TMI Blog2003 (5) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... by G. SIVARAJAN J. -The Commissioner of Income-tax, Trivandrum, has filed this appeal against the order of the Income-tax Appellate Tribunal, Cochin Bench, in I. T. A. No. 737/Cochin of 1995, dated December 20, 1999, affirming the order of the Commissioner of Income-tax (Appeals), sustaining the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961, for short "the Act". While admitting the appeal, notice was ordered on the following questions of law: "1. Whether, on the facts and in the circumstances of the case, does Circular No. 451 dated February 17, 1986 (No. 19), relied on by the assessee and the Tribunal contemplate categoric detection of concealment prior to the filing of the return? 2. Whether, on the facts and in the circumstances of the case, and when the circular speaks of 'If the Income-tax Officer has already found material to show that there has been concealment, that would mean the Department has detected the concealment . . .', the Tribunal is right in the light of the material seized in holding 'according to the answer given to question No. 19 of the Central Board of Direct Taxes Circular No. 451, the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtners on April 9, 1986. Within 14 days from the date of the search, that is on April 23, 1986, the assessee filed a revised return of income disclosing a total income of Rs. 1,98,650. Since the assessment for the year 1982-83 was already over, in order to regularise the said return which is beneficial to the Revenue, the Assessing Officer issued a notice under section 148 of the Act on April 28, 1986. Subsequently, the Assessing Officer completed the assessment under section 143(3) read with section 147 of the Act on October 30, 1987, determining the total income at Rs. 2,00,900. The assessee had subsequently filed appeals before the Commissioner of Income-tax (Appeals) and before the Tribunal against the assessment order, which were dismissed. Later, the Assistant Commissioner of Income-tax, Investigation Circle, Kottayam, issued a notice under section 274 read with section 271(1)(c) of the Act stating that concealment of income was found during the course of the assessment proceedings. Rejecting the objections filed by the assessee, the Assessing Officer passed an order imposing penalty under section 271(1)(c) of the Act on June 26,1995. In appeal by the assessee, the Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that he was satisfied in the course of the assessment proceedings that there is concealment and therefore it is evident that the revised return filed earlier cannot be treated as one filed after detection. He also pointed out that on the face of the details of slip No. 11 discussed by the Assessing Officer and by the Officer imposing penalty in their respective orders, the Tribunal was not justified in entering a finding in para. 8 of the appellate order that though a piece of paper marked 11 was seized from the residence of the partner at the time of search, yet it did not specifically establish the concealment. Senior counsel submitted that there is no due consideration of all the relevant matters by the Tribunal, with regard to the entitlement of the benefit of the amnesty scheme on the facts of the case. Senior counsel submitted that since the Assessing Officer and the Officer imposing penalty had entered a categoric finding that concealment was detected by the Department during the course of search and seizure operations, both the appellate authorities were not justified in cancelling the penalty. Senior counsel alternatively submitted that the order of the Tribunal has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision of this court in Hotel Ambassador's case [2002] 253 ITR 430, the conclusion reached by the Tribunal has to be sustained. We have considered the rival submissions and have perused the various orders produced along with the paper book and the additional documents filed by the assessee. We have also gone through the decision of this court relied on by the assessee. There is no dispute that there was a search of the business premises of the assessee-firm and the residential premises of its partners on April 9, 1986, and that certain documents had been seized in such search. It is also a fact that the assessment for the year 1982-83 was originally completed on August 27,1982, and that the assessee had filed a revised return after the search and seizure on April 23, 1986, offering an income of Rs. 1,98,650. It is not also disputed that the reassessment was completed on October 30, 1987, on a total income of Rs. 2,00,900, that is by making an addition of Rs. 2,250 to the income returned in the revised return. From the penalty order (annexure A), it has been stated that the Assessing Officer, in the course of the assessment proceedings had found concealment, and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Board of Direct Taxes Circular No. 451, the Assessing Officer had only prima facie belief about the concealment and the concealment had not been detected categorically prior to the filing of the return by the assessee on April 23, 1986. The observation of the Assessing Officer in para. 1 of the penalty order that concealment was detected during the course of the assessment proceedings weakens the case of the Department." It is seen from the above extract that the Tribunal had relied on the fact that the officer imposing penalty has stated in the penalty order that concealment was detected during the course of the assessment proceedings from which it is evident that the return was filed prior to detection. The Tribunal also observed that slip No. 11 seized from the residence of the partners at the time of the search did not specifically establish the concealment and that the Assessing Officer had only prima facie belief about the concealment. But that would not mean that the concealment had been detected. It is in the above circumstances, the Tribunal had entered a finding that the Department had not detected concealment prior to the filing of the revised return, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We do not agree with the submissions of learned senior standing counsel that the moment a search operation is conducted on anybody's premises he becomes disentitled to the benefit of the amnesty scheme. A search may be conducted on wrong information without detecting any concealment. Moreover, a search may be conducted on a few premises of an assessee and to take advantage of the amnesty scheme, the assessee may declare the income or wealth, which he kept at different premises, which was not detected to by the raiding party at the time of search and from which no concealment was detected. The question will arise whether the doors of the amnesty scheme will be closed in these situations also. A search without detection of any concealment, in our opinion, is of no consequence and, therefore, the assessee should not be deprived of the benefit of the amnesty scheme merely by the factum of search ; but if the raiding party had detected some concealment, then the position would have been different. We are fortified this view by question No. 30 and answer thereto, which are reproduced below: 'Question No. 30. - Whether an assessee could make a declaration in respect of assets or incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d returns. In penalty proceedings, it was contended that since the assessee had filed revised returns for the years 1981-82 and 1982-83 prior to the issuance of a notice under section 147, the assessee is entitled to the benefit of the amnesty scheme, and consequently the imposition of penalty is without jurisdiction. The Assessing Officer did not accept the said contention and had imposed penalty. However, this was set aside in appeal by the Commissioner of Income-tax (Appeals) and confirmed by the Tribunal. This court however did not sustain the order of the Tribunal in holding that the assessee is entitled to immunity under the amnesty scheme. However, the Division Bench observed as follows: "However, we feel that for the assessment years 1981-82 and 1982-83, the assessee had filed the revised returns on September 30, 1986, disclosing the additional income. This was done before notice under section 147 was issued on January 13, 1987, for these two years. We feel that the additional amounts offered under these two revised returns filed on September 30,1986, are entitled to immunity under the amnesty scheme under Circular No. 453, dated 4th April, 1986." It was further observe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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