plea, he referred to the noting in col. 5(b) of the Panchnama in all the aforesaid 3 cases which reads as "jewellery found but not seized as per valuation report". The assessee's counsel further submitted that the cases of all these 4 appellants (in whose case action under s. 132 was taken) were also covered .....

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that the disclosed asset or income should not have been a matter of 'seizure'. In other words, he submitted that if some asset or income had been found in search and had been seized, then, disclosure of those seized assets or income was not covered by the Amnesty Scheme. He, therefore, submitted that as far as the cases of these 3 appellants are concerned, the disclosure was on account of expenses and investments during the relevant years and none of them being the subject-matter of seiz .....

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see who wants to declare income or wealth in respect of the past years ? (a) in case where the assessments pertaining to those years are already completed; (b) in case where the assessments in respect of those years are pending ? Ans. : In case where the assessments are already completed, the taxpayer should approach the concerned CIT with the full disclosure of the amounts of income and/or wealth concealed in various years and should also file returns for the relevant years. He should also prod .....

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income, would be entitled to immunity under these circulars ? Ans. : Yes. Q. 19 : Kindly clarify the expression "before detection by the Department "? Ans. : If the ITO has already found material to show that there has been concealment, that would mean the Department has detected the concealment. If the ITO only had prima facie belief, that would not mean concealment has been detected. Q. 12 : Can immunity given by the circulars be availed of by assessees whose premises have been sear .....

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asst. yr. 1985-86, though assessments had already been completed, yet the benefit of schemes were available. For asst. yr. 1986-87, no assessment was completed and, therefore, the revised return was automatic under the Amnesty Scheme. He further submitted that by the time, the disclosure was made, the Department had not detected any concealment. To support this, first, he interpreted the intention of answer to question No. 19, where it has been specifically stated that "only had prima faci .....

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and 1987-88, accepted the spreadover of the amounts to be disclosed in asst. yrs. 1970-71 to 1986-87 and in the hands of 21 (twenty one) assessees, clearly leads to prove that the Department had not detected any concealed income because had the Department detected any concealment then there was no reason for either not taking any action under s. 147 or accepting the disclosure in the hands of 21 assessees and in assessment years ranging from asst. yrs. 1970-71 to 1986-87. 6. From answer to quest .....

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ction under s. 132 was taken, was not at all the subject-matter of seizure. As regards to the other 4, he submitted that there was no seizure at all in the cases of Nirmal P. Jhunjhunwala and in the case of the other three, namely, Purshottam Jhunjhunwala, Kishorilal Jhunjhunwala, and Niranjan Jhunjhunwala, though there was some seizure of some cash and jewellery, but these assets, i.e., cash and jewellery which were the subject-matter of seizure were not disclosed, rather, the disclosure was on .....

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ment years had been issued. So, the disclosure was completely in accordance with the provisions of Amnesty Scheme. As regards to additional disclosure (the appellants themselves had disclosed a total amount of ₹ 2,29,90,529 which as per letter dt. 27th Jan., 1987, has been shown at ₹ 2,29,92,455 p. 3 of the assessee's paper-book) of ₹ 21,41,400 on account of difference in valuation of jewellery, difference in interest figures and borrowings of firms, he submitted that these .....

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esty Scheme and immunity available thereunder was available to all of them. Consequently, he submitted that the penalty under appeal has been imposed in complete disregard to the Amnesty Scheme and because the IT authorities are bound by the circulars specially beneficial to the assessees; so the penalty imposed in violation of those benevolent circulars is bad in law and should be quashed. The assessee's counsel further submitted that during the search, the statement were recorded of only 4 .....

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Co. Ltd.'s case (supra), Jaikishan Gopikishan & Sons' case (supra), Shama Raising Chandel vs. ITO (1992) 43 TTJ (Ahd) 268: (1992) 41 ITD 212(Ahd), Uttamchand Bhutani & Co. vs. ITO (1992) 42 ITD 404(Del), ITO vs. Ram Nihara Thakur (1993) 46 ITD 90(Pat), Smt. P.M. Celine vs. Asstt. CIT (1991) 39 ITD 454(Coch), Asstt. CIT vs. Manorajyam (1996) 54 TTJ (Coch) 397: (1995) 54 ITD 116(Coch), Asstt. CIT vs. Prakash Oil Industries & Ginning Factory (1995) 52 TTJ (Ahd) 514, Anand Kumar .....

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erring to answers to Q. No. 12 and No. 30 of Circular No. 451, he submitted that the benefits of the Amnesty Scheme were not available to these appellants. Referring to order under s. 273A, he submitted that benefits of Amnesty Scheme were not claimed by the appellants. As regards to the decisions relied upon by the assessee's counsel, he submitted that they were not applicable to the appellant's cases. Concluding his submissions, the learned Departmental Representative submitted that th .....

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ne through the various circulars as well as case law relied on by the parties with utmost care, and on the basis of discussions and observations in the subsequent paras. We are of the opinion that the submissions made by the assessee's counsel have got force. 9. First of all, we would like to discuss the scope of action taken under s. 132 of the IT Act and for this purpose, would like to reproduce the relevant provisions of s. 132 : "132 Search and Seizure. 'Where the Director Gener .....

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ccount or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to any proceedings under the Indian IT Act, 1922 (11 of 1922) or under this Act, or (c) any person is in possessi .....

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rector, Dy. CIT, Asstt. Director, Asstt. CIT or ITO, or (B) such Dy. Director or Dy. CIT as the case may be, may authorise any Asstt. Director or Asstt. CIT or ITO (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or things are kept; (ii) break open th .....

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y such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search; (iv) place marks of identification on any books of account, or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing. (1A) Where any CIT in consequence of information in his possession, has reason to suspect that any books of account, oth .....

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ficer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft. (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian IT .....

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the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (5) Where any money, .....

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losed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him; (ii) calculating the amount of tax on the income so estimated in accordance with the provisions of the Act, (iia) determining the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Act, as if the order had been the order of regular assessment; (iii) specifying the amount that will be required to satisfy any existing liabili .....

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ay be dealt with in accordance with the provisions of s. 132B. (7) If the AO is satisfied that the seized assets or any part thereof were held by such person, for or on behalf of any other person, the AO may proceed under sub-s. (5) against such other person and all the provisions of this section shall apply accordingly. (13) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizures shall apply, so far as may be, to searches and seizures under sub-s. ( .....

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s nor can overpower these to influence the procedure or judgment in the proceedings under s. 132 of the Act [Joginder Singh vs. CIT (1981) 128 ITR 14(P&H)]. 11. Provisions of s. 132, therefore, suggest that these are to be construed strictly and deeming provisions of the Act cannot be read with these provisions. From the provisions of s. 132(1)(iia), it is very much evident that though the authorised officer can search any person who has got out of, or is about to get into or is in, the buil .....

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d until a person is searched in accordance with these sub-clauses, it cannot be assumed that action under s. 132 has been taken in case of every person staying at the relevant premises' may be a living person or otherwise, such as HUF, companies and firms; and therefore, the arguments of the learned Departmental Representative that in spite of search warrants being in the name of 4 individuals only (supra), action under s. 132 will be deemed to have been taken in all the 18 cases, cannot be .....

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en) appellants are clearly entitled to immunity available under the Amnesty Scheme. 12. As regards to the plea of the assessee's counsel that cases of all the 20 appellants including the appellants in whose cases search was made are covered by the Amnesty Scheme we would like to find the scope of the scheme and therefore, would like to reproduce some of the questions and answers contained in Circular No. 451, dt. 17th Feb., 1986. Q.1 : Ans. : (Please refer to p. 11 above) Q. 2 : In respect o .....

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sees who have been regularly filing their returns of income would be eligible for the benefit of circulars in respect of their income which has escaped assessment for an earlier assessment year and whether the assessment is completed or pending ? Ans. : The circulars apply to old assessees also. Q. 4 : The Income-tax Circulars are not very clear as to whether immunity from penalty and prosecution is guaranteed to the assessee unlike the circular in respect of wealth-tax which appears to be clear .....

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ir own risk. Q. 12 : Ans. : (please refer to p. 12 above). Q. 13 : Whether in disclosing assets which have been suppressed earlier or undervalued for the purpose of wealth-tax under this circular the Board has devised any proforma for making such an application or whether the assessee is required to file a return before the WTO ? Ans. : If the assessment for the relevant year is pending, the assessee should disclose the information before the WTO. If the assessment or the year is already complet .....

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it is clear that: (1) that the amnesty scheme was applicable to the assessment years upto asst. yr. 1986-87 irrespective of the fact as to whether assessment for these assessment years had already been completed or not; (2) the scheme was also applicable to old assessees; (3) the immunity from penalty and prosecution was available in all cases whether of income-tax or wealth-tax; (4) investigation in the case of persons other than the assessee claiming benefit of amnesty scheme was not a bar or .....

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cealment. Even prima facie belief of the ITO was not to mean that concealment has been detected. (7) Answers to Q. No. 30 and Q. No. 11 suggest that answer to Q. No. 30 is an explanation/elaboration of an answer to question No. 12 and the cumulative effect of these answers is that only, the asset or income which were "the subject-matter of seizure", even if disclosed by the assessee as his income under the Amnesty Scheme; were not covered by the scheme. In other words, the assets and i .....

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s evidenced by Panchnama; and (b) the cases of the other 3 persons are also covered by the Amnesty Scheme because none of the seized assets has been disclosed; rather the disclosure is stated to be on account of expenses and investments recorded in the "Boston Diary" found during the search. 14. From the facts on record and cumulative effect of all the circulars issued under the Amnesty Scheme, we are of the opinion that the immunity under the Amnesty Scheme was available to these 4 ap .....

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t the immunity/benefits of Amnesty Scheme were available to all the 20 appellants upto the asst. yrs. 1986-87 and therefore, the penalty orders in all these 20 cases for all the asst. yr. 1986-87 are cancelled. 15. Before parting with this aspect of the case, we would like to make a brief mention of the various decisions relied upon by the parties, as under : Cases relied by the assessee : (i) Jaikishan Gopikishan & Son's case (supra). After having gone through the decision and especiall .....

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1) 82 ITR 913(SC). The binding nature of the circulars has been considered by the various High Courts in a series of decisions. In a recent decision, the Division Bench of the Kerala High Court in CIT vs. Punalur Paper Mills Ltd. (1987) 64 CTR (Ker) 211: (1988) 170 ITR 37(Ker), after placing reliance on the decisions of the apex Court and various High Courts, has held that the circulars so issued have the force of law and are binding on all the officers of the Department. The benevolent circular .....

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e rigour of the law can be relaxed by giving administrative relief. Even if the circulars are relied on for the first time. Before the High Court during the course of hearing, the assessee will be entitled to the benefits of the circulars. The Court is bound to take note of the circular. It is too late in the day for the Revenue to contend that the circular issued by the CBDT is only an administrative direction or that it will not bind the Department or that it shall not be given effect to since .....

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e cases of such assessees, who claim immunity and consideration of their cases leniently and sympathetically, and the authorities are bound to deal with the cases, according to the instructions issued from time to time." (ii) Shama Raising Chandel vs. ITO (supra) : The facts in this case were that a search was conducted at the premises of one VC and AL on 23rd Sept., 1986, and 24th Sept., 1986; and it was revealed that there was a racket which involved conversion of substantial amount of bl .....

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d 1987-88 on 31st March, 1987 and 23rd Feb., 1988, respectively. The ITO held that the appellants did not disclose voluntarily but disclosure was made after search against VC and AL. The question before the Tribunal was whether return of income filed by the assessee for asst. yr. 1985-86 could be accepted as filed under the Amnesty Scheme. The Tribunal after considering the scheme in detail, held that Amnesty Scheme was applicable so far as asst. yr. 1985-86 was concerned and, therefore, held th .....

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ns for all the assessment years and claimed the benefit under the Amnesty Scheme, 1986. The assessee, therefore, claimed that no penalty was leviable in view of the Amnesty Scheme. This claim was not accepted by the WTO but the CIT(A) accepting the assessee's plea had disallowed the penalty. On appeal by the Department, the Tribunal confirmed the order of the CIT(A) that the appellant was entitled to benefit under the Amnesty Scheme. His decision clearly supports the cases of the 14 appellan .....

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uo motu. Therefore, the assessee's case was fully covered by Amnesty Scheme and, therefore, no penalty should be recovered from the assessee under s. 18(1)(a)." (iv) Uttamchand Bhutani & Co.'s case (supra). In this case, the assessment for asst. yr. 1977-78 was filed by the assessee on 21st July, 1977, and the assessment was completed on the basis of that return. Thereafter, the ST Department conducted the raid in the premises of the assessee and seized certain documents and acc .....

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was announced. The assessee, availing benefits of Amnesty Scheme paid taxes on reassessment figures including relief allowed by the CIT(A) and based on these filed revised return under the Amnesty Scheme; and consequently the appeal before the Tribunal was withdrawn. During the course of penalty proceedings under s. 271(1)(c), the AO was apprised of the revised return but he rejected the assessee's claim under the Amnesty Scheme and levied penalty. On appeal, the CIT(A) also upheld the order .....

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on, assessee filed fresh returns under the Amnesty Scheme, 1985, declaring a higher income for all these years, which were accepted by the AO but the immunity under the Amnesty Scheme was not allowed. And consequently penalty under s. 271(1)(a) was imposed. The CIT(A) allowed the assessee's appeal. The Tribunal on further appeal by the Department confirmed the order of the CIT(A) holding that the circulars have to be considered in a liberal manner as they are meant for common taxpayers. The .....

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true. So it was not justified on the part of the Department to refuse the benefits available under the Amnesty Scheme. The findings in the aforesaid case therefore, are in appellants' favour. (vi) Anandkumar Saraf's case (supra) : In this case, the assessee was regular income-tax payer and was carrying on business at Surat in the name of AKT and RT and at Calcutta in the name of AKSC. A search was conducted on 7th March, 1986, at the residential premises of the appellant-assessee as well .....

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icials came across certain cheque books and pay-in-slip in respect of two banks accounts, namely, current account in the name of RT with State Bank and current account with the Oriental Bank of Commerce in the name of AKT, which were the proprietary concerns of the assessee. It was an admitted fact that the income of these two proprietary business had not been disclosed by the assessee in the IT return filed earlier. These cheque books and pay-in-slips were seized. On 31st March, 1986, the asses .....

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the books and documents seized by the Department in course of search carried out in the office and residential premises on 7th March, 1986. The assessee requested that no penalty should be imposed and all interests should be waived. Similarly, WT returns for asst. yrs. 1982-83 to 1985-86 including therein the assets represented by the income so disclosed in the revised returns were also filed. Assessments were completed, but benefits of Amnesty Scheme were not granted on the ground that revised .....

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ch as the said order was passed under a mistaken belief that the IT and WT returns filed by the appellant were covered by the amnesty scheme. He, therefore, wanted to rectify the orders, dt. 11th Nov., 1988, under the provisions of s. 154 of WT Act as well as s. 35 of the WT Act and consequently initiated proceedings by issuing notice under relevant sections on 23rd Feb., 1989. The assessee's writ petition before the High Court was dismissed on 31st March, 1989, but later on filed appeal wit .....

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he said order, dt. 1st Jan., 1990, passed under s. 154 along with an application seeking stay of operation of the said order. On a reference of the writ, the Hon'ble High Court quashed the notice, dt. 23rd Feb., 1989, as well as the order, dt. 1st Jan., 1990, passed by the CIT(A) under s. 154. As the decision in this case is very much relevant to the facts and circumstances of the case, so we have preferred to reproduce the headnotes as under : "Existence of the alternative remedy is no .....

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iven in the Amnesty Scheme only in respect of assets or income which had been found and/or seized by the tax authorities before the filing of revised returns by the assessee concerned and also in those cases where the tax authorities had looked into the seized papers and had carried out some investigations (before the furnishing of revised returns by the assessee) to show that the income now declared in the revised return had already been detected by the Department from the papers and documents .....

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e-tax and wealth-tax. It was an admitted fact that the assessee disclosed fully and truly his income and wealth in such revised returns and had also paid taxes in due time as provided under the Amnesty Scheme. Since the Department had not looked into the seized papers and had not carried out investigation prior to 31st March, 1986, it could not be said that by the mere fact of seizure, the tax authorities could be said to have even a Prima facie belief that the concealment of income and wealth b .....

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facts and circumstances of the instant case, it could not be said that the tax authorities had detected concealment merely by having seized certain books and papers a few days before the furnishing of revised returns by the assessee. In order to show that a concealment had already been detected, it was obligatory on the tax authorities to look into the seized books and documents, verify the entries therein with the income already disclosed by the assessee in his original returns and thereafter i .....

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ns and square up account with the Revenue. The clarifications of the Board in its answer to Q. No. 19 as to the meaning of the expression 'before detection by the Department' shows that if the assessing authority has a prima facie belief, that would not have meant detection. In the instant case, certain documents and papers were seized. They might or might not have revealed concealment. Even the seizure could not have led to a prima facie belief as to concealment as the contents purporte .....

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ed. It is well settled that an issue which is debatable or on which there could conceivably be two opinions cannot be the subject-matter of rectification. A glaring and obvious mistake either of fact or law can alone be corrected under s. 154. On the facts and circumstances of the instant case, it was to be held that the impugned notice issued by the CIT on 23rd March, 1989, was clearly without jurisdiction, and therefore, all proceedings taken in pursuance thereto including the impugned order, .....

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return for assessment years was filed on 6th March, 1987. The assessments were completed but penalty under ss. 271(1)(a) and 273(1)(b) were imposed after rejecting the assessee's claim on immunity under the Amnesty Scheme. The CIT(A) confirmed the order of the AO. The Tribunal, on appeal by the assessee, deleted the penalties holding as under : "In the instant case, assessee had filed returns and felt that she had filed returns voluntarily and in good faith and had made a full and true .....

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e of assessee's husband and the Revenue's contention was that voluntariness was absent in the filing of returns by the assessee. But the Kerala High Court in the case of A.V. Joy, Alukkas Jewellery vs. CIT (1990) 185 ITR 638(Ker) held that merely because returns were filed after search, they will not be ceased to be voluntary or a bona fide disclosure. Therefore, in the instant case, the immunity under the Amnesty Scheme was clearly available to the assessee and the penalties were not at .....

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cent was applied on receipts disclosed by the assessee. These assessments were set aside by the Tribunal by its order, dt. 30th March, 1986, upto the stage of filing of the revised returns. Before the petitioner filed the revised returns, the Amnesty Scheme was introduced by the Revenue. In the revised return, the petitioners disclosed its income by applying the net rate of 25 per cent which the ITO had adopted. These returns were filed under Amnesty Scheme and were accepted. The assessee moved .....

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gh Court held that the revised returns filed by the petitioner would be treated to have been filed under the Amnesty Scheme entitling the petitioner to all the benefits of the scheme. The petitioner was, therefore, immune from imposition of penatly as per Circular No. 451, dt. 17th Feb., 1986. This decision, though is not directly in assessee's favour, but duly supports the appellant's version that benefits under benevolent circular may be allowed liberally. (ix) Prakash Oil Industries & .....

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oks 'Partners gave different statements' No action taken by the Revenue qua this amount for about a period of two years 'Meanwhile, assessee offered the amount of ₹ 2,25,000 + ₹ 25,000 under the Amnesty Scheme' AO not granting benefits of Amnesty Scheme but the CIT(A), on appeal, granting benefits to the extent of 5/6th of ₹ 2,25,000 on the ground that 1/6th of the amount represented concealed income of the relevant assessment years 'Not justified' Benef .....

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st two years prior to the filing of the return by the assessee-firm, and no action whatsoever had been taken by the Revenue to go into the facts of the case and unearth concealed income which they thought to have been concealed by the assessee-firm. Merely for the reason that one of the employees had made the statement with reference to a particular paper that it reflected the unaccounted income of the firm, and which had, there and then, simultaneously at a different premises been denied/reject .....

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ed income of the firm, referable to the assessment year cannot also hold the ground for the fact that the Department has failed to detect any concealed income, and merely a seizure of a paper and a statement of an employee which had been rebutted immediately by the partner of the firm cannot be treated as detection, the offer of the sum of ₹ 2,50,000 was made suo motu by the firm only to avail the benefits of the Amnesty Scheme and to avoid further litigation, cannot be taken as a ground t .....

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ntly, because the firm offers a sum which is all the more, more than what has been reflected in the loose paper, cannot abstain the firm from the benefits of the Amnesty Scheme even on 1/6th portion of the amount reflected in the loose paper. As there is no detection the question of granting immunity on a part of a sum and not on the balance also does not arise. The assessee is entitled to the benefits of Amnesty Scheme on the entire amount of ₹ 2,50,000.'Anand Kumar Saraf vs. CIT (199 .....

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amount offered. Income from undisclosed sources 'Unexplained money' Diary found in search operations at the residence if assessee's partner 'G' who was also partner in other firms 'Name of assessee not mentioned in the relevant page of the diary but other names mentioned G' offering the peak credits for taxation and paying tax thereon' Merely because 'G' happens to be a partner of the assessee-firm, he being partner in other firms also, any admission on t .....

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arried on by G at his end and there is no corroborative evidence that the assessee-firm made sales to G. It is an admitted fact that the diary was seized from the residence of G who has got interest in 12 different firms in his individual sub-group and if he has admitted about his financial transactions as recorded in the diary such admission binds him alone and not the assessee-firm merely because he happens to be one of the partners of the assessee-firm. It is further noted that five different .....

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has owned up the entries in the diary and has surrendered peak of credits in the asst. yrs. 1982-83, 1983-84 and 1984-85. He has paid substantial tax thereon. Mere entries in the accounts of third party was not sufficient to prove that the assessee had indulged in such transaction, as there was no guarantee that the entries were genjine. The AO is not justified in making the additions.'Addl. CIT vs. Miss Lata Mangeshkar (1974) 97 ITR 696(Bom) relied on. Conclusion Mere admission of a partne .....

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, revised returns were filed by the assessee after the search in which some unexplained assets seized of cash and jewellery, etc., were found. As a result of the revised return furnished by the assessee, the total income assessed was ₹ 13,86,340 which included cash of ₹ 6,28,438, jewellery of ₹ 3,33,277, interest and loans unaccounted of ₹ 1,00,000, restaurant receipts of ₹ 10,000, income from five special clubs of ₹ 1,00,000, interest and loans to Mohd. Shafi .....

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was made by the AO. It was the fact that assessment was made on the basis of revised return only. The appellant had agreed to the proposed addition and responded by declaring the total income by filing revised return of income. In this case, though the cash and jewellery were found during the search, but the appellant filed revised return of income voluntarily with a view to purchase peace. The assessee, therefore, submitted that the return being voluntarily filed to buy peace, so, penalty under .....

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assessment order, penalty order and the order of the CIT(A) sustaining the said penalty order. There is no difference between the facts for the asst. yrs. 1982-83 and 1983-84. The penalty levied for the alleged concealment of income under s. 271(1)(c) for asst. yr. 1982-83 has been cancelled by the Tribunal. It is a fact that the appellant filed the revised return of income voluntarily before making the assessment with a view to buying peace. The assessment was made exactly on the basis of the .....

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d making the assessment of the said income would attract the penalty. In this view of the matter, the appellant succeeds." Decision in this case amply supports assessee's version that the revised return, in the case of those 4 individuals also where search was conducted were voluntary and consequently covered by the amnesty scheme. (xi) Manorajyam's case (supra) : In this case revised return was furnished after survey and it was held that benefits of amnesty scheme were available to .....

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was held justified. The facts of the case are quite different than the facts of cases of appellants before us, because in those cases we have already held that there was no evidence with the Department to prove any concealment of income. Consequently the decision in this case does not help the Revenue. (ii) Ilexi Textile Industries' case (supra) : In this case also, it was found on facts that concealment had been detected prior to filing of the revised return and it was under these circumst .....

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eclaring its income at ₹ 5,63,910. On 21st Sept., 1982, a search was conducted at the premises of the assessee. A petition under s. 273A was filed by the assessee before the CIT on 27th Jan., 1983, offering ₹ 20 lakhs for taxation purposes with a view to avoid further inquiries and investigations and to buy peace. This petition related to asst. yrs. 1979-80 to 1982-83. This offer was increased gradually to ₹ 30 lakhs and later on further increased to ₹ 52 lakhs plus vide .....

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he details of cash creditors. Summons under s. 131 were issued by him to twenty two parties at the addresses furnished by the assessee but the same remained unserved with the remarks that such parties were not available at such addresses. The AO vide his letter, dt. 17th Dec., 1985 informed the assessee about this fact and further asked the assessee to produce the parties along with the books of account and pass-books. Since the assessee was not able to produce these cash creditors except in the .....

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gations in regard to loans. He informed assessee vide letter, dt. 15th Jan., 1987, that GIR Nos./P.A. Nos. given in the loan confirmation letters in respect of 218 persons were not correct as they were not found in the respective wards. This fact is also stated to have been informed to the representatives of the assessee. The list of 218 parties was enclosed in the penalty order as 253. In response to this letter, assessee vide its letter, dt. 3rd Feb., 1982, submitted before the AO that during .....

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so be noted that on 16th Jan., 1987, the AO also issued a letter to the assessee informing that summons had been issued to Miss Rekha Ganeshan, a film actress for examination to be held on 22nd Jan., 1987. He asked the assessee to remain present during her examination/cross-examination. This summon had been issued because she had stated in her statement, dt. 9th Nov., 1982, recorded under s. 131 by the Addl. Director of Income-tax.. Unit (III)(5) that she had purchased certain jewellery from the .....

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ill 9 p.m. This is seen from the letter filed by the assessee..... office of the AO on the next day, i.e., 26th March, 1987 which is placed at p. 60 of the compilation. 6. Faced with this situation, assessee again filed a revised return on 30th March, 1987, under the Amnesty Scheme offering an additional income of ₹ 11.5 lakhs comprising of the following : Rs. (i) 2,85,000 In respect of loans from six cash creditors. (ii) 38,047 Interest on above loans. (iii) 5,50,000 Re. Jewellery purchas .....

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to the conclusion that the disclosure made by the assessee was not full and true and in good faith, as is clear from the Tribunal's finding in para 10 reproduced as under : "10.1 Now, let us examine whether assessee is entitled to the immunity from levy of penalty under s. 271(1)(c) and under s. 273. In the present case assessee had filed its return originally on 15th June, 1982 declaring an income of ₹ 5,63,910. The revised return under the Amnesty Scheme was filed on 31st March .....

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ands. The assessee must have disclosed the entire income while filing the first return under the Amnesty Scheme. In the present case the AO was not satisfied with regard to the disclosure made by the assessee in the year 1986, and continued his investigation in respect of the cash credits which were not surrendered by the assessee. Since the assessee was unable to prove the genuineness of the cash credits, it filed another revised return on 30th March, 1987. Had the AO not made further investiga .....

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on similar set of facts." After considering the aforesaid decision, we are of the opinion that the decision in this case is not helpful to the Revenue. 16. In view of our aforesaid observation and discussions, we are of the opinion that the cases of all the appellants upto asst. yr. 1986-87 are covered by the various circulars issued under the Amnesty Scheme (supra) and therefore, we hold that penalty under s. 271(1)(c) in all these cases have been imposed in complete disregard to the Amne .....

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aw, are also bad in law and void ab initio. He further submitted that as per the provisions of s. 271(1)(c) as they stood at that time, it was the ITO or the AAC or the CIT(A) who could initiate the penalty proceedings and, therefore, he proceeded to argue that penalty proceedings being penal and quasi judicial, no other authority other than the authorities mentioned in the section itself, had jurisdiction either to initiate the proceedings or to direct any of these authorities to initiate the p .....

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e, submitted that the proceedings were bad in law and the consequential orders are void ab initio. He further relied on the decisions reported as D.M. Manasvi vs. CIT 1972 CTR (SC) 437: (1972) 86 ITR 557(SC), Sheo Narain Jaiswal vs. ITO (1989) 176 ITR 352(Pat), CIT vs. Daj Bhai Kanji Bhai (1991) 189 ITR 41(Bom) and Panchanam Hati vs. CIT (1978) 115 ITR 336(Cal). The learned Departmental Representative, on the other hand, after referring to the discussion note and letters from the Dy. CIT, dt. 20 .....

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tative further submitted that the last para of the discussion note which states that the question of waiver of penalty would be considered subsequently with the prior approval of the Board, on the other hand, shows that no directions were issued by the CIT. He further submitted that the observations of the Tribunal in para 6 of its order (since recalled) to the effect that "Consequently, the AO stated in his penalty orders and observed as under... While granting the spread over the CIT has .....

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penalty proceedings will be initiated then also it cannot be said that the CIT had issued any directions because order under s. 273A is a judicial order and not an administrative order. 18. We have considered the submissions made by both the sides and have carefully gone through the penalty orders, order of the CIT(A), the Tribunal's order (since recalled), order in miscellaneous application, CIT's letter dt. 21st March, 1988, Dy. CIT's letter dt. 20th March, 1989, and various case .....

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ity VIII, Bombay. The report, dt. 6th March, 1989, was received from A.C. Cir. 26(1). Thereafter he was asked to send another report in the case of Purshottamdas F. Jhunjhunwala as the case records of the said assessee have also been received here on transfer. He submitted a report, dt. 16th March, 1989. The Annexures I to V showing distribution of income amongst various persons were also submitted by the Asstt. CIT. The Asstt. CIT's reports, dt. 6th March, 1989, 16th March, 1989, and the An .....

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the figure of ₹ 69.46 lakhs in various names and those details are mentioned in the said diary. Thereafter certain pages have been pinned up with the diary showing the figures of interest. The assessee tried to explain with the help of certain entries that the figure of ₹ 69.42 lakhs also includes the interest of ₹ 14.70 lakhs. After discussion it was decided that 50 per cent of this interest should be included in the total income of the assessee for the purpose of disclosure. .....

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rence is worked out at ₹ 10.53 lakhs. It was decided that this amount should be further added to the disclosed income. The distribution of the additional amount of ₹ 10.53 lakhs should be made as per the figures in Annexure III of the Asstt CIT's report. 3. Jewellery : At p. 7 of the report of the Asstt. CIT he has worked out the figures of jewellery not declared at ₹ 7.28 lakhs and figures of jewellery with wide variatoins at 6.11 lakhs in the names of 3 (three) parties, v .....

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been shown in their respective hands, they are to be ignored for the purpose of this disclosure. Thus, unexplained jewellery of ₹ 17.28 lakhs will be added along with silver utensils not disclosed by the assessee at ₹ 2.74 lakhs making the total at ₹ 20.02 lakhs. It is explained by the assessee that all these items have naturally been purchased out of the expenditure for which the amount of ₹ 10.53 lakhs has already been added and, therefore, the reduction of the aforesai .....

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) and Purshottamdas Jhunjhunwala (Individual) during the asst. yr. 1987-88 only, in the proportion of undisclosed amount of jewellery of ₹ 20.02 lakhs in the hands of the above said 4 persons. 4. Regarding amount of ₹ 1.80 lakhs in the name of minors : This has reference to p. 10 of the Asstt. CIT's report. The amount of ₹ 1.80 lakhs is to be included and distributed amongst Jhunjhunwala & Co. and Fatechand Paliram & Sons in the ratio stated in Annexure I of the Ass .....

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uestion of waiver would be considered subsequently, with the prior approval of the Board." Extract of letter, dt. 20th March, 1989 from Dy. CIT Bombay to CIT, Range 26, Bombay to CIT, City, VIII, Bombay Dt. 20th March, 1989. To CIT Bombay City VIII, Bombay Sub :' Report in the case of Jhunjhunwala Group of cases on petition under s. 273. Kindly refer to this office letter No. Range-26/9/1988-89, dt. 7th March, 1989. A discussion note, dt. 20th March, 1989, is sent herewith along with co .....

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8-89, dt. 23rd March, 1989, forwarding the discussion note, dt. 20th March, 1989. CIT's remarks are as under : "Approved, assessments in the respective cases to be made as per the note and as discussed." M. Madhavan For CIT B.C. VIII, Bombay." Extract from CIT(A)'s order dt. 7th Feb., 1991 in the case of Nirmal P. Jhunjhunwala : Page 5, para 3 "... Lastly the Asstt. CIT pointed out that while granting spread over, the CIT had directed that the penalty proceedings shou .....

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proceedings should be initiated against the assessee..." Extract from Tribunal's order on M.A. Page 7, para 6 : Secondly, the AO stated in his penalty orders and observed as under : "While granting spread over the CIT has directed that penalty proceedings should be initiated against the assessee." 19. After careful consideration of the aforesaid extracts, we are of the opinion that the inference drawn by the Departmental Representative from various orders and documents, relie .....

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authorities themselves that the penalty proceedings were initiated as per directions of the CIT. Here, we would like to discuss the various statements in these documents as under : Firstly, the discussion note clearly confirms that the issue regarding disclosure by the appellants was discussed by the CIT City VIII, Bombay with the representative of the assessee, Nirmal Kumar P. Jhunjhunwala, P.S. Hajela, Dy. CIT, Range 26, Bombay, S. Halder, Asstt. CIT, Cir. 26(1), Bombay and M. Madhavan, Asstt .....

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ody else could have done so. Thirdly, on the basis of such discussion and consideration, it has been mentioned as "The following decisions were taken". This finding also confirms that the decisions were taken by the CIT and nobody else. Fourthly, from para 5, which runs as hereunder, it is very clear that such direction could be given only by the CIT and nobody else : Annexure V of the report: The distribution as done in Annexure V is approved. This has reference to p. 11 of the Asstt. .....

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because of the following two reasons : (i) Had it been from the Asstt. CIT, then there was no question of using the word "should" rather the words would have been as "if approved" and then the words "should" or "would" or "may" because when some one seeks instructions or approval from a higher authority, then such lower authorities can never use the directive language; rather will mention just his proposal which in this case was as to what actio .....

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ion of waiver would be considered subsequently, with the prior approval of the Board", because the Asstt. CIT had neither any business to deal with waiver of the penalties nor he had the powers or jurisdiction to suggest such a proposal. On the other hand, such direction could be only from the CIT who was seized of the matter of waiver of penalties under s. 273A. The overall interpretation of this note on facts proves beyond doubt that the directions given in this note to initiate penalty p .....

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dings were initiated not by the Asstt. CIT himself but were initiated as per the directions of the CIT. We would further like to observe that this fact has been duly taken note of by the CIT(A), the Tribunal in the order (since recalled) and Tribunal's order passed in assessee's miscellaneous application. 20. We would further like to observe that had there been no such directions by the CIT, then, either the CIT(A) would have rebutted the admission made by the Asstt. CIT in penalty order .....

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proceedings were initiated as per the directions of the CIT. 21. In our opinion, the cumulative effect of the aforesaid discussion and facts on record confirms beyond doubt that the Revenue had all along been accepting that the penalty proceedings were initiated by the CIT and, therefore, we are of the opinion, that the CIT had given such directions. 22. Having found from the facts on record and admission by various Revenue authorities that the penalty proceedings under appeal were initiated on .....

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e particulars of such income, he may direct that such persons all pay by way of penalty." From the above provisions of s. 271(1)(c), we find that it is the ITO or the AAC or CIT(A), who, in the course of any assessment proceedings must be satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, then and only then he may direct that such person shall pay by way of then and only then he may direct that such person shall pay by w .....

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and in the language of Smith Justice, J., Angland vs. Payne 1944 MZLR 610626, the terms "is satisfied" mean "a mind which reached a clear conclusion". Thus, it is the ITO who in the course of assessment proceedings or first appellate authority in the course of appellate proceedings, who has to be satisfied in his own mind that it is a case where he should initiate penalty proceedings, so that the majesty of law is upheld. He must reach a clear conclusion and, therefore, it i .....

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can be initiated only on the personal satisfaction of any of these 3 authorities, i.e., ITO, AAC or CIT(A) and not on the basis of satisfaction of any other authority, meaning thereby, that penalty proceedings under s. 271(1)(c) cannot be initiated on the directions, suggestions or advice of any other authority, even higher in rank. Consequently, we hold that penalty proceedings initiated on the directions of the CIT will definitely be bad in law. This view is fortified by the order of the Hon&# .....

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re automatically bad in law and void ab initio. The same are held to be null and void. 25. Though, after having reached the aforesaid conclusion it is not necessary to make any further comments, but we would like to mention that in the order passed in assessee's miscellaneous application, it has been clearly held in para 20 of its order that if the penalty proceedings are initiated as per the direction of the superior authority, the entire penalty proceedings would get vitiated and the penal .....

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that the AO has initiated penalty action even in respect of asst. yr. 1987-88, the return for which year had been filed after the group submitted a petition under s. 273A and the assessee of the group had disclosed in the returns for asst. yr. 1987-88, the additional amount being offered for taxation, is, in our opinion, a proof of the fact that the initiation was because of the directions of the CIT; (iii) further there is hardly any discussion in any of the assessment orders to indicate that .....

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rom the AO's penalty order which clearly bring out the fact that the CIT had directed the AO to initiate penalty proceedings. Secondly, it has been asserted by the assessees that an argument had been made by the assessee's counsel that since the initiation of penalty proceedings was because of the directions of the CIT, the whole proceedings were vitiated and that the penalty orders deserve to be cancelled on this ground. Thirdly, it may be noted that this claim of the assessee that this .....

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der. Secondly, it is a well settled position in law that penalty proceedings can be initiated only if the ITO is satisfied in the course of proceedings under the Act before him that the assessee had committed one of the specified defaults. If the initiation of penalty proceedings is not because of such satisfaction on the part of the ITO but is because of the directions of the superior authority, the entire penalty proceedings would get vitiated and the penalty orders would have to be struck dow .....

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in s. 271(1)(c) and this is more so in the present case in view of the admission on the part of the AO that the CIT had directed him to initiate penalty proceedings. The fact that the AO has initiated penalty action even in respect of asst. yr. 1987-88, the return for which year had been filed after the group submitted a petition under s. 273A and the assessee of the group had disclosed in the returns for asst. yr. 1987-88 the additional amount being offered for taxation is, in our opinion, a p .....

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the orders under s. 271(1)(c) deserve to be reconsidered." As the learned Departmental Representative has not objected to the findings of the Tribunal arrived in the order of miscellaneous application SO, we have no option but to follow the findings also and on this basis also, we hold that the initiation of penalty proceedings under s. 271(1)(c) was as per the directions of the CIT and consequently the penalty orders are bad in law. As regards to the decisions relied upon by counsel for t .....

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l as penalty order, he submitted that there is nothing except the reliance on disclosure made by the assessee himself. He, therefore, concluded that the Department's failure to discharge its onus the penalty is unjustified. (ii) His next point of attack was that the disclosure was voluntary. For this proposition, he referred to the submissions of Kishorilal F. Jhunjhunwala placed at pp. 16 to 26 of the assessees paper-book containing copy of statements recorded during search. Referring to an .....

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00 Cash Shakti Housing Development (P) Ltd. 3. 1,00,000 Difference in valuation of jewellery Whole of Jhunjhunwala Group. 4. 3,25,000 Payment in cash for flat Niranjan P. Jhunjhunwala 5. 2,00,000 Income from bldg. construction work Niranjan P. Jhunjhunwala 6. 90,126 Creditors Kishorilal Jhunjhunwala 7. 93,67,129 Expenses and investments, last 20 years Whole of Jhunjhunwala Group 8. 69,46,900 Advances given Kishorilal Jhunjhunwala After referring to the letters, dt. 28th Aug., 1986, and 7th Nov., .....

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ime these revised returns were furnished, no notice under s. 148 for any of the assessment years and also no notice under s. 143(2) for asst. yr. 1986-87 had been issued. He, therefore, concluded that the disclosure having been made during the search itself, it was voluntary disclosure. Deriving support from the fact of disclosure having been made voluntarily, he submitted that the appellants were entitled to benefits of the amended Expln. 5 to s. 271(1)(c). He submitted that the amendment, thou .....

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as nothing but to give recognition to the existing legal proposition. To support this, he relied on the Board Cir No. ... and also derived force from the amendments effected by way of introducing deeming provisions of ss. 69, 69A, etc., which have been held by various Courts as recognition of the existing legal proposition. He, therefore, submitted that the benefits of no penalty were admissible to the assessees who had volunteered to disclose the concealed income even prior to the amendment of .....

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, it is very much clear that the assessee's disclosure was accepted. He further submitted that the disclosure was subject to no penalty for concealment and prosecution. So his point of objection that either the Department should have accepted the disclosure in toto or should have rejected. In support of the aforesaid submissions, the counsel for the assessee relied on the following decisions : (i) CIT vs. Anwar Ali (1970) 76 ITR 696(SC); (ii) Smt. Ram Rakhi vs. ITO (1989) 30 ITD 221(Chd); (i .....

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(1980) 123 ITR 457(SC); (x) CIT vs. Haji Gaffar Haji Dada Chini (1987) 63 CTR (Bom) 130: (1988) 169 ITR 33(Bom); (xi) CIT vs. Kurruddin & Bros. (1990) Taxation 96(3)-59; (xii) A.N. Sarvaria vs. CWT (1985) 49 CTR (Del) 264: (1986) 158 ITR 803(Del); (xiii) CIT vs. Amalendu Paul (1983) 34 CTR (Cal) 174: (1984) 145 ITR 439(Cal); (xiv) CIT vs. Sarda Rice & Oil Mills (1979) 117 ITR 917(Cal); (xv) Bhagwanji Bhawanbhai & Co. vs. CIT (1982) 28 CTR (Cal) 375: (1983) 141 ITR 640(Cal); (xvi) CI .....

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s 1975 CTR (All) 163: (1977) 106 ITR 307(All); (xxiii) CIT vs. Kartar Singh (1970) 77 ITR 338(P&H) (xxiv) Thoppil Kutti Eroor vs. CIT (1958) 34 ITR 850(Ker); (xxv) S. Santhosa Nadar vs. Addl. ITO (1962) 46 ITR 41(Mad) (xxvi) CST vs. Shahid Husain Rakesh Kumar (1977) 39 STC 520(All); and (xxvii) Narain Das Suraj Bhan vs. CST (1968) 21 STC 104(SC). 26. The Departmental Representative, on the other hand, submitted that though penalty has been imposed under the main provisions of s. 271(1)(c), b .....

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) 204 ITR 369(SC). Relying on the statements, he submitted that Kishorilal Jhunjhunwala has admitted the concealment whereas from the order under s. 132(5), he derived the proposition that the Department had detected a huge amount of concealment while relying on the decision of the apex Court (supra), he submitted that the assessee had disclosed the huge amount of ₹ 2,29,92,254 only because of the search and, therefore, the disclosure cannot be said to be voluntary. As regards to benefits .....

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(I) Ltd. vs. CIT (1994) 210 ITR 1035(Del), Krishna Kumari Chamanlal vs. CIT (1996) 127 CTR (Bom) 458: (1996) 217 ITR 645(Bom), CIT vs. K. Govindarajulu Naidu (1991) 190 ITR 318(Mad), S. Vasudeva Rao vs. P.S.J. Sigamang (1995) 125 CTR (Mad) 93: (1995) 211 ITR 284(Mad), F.C. Agarwal vs. CIT 1976 CTR (Gau) 82: (1976) 102 ITR 408(Gau), CIT vs. Industrial Finance Corpn. of India Ltd. ((1990) 85 CTR (Del) 72: 1989) 180 ITR 440(Del), Dayabhai Girdharbhai vs. CIT (1957) 32 ITR 677(Bom), Vadilal Ichhach .....

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details of which have been stated in the submission made by the assessee's counsel. (ii) Difference in valuation of jewellery was also disclosed. (iii) There was no seizure of any value in the case of Nirmal Kumar Jhunjhunwala. (iv) The seizure of jewellery in the case of Purshottam Jhunjhunwala, Kishorilal Jhunjhunwala, Niranjan Jhunjhunwala was only with respect to the jewellery whose valuation was disputed. (v) Some cash was seized in the case of Niranjan Jhunjhunwala. (vi) The Asstt. CIT .....

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fact that according to him, the provisions were operative from 10th Sept., 1986, and also because of the search. (viii) No notice under s. 148 in any of the case was issued prior to furnishing of revised return and no notice under s. 143(2) was issued prior to furnishing of revised return for the asst. yr. 1986-87. (ix) Assessments were completed on the basis of disclosed income with minor variations due to appellants' further agreeing to disclosure of an additional amount of ₹ 20 lak .....

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and relevant assessments in their prospective perspective, Hon'ble CIT suggested over us to set further an amount of ₹ 20 lakhs for taxation which were gracefully accepted even though not fully convinced. In the said meeting, the Hon'ble CIT decided the years and the persons in whose hands the said amount of ₹ 20 lakhs were to be taxed. On the basis of said directions, various assessments were completed between May to July, 1989. (x) As per the discussion note, disclosure wit .....

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nce in the said discussion note to the effect that "penal interest should be charged and penalty proceedings should be initiated. The question of waiver would be considered subsequently, with the prior approval of the Board". Had there been no intention to waive the penalty, this sentence should not have been stated/included. 28. Having considered the submissions and the various facts on record and having gone through the various decisions relied upon by both the parties, we are of the .....

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f disclosure offer during the search or thereafter arise only when there had been concealment on the part of the assessee and, therefore, if the disclosure by the appellant is not accepted as to be voluntary, then it is the Department's onus to prove that whatever it is going to tax was assessee's concealed income for a particular assessment year. If the Department prefers to accept the disclosure, then it cannot allege that the assessee has concealed the income or furnished inaccurate p .....

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s income of that particular year and belonged to the particular assessee. The Department's failure to do so cannot be a support to the Department for its claim that after disclosure by the assessee, the Department was not under obligation to do anything in proving that the income disclosed was assessee's income. Our aforesaid views are fortified by decisions of the Bombay Tribunal in the case of Sidhivinayak Chemicals (P) Ltd. vs. Asstt. CIT (1995) 52 ITD 226and we would like to reproduc .....

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e of CIT vs. Anwar Ali (1970) 76 ITR 696(SC) would apply to the facts of the present case. Therefore, the penalty cannot be imposed on the mere findings arrived at in the course of assessment proceedings as these findings, though relevant, are not conclusive. (iii) That all the facts on the record should be taken into consideration in deciding the justification of penalty imposed by the AO. 11. Both the parties have been heard at length and the material placed before us had been perused. There c .....

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A), the Tribunal found that the ratio of the Supreme Court decision in Anwar Ali's case (supra) was applicable to the facts and circumstances of the case. (ii) As regards to the benefits available under the amended Expln. 5 to s. 271(1)(c), we are again not able to agree with the learned Departmental Representative because in para 15(5)(c)(b) of Circular No. 469, dt. 23rd Sept., 1986, in which the scope of amended Expln. 5 has been explained to suggest that the amendment was nothing but a re .....

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f the appellant's case. In this case, the Hon'ble Supreme Court was to consider the scope of word 'voluntary disclosure' in view of provisions of s. 3(2)(ii) and s. 14 of the Voluntary Disclosure of Income and Wealth-tax Act, 1976 (No. 8 of 1976, [102 ITR (St) 49]. Before differentiating the decision, we would like to note the relevant provisions of this Act. Sec. 3(1). Subject to the provisions of this Act, where any person makes, on or after the date of commencement of this Act .....

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n the part of such person to make a return under the Indian IT Act, 1922 (11 of 1922) or the IT Act or to disclose fully and truly all material facts necessary for his assessment or otherwise, then, notwithstanding anything contained in the Indian IT Act, 1922 (11 of 1922), or the IT Act or in any Finance Act, income-tax shall be charged in respect of the income so declared such income being hereinafter referred to as the voluntary disclosed income (Emphasis in italisized in print, supplied) at .....

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hereinafter in this section, in ss. 4 to 13 and in the Schedule referred to as the declarant) have been seized as a result of any search under s. 132 of the IT Act or under s. 37A of the WT Act, income in respect of the previous year in which such search was made on any earlier previous year. (3) In addition to the amount of income-tax to be paid under sub-s. (1), the declarant shall invest a sum equal to 5 per cent of the amount of the voluntarily disclosed income in such securities as the Cent .....

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a declaration in accordance with the sub-s. (2) in respect of any income relating to the previous year in which such search was made or any earlier previous year' (a) for which he has failed to furnish a return under s. 139 of the IT Act, or (b) which he has failed to disclose in a return of income furnished by him under the IT Act before the commencement of this Act, or (c) which has escaped assessment by reason of the omission or failure on the part of such persons to make a return under t .....

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) payment of interest by the declarant under s. 215 or s. 217 of the IT Act or the corresponding provisions of the Indian IT Act, 1922 (11 of 1922); (iii) imposition of penalty on the declarant under the provisions of any of the said Act, except under s. 221 of the IT Act or the corresponding provisions of any of the other said Acts; and (iv) prosecution of the declarant under the provisions of any of the said Acts. (2) The declaration under sub-s. (1) shall be made to the CIT and shall be in su .....

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the income of the declarant under the provisions of any of the Acts mentioned in sub-s. (1) of s. 8 or the WT Act. (5) The immunity provided under sub-s. (1) shall not be available to the declarant unless the tax chargeable in respect of the income of the previous year or years for which the declaration has been made is paid by the declarant in accordance with the provisions of s. 5." Under s. 3(2)(ii) of this Act, it was specifically provided that provisions of sub-s. (1) were not applica .....

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erm "voluntarily disclosed income" or "voluntary disclosure scheme" as appearing in this Act had universal application to such term appearing at any other place in the IT Act. In our opinion, the term 'voluntary disclosure scheme' appearing in this Act was only relevant for ss. 3 and 14 of this Act itself and was not applicable to the disclosures made under s. 273A or under the Amnesty Scheme or under Expln. 5 to s. 271(1)(c), because it was in the context of provisio .....

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making disclosure in different types of cases'one where there was search and seizure and the other where there was no search; that the apex Court has held that the appellant's case was not covered by s. 3(2) of the Act. With utmost respect to the Hon'ble Highest Court of the land, we are unable to agree with the submission of the learned Departmental Representative that the findings of the apex Court with respect to the term "voluntary disclosure income" have an universal a .....

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f search and seizure alone, but because of prohibitory provisions in the Act itself, according to which search and seizure cases were excluded from the ambit of the term "voluntary disclosure of income". In view of the above facts and circumstances, we are of the opinion that the appellant's case may not be directly covered by the amended Explanation but in view of the legislature's intention behind the amendment and the disclosure being voluntary, we are of the opinion that no .....

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the search and that too have not been assessed anywhere in the final assessment orders because the assessment orders have been completed on the basis of appellants' disclosure. The assessee's counsel had further submitted that even if it is taken that the amended Expln. 5 was not applicable, then also, the appellants were entitled to immunity under the old Explanation because of the disclosed amounts were recorded in the 'Boston diary' which was a part of the books of account as .....

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nature of any books of account which are to be maintained under the recognised system of accounting and, therefore, this argument is rejected. As regards the arguments that disclosure was subject to no penalty, and, therefore, the same should have been accepted in toto, and if the Department was not to accept the disclosure, then it should have rejected the disclosure and have completed the assessments on the basis of its own enquiries and the seized documents, and as the Department has not don .....

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d not be accepted. 29. After careful consideration of the submissions, we are of the opinion that the appellants' submissions have force and the Departmental Representative's objection cannot be sustained. As far as the fact of conditional offer, i.e., the disclosure was subject to no penalty and prosecution is concerned, it has never been disputed by any of the parties and the Departmental Representative has also not disputed. So, once this fact is accepted, then it has to be held autom .....

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discussion note, it is, however, evident beyond doubt that the assessments have been completed solely on the basis of disclosure made by the assessee after having accepted the spread over of the income in the hands of the various persons and in various years. So, having done so, now, it does not lie in the mouth of the Department to claim that the disclosure was unconditional or that the condition would not be accepted as the disclosure was made after the search. Our opinion is fortified by the .....

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sment penalty levied and leviable being given up. If it was not possible to accept that condition the only result would be that the said offer just be rejected. If it was rejected by the Dy. CIT he was bound to deal with the claim of the assessees for deduction under the first proviso to s. 9 of the Act on merits. That an offer is coupled with conditions which are not reasonable or one which can be accepted in law completely would not render unconditional the offer which is in terms made on a co .....

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or. The ITO required the assessee to prove the source of the credit and summons under s. 131 of the IT Act was also issued in this connection. Later, the assessee requested the ITO to issue the summons to another new address of the creditor but the creditor could not be found to substantiate the assessee's contention regarding the source of the credit. The assessee, thereafter, filed a revised return including therein the cash credit amount as his income. The ITO completed the assessment by .....

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ry evidence, his claim that the amount was a loan taken from the creditor and not because he admitted the amount to be his undisclosed income and that too with a prayer that no penalty was to be levied, and, therefore, cancelled the levy of penalty. On a reference : Held, affirming the decision of the Tribunal, that the admission made by the assessee was a conditional admission and could not be relied upon for imposing penalty as an unconditional admission. Therefore, the levy of penalty was not .....

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e that offer must be rejected, but when an offer is coupled with conditions, then whether those conditions can be accepted or not, the offer cannot be treated as unconditional. In the case at No. II above, the Hon'ble High Court while dealing with the levy of penalty under s. 271(1)(c) by the Department in spite of the fact that surrender of cash credits by the assessee was subject to the conditions of no penalty would hold affirming the Tribunal's order cancelling the penalty, that cond .....

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r. 1987-88 are cancelled. 31. Assessee's counsel further submitted that as far as asst. yr. 1986-87 is concerned, the original returns were filed on 3rd March, 1987, and the revised returns, though were filed after the search, but by that time neither any notice under s. 142 had been issued nor assessments were completed and the disclosure made in the revised returns being a conditional one, there was no question of any concealment. He further submitted that the assessments were completed on .....

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ve the assessee of its default of concealment, but it is not so in every case, because such outcome depends on the facts of each case. As far as the present case is concerned, no doubt that the revised return was filed after search, but the other factors such as wholesome disclosure, conditional and of no penalty and completion of assessments only on the basis of disclosure without proving the factum of concealment, supports the assessee's version. We are, therefore, of the opinion that pena .....

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entitled to the benefits of amended Expln. 5 to s. 271(1)(c). The learned Departmental Representative, on the other hand, submitted that the unamended Explanation was applicable and the penalty was justified. After considering the submissions we are of the opinion that when search was conducted, returns for asst. yr. 1987-88 were not due and as we have already held that the amendment in the Explanation was nothing but a recognition to the prevailing concept of law, so the assessee was entitled t .....

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ectly and in some cases indirectly, whereas the decisions in the cases relied upon by the learned Departmental Representative are completely distinguishable on facts. In the result, the appeals of all the 20 appellants in all the assessment years are allowed. G.E. VEERABHADRAPPA, A.M. : I have gone through the order proposed by my learned brother but I am unable to agree to his conclusions. I proceed to dissent in the following manner . 2. All these assessees are the members of a group called Jh .....

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tain incriminating documents, including one diary called 'Boston' were found. The said diary contained about 30 pages and numerous transactions were noted therein and that too in code, which could be deciphered by only one or two persons in the group. In connection with the seizure made, orders under s. 132(5) of the Act came to be passed by the Department on 18th Dec., 1986. 3. On 27th Jan., 1987, through their tax consultant, N.C. Mehta, the members of the group made disclosure petitio .....

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nd given to the CIT. On 20th March, 1989, a discussion took place between the members of the group and the CIT/AO. Whenever such important discussion takes place, it is normally the practice of the Department to draw the memorandum of discussion by means of discussion note. Such note, dt. 20th March, 1989, is also extracted in para 19 of the order of the learned J.M. In the meantime, post-search investigations were going on and the members of the group were called upon to furnish certain particu .....

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cluding therein the additional income disclosed in each of the years under consideration in terms of disclosure petition. 4. With the framing of assessments under s. 143(3)/148 of the Act, the AO initiated proceedings under s. 271(1)(c) of the Act in respect of the concealed income brought to tax in the reassessments. The assessees, by the letter of their representatives, dt. 19th Feb., 1990, stated as under : "(i) During the actions under s. 132, the assessee voluntarily made the declarati .....

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n, the assessee prayed for not levying any penalty nor any interest. The assessee has complied all the requirements necessary for the compliance of s. 273A. The declaration under s. 132(4) and the petition under s. 273A were voluntary and without having been issued any notice under s. 139 or under s. 148. The assessee paid all the taxes on the additional income declared and co-operated with the Department diligently and from time to time for the completion of the assessment. Under the circumstan .....

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d under s. 273A, the penalty on such voluntarily declared income may kindly be dropped/waived." 4.1. The AO rejected the assessee's contentions on the ground that: (i) the assessee was in a habit of concealing income, as earlier also raids were carried out in 1976 and in Oct., 1981; (ii) the assessee had not declared the additional income voluntarily; (iii) the assessee had declared higher amounts than what was earlier declared only on further post-search investigation/probing; (iv) fil .....

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ad over the CIT has directed that penalty proceedings should be initiated against the assessee. This is a case where the assessee has deliberately concealed the particulars of his income. There was conscious attempt on his part to conceal his income and the same could be detected only when search action was taken by the Department. The very fact that this income was thereafter offered by the assessee for taxation shows that the income not disclosed originally was the 'income' of the asse .....

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c) at 100 per cent of the tax/income sought to be evaded amounting to ₹ 56,206, as per working given below : Rs. Income as finally assessed 81,580 Income as per original return 24,444 Tax on assessed income as per order of final assessment ' Income-tax sought to be evaded, minimum penalty @ 100 per cent of Income-tax sought to be evaded ₹ 56,206." 56,206 Similarly, the AO imposed penalty for other years and in all other cases. 5. The assessee went in appeal and contended bef .....

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had been assessed finally for different assessment years, after considering the appellant's petition before the CIT for spread over, there is wide disproportion in the figures. In the petition under s. 273A of the IT Act, 1961 (and 18B of the WT Act, 1957), dt. 27th Jan., 1987, relating to asst. yrs. 1970-71 to 1987-88, vide para No. 13, additional income of ₹ 2,29,90,529 was offered in respect of the Jhunjhunwala group of cases pertaining to different assessment years as per details e .....

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ered is, however, ₹ 2,29,92,254. The above petition was followed by another letter dt. 3rd March, 1987, addressed to the CIT, Bombay, with respect to payment of taxes. It is seen from the said petition that vide para 2 thereof it has been categorically admitted that the offer made in the petition, dt. 27th Jan., 1987 was commensurate with the papers found at the time of action under s. 132 of the IT Act. Therefore, the plea taken at this stage that the group made suo motu offer while no in .....

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ands of the assessee and various members of the group as per details on record. Thus, it is difficult to accept that the appellant would have suo motu come forward with disclosure if the search operations had not taken place resulting in detection of concealed income. This is also evidenced from the fact that in the original returns in this case and other cases of this group, assessments have been framed at meagre income(s) an without declaring income(s) shown as per the assessment framed afresh .....

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y, there is a very recent decision of Tribunal, Nagpur Bench in the case of ITO vs. Dhanpatrai Badridas Malhotra in appeal Nos. 525 to 529 (Nag) of 1986 and CO. No. 17 (Nag) of 1986 dt. 13th Aug., 1990 reported in 35 ITD, 247. These relate to levy of penalties under s. 271(1)(c) for asst. yrs. 1973-74 to 1982-83. The assessee was carrying on business in handloom and for all assessment years in question his income was assessed at ₹ 68,000 approximately. On search under s. 132, the Departmen .....

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ated otherwise than concealed income. The Tribunal held that : 'In the instant case, the total assessed income of the assessee for the five years in question was approximately ₹ 68,000 whereas the income returned by him in his revised returns was approximately of a sum of ₹ 7,68,000. There was such a great disproportion between the assessed income and the revised income that it was impossible for the assessee to have successfully shown that the understatement by him of his was un .....

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e, the CIT(A) was not justified in cancelling the penalties so levied.' The facts of the case are similar. In most of these years, 1972-73 to 1975-76 and 1977-78 to 1986-87, there is wide disproportion between the income assessed originally and the income assessed on the basis of material found after search operations and covered in the revised returns and such disproportion is occurred on account of material detected at the time of search operations on 22nd Aug., 1986. Further, in asst. yr. .....

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ieved by the order of the CIT(A), the assessees came up in appeal before the Tribunal and strongly argued against the imposition of penalty on the basis of income that was stated to be voluntarily declared by the group of assessees. The Tribunal, by a Bench consisting of U.T. Shah, Vice-President and H.C. Srivastava, A.M. vide their order, dt. 26th Nov., 1991, dismissed all the appeals of the assessees resulting in confirmation of the penalties. Thereafter, the assessees filed reference applicat .....

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d before us. 7. Before I go into the arguments of the learned counsel for the assessees, I feel that the peculiar objecton taken by the Department needs to be dealt with. The learned Departmental Representative contends that the scope of the present exercise according to the order on the miscellaneous applications is limited and does not extend to give second innings to the assessees and should be confined to prayers made in the assessee's miscellaneous applications. After going through the .....

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n satisfaction before imposing the penalty. This could be clear from the discussion note itself apart from the discussions in the penalty order for the asst. yr. 1987-88 wherein the AO has mechanically proceeded to impose penalty under s. 271(1)(c) without considering the fact that the return was filed for the first time in that year. To this, reliance was placed on to the authorities in: (1) D.M. Manasvi CIT 1972 CTR (SC) 437: (1972) 86 ITR 557(SC) (2) Sheo Narain Jaiswal vs. ITO (1984) 176 ITR .....

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s are based on the disclosures made as to the extent and to the year. The amounts, according to the learned counsel for the assessee, were based on a disclosure that were made voluntarily before any sort of detection by the AO. It was highlighted that the additional income was offered for taxation on the basis of investments made on certain assets and the expenditure incurred on various occasions like marriages in the family and other auspicious occasions. The income so declared was not the actu .....

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their part. Reliance was placed on to: (1) Sir Shadilal Sugar & General Mills Ltd.'s vs. CIT (1987 64 CTR (SC) 199: (1987) 168 ITR 705(SC) (2) CIT vs. Haji Gaffar Haji Dada Chini (1987) 63 CTR (Bom) 130: (1988) 169 ITR 33(Bom) (3) CIT vs. Punjab Tyre (1986) 56 CTR (MP) 7: (1986) 162 ITR 517(MP); (4) CIT vs. Amalendu Paul (1983) 34 CTR (Cal) 174: (1984) 145 ITR 439(Cal); (5) Girdharilal Soni vs. CIT (1990) 82 CTR (Cal) 73: (1989) 179 ITR 111(Cal); and (6) CIT vs. National Alloy & Met .....

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; and (6) CIT vs. Gwalior Metal Industries (1983) 34 CTR (Pat) 379: (1983) 141 ITR 274(Pat). It was submitted that before imposing penalty under s. 271(1)(c) of the Act, there should be a finding that income of a particular year has been concealed by the assessee. However, according to him, no such finding was given by the AO and the AO simply brought to tax the additional income as agreed between the members of the group and the Revenue authorities without giving a clear finding about the fact .....

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77 ITR 338(P&H). Reliance was also placed on to the decision in the case of Narain Das Suraj Bhan vs. CST (1968) 21 STC 104(SC) to urge that the concealment should be in the return filed by the assessees and not outside the returns. The learned counsel for the assessees also submitted that it was the assessees who offered the services to the Department for computing the income of the various persons involved in different years. But, for the help rendered by the assessees, the Department woul .....

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and as such the principle of mens rea has not been satisfied. It was submitted that the assessment of a person for an amount of income which has not been proved to be belonging to him cannot be based on the ground that he himself wanted to be assessed on it. It was, therefore, submitted that the Department has, prima facie, failed to make out a case of concealment of income or furnishing of inaccurate particulars and as such the penalty imposed should be cancelled. The learned counsel further co .....

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isclosure Act, 1975. The learned counsel for the assessee further contended that the disclosure besides being voluntrary, was a conditional offer and the Department having accepted the offer is precluded from imposing any penalty. Reliance was placed on to the decision in: (1) Punjab Tyres case (supra); and (2) Amalendu Paul's case (supra). According to the learned counsel for the assessee, such disclosure had an implied condition, i.e., non-levy of penalty and interest. The offer, according .....

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such disclosure in the books of account of the assessees. The learned counsel pointed out that the burden on the Revenue in relation to the imposition of penalty under s. 271(1)(c) is still there even in the case of an admission by the assessees. According to him, concession given in the assessment cannot be extended for penalty proceedings. The learned counsel further argued that searches were there in eight cases and not in all the cases of the group. Further it was pointed out except in the c .....

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rised his contentions as under : (1) That the initiation of the penalty is on the basis of the direction of the CIT as contained in the discussion note. (2) The onus is on the AO to establish that the assessees had concealed income' quantum-wise, year-wise, source-wise and assessee-wise. Since, in the instant case, the AO has failed to establish the same, no penalty could be imposed under s. 271(1)(c) of the Act. (3) The offer for taxation of the additional income cannot be considered to be .....

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ny penalty as a condition for accepting the addition. (6) In any event, for the asst. yrs. 1986-87 and 1987-88, the provisions of s. 271(1)(c) of the Act cannot be attracted as the assessees have shown the correct income in the returns either revised before the assessment was completed or originally filed. (7) The returns were filed under the Amnesty Scheme and the benefit of Amnesty Scheme should be extended to the assessees. 11. The learned Departmental Representative, on the other hand, stron .....

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by the members of the group. He also submitted that once the assessees have made applications under s. 273A of the Act to the CIT, they had clearly conceded the fact of concealment. He emphasised that due to post-search investigations and the material gathered, the Jhunjhunwala group came forward with a further disclosure of ₹ 20 lakhs. He also highlighted the fact that the group carried on various activities either individually, through the medium of HUFs or partnership, including buildin .....

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n 1981 and the assessees had not used those opportunities to make such disclosures, which they now call as voluntary. Although the searches in 1976 and 1981 did not yield any benefits to the Revenue, it is not now open for the assessees to contend that the assessees are now making a clean breast of their affairs. Income of more than a decade was recorded in the Boston diary. The entries in the Boston diary were in secret code, which could be deciphered only by one or two members of the group. Th .....

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re is an admission of concealment, nothing is left for the Department to do to establish the concealment assessee-wise, year-wise, quantum-wise and source-wise. According to the learned Departmental Representative neither agreed assessments nor filing of revised returns would absolve the assessees from the penal provisions of s. 271(1)(c) of the Act. In this connection, he relied upon the decisions in the cases of Durga Timber Works vs. CIT (1971) 79 ITR 63(Del), Mahavir Metal Works vs. CIT (197 .....

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ove that his case could not be brought under s. 271(1)(c) of the Act, in the penalty proceedings. Relying upon the decisions in: (1) Jaswant Rai vs. CBDT (1982) 133 ITR 9(Del); (2) CIT vs. Rajaram Pannalal & Bros. (1980) 19 CTR (Cal) 35: (1981) 127 ITR 679(Cal); (3) Smt. Ichhabai Panchal vs. CIT (1981) 24 CTR (Cal) 292: (1982) 137 ITR 232(Cal); (4) K.P. Kandaswami Mudaliar & Sons vs. CIT (1984) 39 CTR (Mad) 303: (1985) 156 ITR 638(Mad); (5) Hakam Singh vs. CIT (1980) 17 CTR (All) 255: (1 .....

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f the Act, it is not necessary to find out whether the provisions of Expln. 5 to that section are attracted. Our attention was invited to the decisions in the cases of K. Govindarajulu Naidu (supra), CIT vs. Mussadilal Rambharose (1987) 60 CTR (SC) 120: (1987) 165 ITR 14(SC) and Vishwakarma Industries vs. CIT (1982) 29 CTR (P&H)(FB) 243 : (1982) 135 ITR 652(P&H)(FB). 11.2 As regards the discussion note, it was pointed out that it is a common practice on the part of the Department to hold .....

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of directions to the AO in relation to the penalty. The learned Departmental Representative pointed out that the Department has collected substantial material before the assessees made any disclosure and, therefore, the assessees' disclosure cannot be taken to be voluntary or prior to the detection by the Department. Our attention was invited to the decision of the Delhi High Court in Tube Fabrico (I) Ltd.'s case (supra). When there is a clear admission on the part of the assessee, the D .....

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attention was invited to the following authorities: (1) Sir Shadilal Sugar & General Mills Ltd.'s case (supra) (2) A.N. Sarvaria vs. CWT (1985) 49 CTR (Del) 264: (1986) 158 ITR 803(Del); (3) Krishna Kumari Chamanlal vs. CIT 1972 CTR (SC) 295: (1972) 83 ITR 69(SC); (4) K. Govindarajulu Naidu's case (supra); (5) S. Vasudeva Rao vs. P.S.J. Sigamany (1995) 125 CTR (Mad) 93: (1995) 211 ITR 284(Mad); (6) Tribhovandas Bhimji Zaveri vs. Union of India (1993) 115 CTR (SC) 411: (1993) 204 ITR .....

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lised. The learned Departmental Representative further pointed out that there was search in all the cases of the group as mentioned in the search warrant which is on the premises and in relation to all the assessees of the group and, therefore, the case of the assessees does not fall in the Amnesty Scheme. Finally the contentions of the Revenue can be summarised as under: (1) The facts and circumstances obtaining the case clearly show that but for the search operations carried out under s. 132 o .....

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h diary recorded the activities of earning huge income, which was not disclosed to the Revenue. (4) The background of the sequence of proceedings under s. 132 of the Act as also the assessees' admission of concealment should be kept in mind in deciding the issues involved. There are no directions by the CIT to the AO either in relation to the initiation or imposition of penalty under s. 271(1)(c) of the Act in the case of the group. The discussion note should be read in the context in which .....

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have carefully considered the rival submissions of the parties, the material to which our attention was drawn and the reported decisions cited at the Bar in order to support the respective stand taken by the parties and I am of the opinion that there is no escape for the assessees to salvage their case from the clutches of the provisions of s. 271(1)(c) of the Act. The material available on the record clearly show that the assessees were systematically earning huge income since last several year .....

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e in their regular books of account. All these transactions are recorded in the Boston diary, which was also a part of seizure in the course of search. Had this diary not been seized, it would be impossible to expect that the assessees would have come forward with similar disclosures. It may be mentioned that in 1976 and 1981 also there were searches on the same group and the Department has not seized any such diary as Boston. Only in the current search operations such diary was found and utilis .....

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came forward with a disclosure under the guise of "buying peace with the Department" and thereby effectively trying to prevent any further investigation which would perhaps have resulted in much larger concealed income. Under such circumstances, it does not lie in the mouth of the assessee to say that no penalty could be imposed under s. 271(1)(c) of the Act and expect the AO to establish which income, to what extent, from what source, to which year the disclosed income pertains and t .....

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come/wealth from the Revenue over the years till the bubble was burst, which was to burst one day. Therefore, taking into consideration the circumstances and the modus operandi employed by the assessees over the years in not disclosing the proper income to the Department, I am of the opinion that the assessee deserves to be penalised in accordance with the law. According to me, there is no substance in the stand taken on behalf of the assessees that in making the disclosure of income, they have .....

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that the Revenue too was not interested in investigating further when the Jhunjhunwala group had disclosed substantial income/wealth as a result of successful search carried out under s. 132 of the Act. Such investigation would not only have entailed time consuming proceedings but also would have resulted in hardship to the assessees. It is in this background that one has to decide whether there was anything left for the AO to establish the concealment of income, its extent, its source, the yea .....

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diary belonged to them. In spite of knowing that fact, the assessees did not show this income in the original returns right from the asst. yr. 1970-71. In other words, the assessees took 15 long years to disclose to the Department what the Department is rightly entitled to assess. It was only after the Department caught the assessees in the act of concealing their income, they have agreed to show the additional income in the years whose assessments were already completed. If an admission is made .....

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o the search operations, there was no concealment justifying action under s. 271(1)(c) of the Act. It is pertinent to note that in the returns originally filed the assessees have not shown the additional income found in the search operations and the additional income was shown only after the searches were carried on under s. 132 of the Act, which implied that but for the search operations such income would have never seen the light of the day. In this view of the matter, it is impossible to acce .....

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suance of the petition filed by the assessees before the CIT under s. 273 of the Act. Whenever such petition comes before the Revenue, it is posted for such discussion and such discussion is normally reduced into writing. What has been discussed is contained therein. It is not in the nature of a direction nor is it meant to be used as direction when it comes to the imposition of penalty. The AO has independently initiated the proceedings and was satisfied with the facts and circumstances of the .....

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gainst the assessees. Now I shall deal with some of the cases relied on on behalf of the assessee. One such case is Balakram Jankidas Agarwal (IT Appeal Nos. 2028 to 2033 of 1989, dt. 3rd July, 1990). The Tribunal has found that the assessee had never admitted as his income certain cash credits found in the search operations. Further, the Tribunal found entries for the cash credits in the books of account and confirmation letters along with GIR number were also filed in respect of such cash cred .....

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in reducing the penalty from ₹ 70,000 to ₹ 5,000. The Hon'ble High Court recasted the aforesaid question as under: "Whether, on the facts and in the circumstances, the finding of the Tribunal that the assessee had not concealed income to the extent of ₹ 67,500 and ₹ 21,700 within the meaning of s. 271(1)(c) of the Act is correct in law." In their judgment, the Hon'ble Supreme Court has not approved the action of the Hon'ble High Court in not only re .....

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ncome and assets which were systematically recorded outside the books of account. In the case of Haji Gaffar Haji Dada Chini (supra), the assessee had offered for taxation certain amount when after completing of assessment it came to light that in the account books some money was introduced. In the case before us there were rigorous proceedings under s. 132 of the Act and there were material gathered in the course of search, which show that the group had possessed undisclosed income or assets. I .....

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39; contention about the applicability of the Amnesty Scheme to the cases of the group, I may observe that all the members of the group reside in the premises known as Giri Kunj, Paliram Road, Bombay-78. All the search warrants are on that premises. To a question that whether an immunity given by the amnesty circular be availed of by the assessees whose premises have been searched by the tax authorities, the answer given by the CBDT is an emphatic No. The above answer is available in question No .....

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seizure. The disclosure in the computation is in respect of the unexplained expenditure and investment found recorded in the Boston diary. Which was a subject-matter of seizure in the search proceedings. I am, therefore, of the opinion that the benefit of Amnesty Scheme cannot be availed of by the assessees. The assessees have also conceded that such Amnesty Scheme is not available for the asst. yr. 1987-88. The decisions reported in: (1) Shama Raising Chandel vs. ITO (1992) 41 ITD 212(Ahd); (2) .....

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to consideration that there was a search action in the group, substantial material was found to show that there was huge income which was concealed from the view of the Department and the assessees were successful in concealing such income for 15 long years, the benefit of the Amnesty Scheme, in my opinion is not available to the assessee. 12.4. In my opinion, most of the other cases relied upon by the assessees are decided on those particular facts and circumstances of the cases and cannot be b .....

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he case of Nirmal Udyog Co. & Ors., involving asst. yrs. 1970-71 to 1987-88, is being referred to the Hon'ble President of the Tribunal for making reference to Third Member as provided for in s. 255(4) of the IT Act, 1961: "Whether, on the facts and in the circumstances of the case, levy of penalty under s. 271(1)(c) on these assessees is justified?" R.P. GARG A.M. (AS A THIRD MEMBER) : On a difference of opinion between the two Members of the Tribunal constituting 'E' .....

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tly no penalty can be levied? the Judicial Member opined that the notices were issued on the directions of the CIT and therefore invalid; whereas the Accountant Member stated that they were issued on AO's own satisfaction as required under s. 271(1) and therefore there was infirmity. (2) Whether amnesty benefit could be given to the assessee?'the Judicial Member held that the assessee came forward voluntarily and offered the income before it was detected by the Department and therefore t .....

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ala; (2) Purshottamdas F. Jhunjhunwala; (3) Nirmal P. Jhunjhunwala; and (4) Niranjan P. Jhunjhunwala; and at Mittal Court, being the business premises of the Jhunjhunwala Group to whom these four persons belonged. Shares/units/debentures valued ₹ 82.00 lakhs, cash ₹ 7.25 lakhs, ornaments and jewelleries worth ₹ 11,34,280, and silver utensils worth ₹ 2.70 lakhs were seized. These are stated to have been recovered from Kishorilal's portion of the residence. The group wa .....

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one or two persons, particularly Shri Kishorilal F. Jhunjhunwala. On 18th Dec., 1986, order under s. 132(5) was passed. 3. On 27th Jan., 1987, the assessee owned up this situation and made a disclosure to the CIT under s. 273A by offering ₹ 2.29 crores to tax and claiming spread over in various hands and for various years from asst. yrs. 1970-71 to 1987-88. This included ₹ 1,44,57,923 and ₹ 86,88,606 being receipts as per the seized papers minus ₹ 1,56,000 offered by Sha .....

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987. 5. A letter to the CIT-VIII was also written on 3rd March, 1987, requesting inter alia for the payment of tax modalities. In paras 2 to 6 of this letter, it is stated as under: "2. Vide the said petition, we had offered a sum of ₹ 2,29,99,254 to be added to our income over a period of years. The offer made in the said petition is commensurate with the papers found at the time of an action under s. 132 of the Act not only that the offer made by us is commensurate with the papers f .....

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with the Department in completion of all pending proceedings in our matter." The matter was thereafter discussed by tax authorities with the assessee and after discussion the disclosure was increased by another sum of ₹ 20.02 lakhs, consisting of the following: (1) ₹ 54,000 on account of difference of interest on bogus loans in the hands of Kishorilal F. Jhunjhunwala (Individual) for asst. yr. 1987-88. (2) ₹ 10.53 lakhs on account of difference of expenses incurred out of .....

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re I of Asstt. CIT's report. The assessments thereafter were completed in almost identical language on the basis of this final discussion and issue of notice under s. 143 and upon hearing the assessees. One of such an order of assessment as a specimen reads as under: "Return was filed on 3rd March, 1987, disclosing additional income of ₹ 51,000 after the original assessment was completed and action under s. 132 was taken on 22nd Aug., 1986 in this group of assessees. Return being .....

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roup on 22nd Aug., 1986 51,000 Add 5,206 Total addl. income particulars of which were concealed within the meaning of s. 271(1)(c) 56,206 Gross total income 84,389 Less: Deductions/Under s. 80L 2,805 Assessed income 81,584 or 81,580 Assessed as above. Allow credit for taxes paid and TDS, if any, as per record. Charge interest under s. 217, 138(9). Proceedings under s. 271(1)(a), 271(1)(c) & 273 are initiated separately. Issue DN/C." 6. Consequent upon assessment, wherein the proceedings .....

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based on unexplained assets and investments detected by the Department. He also held that the contention of the assessee to the effect that all the taxes and additional income were paid and that the assessee co-operated with the Department diligently. The AO's order on which lot of emphasis is placed by the assessee, as well as the Department, reads as under: "While granting spread over the CIT has directed that penalty proceedings should be initiated against the assessee. This is a ca .....

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ulter and as such, the case clearly attracts the provisions of s. 271(1)(c). I am, therefore, satisfied that the assessee has concealed the particulars of his income and has furnished inaccurate particulars thereof. Looking to the recalcitrant and unrepenting attitude of the assessee, it is a fit case for levying penalty under s. 271(1)(c). I, therefore, levy minimum penalty under s. 271(1)(c) at 100 per cent of the tax/income sought to be evaded." 7. Challenging the order of the AO, the as .....

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ndiscriminately to come to the correct amount to be offered; the group was allowed the xerox copies of the relevant papers in the third week of November, 1986. It was also submitted that the details were worked out and the petition was made to the CIT, disclosing the income of ₹ 2.29 crores for taxation. It was further submitted that it was a matter of record that between the date of raid and the date of suo motu settlement petition dt. 27th Jan., 1987, neither any enquiries were made by t .....

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ils have been the basis of addition and it was submitted that there was no case for any detection or concealment of income so as to warrant any levy of penalty. Certain case law have been relied on in support of the contention that under more or less similar circumstances penalty for concealment of income was not exigible. It was further argued that the Asstt. CIT had not sought to tax any amount in excess of what has been disclosed by the assessee and thus relied on the decisions of the Calcutt .....

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on, it was urged that, it cannot be the ground to hold that the Revenue had detected the concealment of income. The assessee has also claimed that where an assessee had agreed to the addition of the cash credits as its income without mentioning anything else, still under such circumstances the penalty was deleted by the Calcutta High Court in the case of Girdharilal Soni (supra), as the same could not be levied merely because of assessment of undisclosed income. It was urged by the assessee that .....

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after considering the assessee's petition before the CIT for spread over there was wide disproportion in the figures. In the petition under s. 273A of the IT Act, 1961 (and 18B of the WT Act, 1957), dt. 27th Jan., 1987, relating to asst. yrs. 1970-71 to 1987-88, vide para No. 13, additional income of ₹ 2,29,90,529 was offered in respect of the Jhunjhunwala group of cases pertaining to different assessment years as per details enclosed therewith. As per para 14E, each firm and member o .....

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on was followed by another letter, dt. 3rd March, 1987, addressed to the CIT-VIII, Mumbai, with respect to payment of taxes. It was observed by the CIT(A) from the said petition that vide para 2 thereof it was categorically admitted that the offer made in the petition, dt. 27th Jan., 1987, commensurate with the papers found at the time of action under s. 132 of the IT Act; therefore the plea taken at this stage that the group made suo motu offer while no incriminating papers or things were found .....

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he group as per details on record. The CIT(A) found it difficult to accept that the assessee would have suo motu come forward with the disclosure if the search operations had not taken place resulting in detection of concealed income, which was also evidenced from the fact that in the original returns in this case and other cases of the group, assessments have been framed at meagre income and without declaring income shown as per the assessment framed afresh following search and seizure action i .....

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(1990) 35 ITD 247(Nag). 9. The assessee came in second appeal and the Tribunal also upheld the penalties vide its order, dt. 26th Nov., 1991 in ITA Nos. 3226 to 3240/Mum/1991. The summary of the contentions of the assessee before the Tribunal are set out in para 12 of its order as under: "(i) The onus is on the ITO to establish that the assessee had concealed income quantum-wise, year-wise, source-wise and assessee-wise. Since in the instant case, the AO has failed to establish the same, n .....

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(iv) In any event, for the asst. yrs. 1986-87 and 1987-88, the provisions of s. 271(1)(c) of the Act cannot be attracted as the assessee had shown the correct income in the returns originally filed." 10. The Tribunal upheld the penalties vide para 18 of its order by observing as under: "18. We have carefully considered the rival submissions of the parties, the material to which our attention was drawn and the reported decisions cited at the Bar, in order to support the respective stan .....

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ere launched in August, 1986 that the assessee and the other members of the Jhunjhunwala Group actively started to forestall further proceedings including the penalty proceedings, which would start by the Revenue in respect of various activities carried on by them in clandestine manner. We make this observation, as the transactions noted in Boston diary speak volumes. It is pertinent to mention that the notings in the said diary were in code and it took great time, patience and persuasion to dec .....

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as it was for the AO to establish which income, its extent, its source, the year to which it pertains and the individual to which it belongs, that was concealed from the Revenue. if one were to consider the entire sequence of events right from August, 1986, when the search operations were carried out in proper perspective, one gets a clear impression as to how the Jhunjhunwala group, as a whole, which included the assessee had successfully concealed large chunk of income/wealth from the Revenue .....

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ce in the stand taken on behalf of the assessee and the other members of the Jhunjhunwala group that while making disclosure of income they had not taken into account liabilities. This may be due to various reasons best known to the members of the Jhunjhunwala group. However, one thing is clear that by making disclosure of income and requesting its spread over the years and in different hands, the members of the Jhunjhunwala Group have stopped further probing/investigation by the Revenue in the .....

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ide whether there was anything left for the AO to establish the concealment of income, its extent, its source, the year to which it pertained and the individual to which it belonged, before imposing penalty under s. 271(1)(c) of the Act." 11. A miscellaneous application to rectify/recall the order was made and this order of the Tribunal was recalled vide Misc. Appln. Nos. 413 to 430/Mum/ 1994, dt. 20th April, 1995, primarily on the issue that the Tribunal had not dealt with the issue of the .....

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me of the hearing of the miscellaneous application or thereafter when the appeal was reheard by the Tribunal and it ended with a difference on the aspects stated above, and as a Third Member, I have to confine myself as aforesaid, on the points of difference. 13. The first point of difference is whether the initiation of penalty proceedings is invalid. The assessees' contention is that initiation of proceedings is on the direction of the CIT and not on the own satisfaction of the AO and, the .....

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to the learned counsel of the assessee, C.V. Kothari, it is a clear case where the notice for penalties were initiated at the direction of the CIT and not on the own satisfaction of the AO. It is also submitted that the AO has not applied his mind at all, as is evident by the fact that he initiated the proceedings under s. 271(1)(a)/273 as well for all the years and under s. 271(1)(a) for asst. yr. 1987-88, even though there was no default. The learned Departmental Representative, S.U. Pathak, o .....

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AO, but were on the direction of the CIT. It was an independent action of the AO to initiate the proceedings. Relying upon the decision of the Supreme Court in the case of Sirpur Paper Mills Ltd. vs. CWT (1970) 77 ITR 6(SC), the learned Departmental Representative submitted that if the directions issued without jurisdiction, they would be invalid and are to be ignored. On the contrary, in the penalty order he submitted that the AO prior to mentioning of the venerable lines "while granting s .....

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her contentions, I am of the opinion that the satisfaction of the AO was his own satisfaction and the initiation of proceedings was not at the direction of the CIT. Such satisfaction, as held by the Supreme Court in the case of D.M. Manasvi vs. CIT 1972 CTR (SC) 437: (1972) 86 ITR 557(SC) and is also evident from the provisions of s. 271(1), is to be formed in the course of assessment proceedings. If something is said by anybody, or the CIT, as is alleged in this case, somewhere other than in th .....

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rection by the CIT. 15. Furthermore, neither in the assessment order nor in the show-cause notices did the AO mention or state or give impression that any of the notices were issued at the direction of the CIT or under his influence. On the contrary, the noting in the assessment order does indicate that it was AO who initiated the proceedings on his own satisfaction. The mention of initiation of other proceedings under s. 271(1)(a) or 273 in the concluding paragraph of the assessment order does .....

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has directed that penalty proceedings should be initiated against the assessee" cannot be taken as directions for initiation of the proceedings. It is a mere mention of the discussion that has taken place. In any case these notings are of the successor AO and, therefore, cannot be taken to be the true imprint of the mind of the AO initiating the proceedings. The satisfaction of the AO who initiated the proceedings does not indicate any influence or impact of the alleged directions, if any, .....

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eration of the issue afresh. I, therefore, hold that the initiation of the proceedings was valid and were based on the satisfaction of the AO and not on the direction of the CIT. The contention of the assessee, therefore, is to be rejected. 16. The second reason for recalling the earlier order also gives rise to difference of opinion between the two Members in the fresh proceedings. In fact, this reason for recalling was whether offer was voluntary under s. 273A, but it took a shape in the fresh .....

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on was concerning s. 273A and the assessee was seeking relief from the CIT (Administration) whereas the newly raised submission is emanating from various Board Circulars called Amnesty Scheme applicable upto 31st March, 1987. Both these aspects seem to be administrative relief and probably cannot be sought for in any appellate proceedings. Be that as it may, since there is no difference on these aspects, I proceed on the assumption that they can be invoked in the appellate proceedings as well. 1 .....

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our cases also: (i) There was no seizure in the case of Nirmal P. Jhunjhunwala. (ii) There was no disclosure of assets seized. It was because of certain expenditure and investments recorded in the Boston diary decoded by the assessees only and, therefore, disclosure was voluntary, full and true. 18. The learned Accountant Member, on the other hand, held that Jhunjhunwala group as a whole was systematically earning huge income since last several years, which was not shown in the originally filed .....

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is searched. He further opined that it was not a full and true disclosure, as the income above ₹ 20 lakhs and odd was assessed and offered by the assessee over and above disclosed in the disclosure petition. 19. The chronology of events show that the disclosure of higher income of all the assessees was on search and seizure action that had taken place. The disclosure is not of the year in which the search has taken place, but of the earlier years as well, right from asst. yr. 1970-71. Ins .....

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question of offering any additional income shows the conduct of the assessee. It means that offer would have been made if some incriminating material was there. This seems to be precise reason that this time because of the incriminating documents did catch the Department's attention which were seized, the assessee came forward and offered the undisclosed income. This is, in my opinion, cannot be said to be voluntary, if seen in the light of the decision of the Supreme Court in the case of T .....

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counsel of the assessee that the Supreme Court's decision in the case of Tribhovandas Bhimji Zaveri (supra) was under Voluntary Disclosure Scheme Act, 1965, which implies a different language for granting "immunity" is of not much relevance. The question is what does the word "voluntary" appearing in s. 273A or used in the Amnesty circulars issued by the CBDT mean generally, as a word of English language and as a word of art or technique? When there is no option but the .....

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Firstly, the Circular is not the letter of law or clause in a statute book and, therefore, should not receive a technical interpretation and secondly, it does not, in absolute term, say that in all situations, prima facie belief view is not detection of concealment. The question and answer are reproduced here below: "Q. 19: Kindly clarify the expression "before detection by the Department?" Ans: If the ITO has already found material to show that there has been concealment, that wo .....

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ealment, and had the assessee not owned up the situation, the Department would have held so. That material had already come to the possession of the Department and the concealment detected is the result thereof. Again, the assessee's efforts were to suggest that it was assessee's co-operation in deciphering the coded language used in the 'Boston Diary' that brought the undisclosed income home and not because of the detection by the Department, I do not find myself in agreement wi .....

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wingly and wilfully. In any case, as stated by the assessee himself, the Boston diary contained information of concealed income of around ₹ 65 lakhs; and the balance from the other seized paper Nos. 5, 21 to 26, 27, etc. as per the letter of the assessee. In my opinion, therefore, there was material with the Department to the effect that the income was concealed and that it was not a mere prima facie view of the situation shorn of supporting evidence. The assessees, therefore, are not enti .....

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A reference to the decision of the Bombay High Court in the case of Bombay Cloth Syndicate vs. CIT (1995) 214 ITR 210(Bom) was invited. At the first instance, once the case of the assessee is out by Question and Ans. No. 19 from the purview of the Amnesty Circular, one need not go to see whether the other clauses apply. Be that as it may, the Jhunjhunwala's as a Group, owned up the transaction which was found in the search action, which was in the names of four persons and other concerns at .....

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s owned up as belonging to all, they cannot be said to be non-search cases. Reliance on the decision of the Bombay High Court in the case of Bombay Cloth Syndicate (supra), is not of much help to the assessee, as it was with reference to the provisions of s. 139(5), where the Court held that the second return filed by the assessee was a revised return as contemplated under s. 139(5); that the incorrectness in the original return had not been discovered by the ITO; that the account books were imp .....

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take the stand that it was not a revised return. The four persons were in possession of documents and that when are found and owned up by others, all would be search and seizure cases. The assessee would, therefore, be not entitled to any immunity. See answer to Q. No. 12 of the Circular No. 451, wherein the Board answered in negative the question "Can immunity given by the circulars be availed of by assessee whose premises have been searched by the tax authorities"? 23. The learned c .....

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three out of the four cases, the seizure of cash/jewellery was there. In any case, the disclosure is based on the seized material and stated to be in commensurate with the investment made by the group and the expenditure on household, marriages, jewellery purchases and charity and donations made. It is not necessary that, if the disclosure is not based on the assets found, only then the case is out of amnesty benefit. Question No. 30 in this connection can be stated, which reads as under: " .....

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come was lying undisclosed therein and the disclosure was based on that and commensurate with the investment and expenditure etc. I, therefore, do not find any force in the contention of the assessee that any benefit can be granted to the extent of income which is not based on the assets seized. Sec. 132(7) authorises the AO to proceed against other persons from whom the seized assets or any part thereof were found to be held by such person for or on behalf of any other person, in that case the .....

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in the case of CIT vs. Kiran & Co. (1996) 217 ITR 326(Bom), no penalty be levied. Here also, I do not find any merit in the contention of the assessee. There does not seem to be any conditional offer. Under petition 273A, the assessees only requested not to initiate the penalty proceedings and there is no acceptance of any such condition, nor can there arise any such question in the light of the material found in the shape of paper Nos. 5, 21 to 26, 27, etc. and the Boston diary, and the ex .....

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. 1 & 7 of the Circular No. 451 to public address reported in (1995 ) 214 ITR 210(Bom); Kanga & Palkhivala 'discussion at p. 1634; decision of the Madras High Court in the case of CIT vs. Sri Rajaram Cloth Stores (1995) 214 ITR 262 (Mad), was invited to. The question is not whether the income was disclosed before or after the issue of notice under s. 143(2), but whether it was voluntary and before the detection by the Department. As aforesaid, neither it was voluntary nor it was befo .....

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