TMI Blog2003 (2) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ty on November 19, 1983, and from them US $ 47,700 and Indian currency of Rs. 1,500 were recovered. A proceeding under section 135(1) of the Customs Act was initiated against the said two persons for possessing and dealing with smuggled currency. The customs authority had passed on the information to the Income-tax Department. The Income-tax Department did not take any steps. On October 9, 1986, the assessee filed a return seeking immunity under the voluntary disclosure scheme. The assessee denied the ownership but made out an alternative case, if found otherwise, for deduction of the amount confiscated by the customs authority as business loss. This was not accepted by the Assessing Officer, the Commissioner (Appeals) as well as the learned Tribunal. Reference under section 256(1) of the Income-tax Act, 1961, therefrom was pending adjudication before this court. Subsequent to the conclusion of the assessment proceeding, a proceeding for imposition of penalty under sections 271(1)(c), 273(1)(b) and 271(1)(a) of the 1961 Act was initiated. The Assessing Officer and the Commissioner (Appeals) had rejected the claims of the assessee for amnesty. However, the learned Tribunal, in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding for imposition of penalty in respect of the assessment for the period up to the assessment year 1985-86 provided the conditions stipulated therein are satisfied. Condition (a) postulates that such voluntary disclosure is to be made (i) within the stipulated time mentioned therein, namely, between November 15, 1985, and March 31, 1986, (ii) voluntarily, and (iii) in good faith and fully and truly, (iv) before detection by the income-tax authority of the concealment of a particular income or of the inaccuracy of particulars furnished in respect of such income. The second condition in clause (b) is that such assessee has to pay the tax on or before March 31, 1986, on the incomes so disclosed. The third condition in clause (c) is that he had co-operated in the enquiry relating to the assessment of his income. Now, let us examine as to whether these conditions have been fulfilled. It is not in dispute that the disclosure was made within the time stipulated. A clarification was issued by Circular No. 451, dated February 17, 1986. Referring to question No 1, Mr. Saha pointed out that the scheme for voluntary disclosure was applicable only in respect of those assessees whose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, as pointed out by Mr. Khaitan, we find from pages 104-11 that the learned Tribunal had addressed itself on the materials available before it and had come to the conclusion that only the information with regard to the seizure was before the Department. But nothing was brought on record to show that there was material before the income-tax authority to the extent that there was a taxable concealed income. In fact, from the materials placed before us, we have not been able to find out any materials to show that the income-tax authority could have come to any opinion that there was a detection of concealment of income. Seizure of an asset and detection of a concealed income are two completely different things. It was only the existence of the asset that was detected by the seizure and it was this information of detection of the asset that was with the income-tax authority. Detection is a positive action something more than mere receipt of information. There was no material to show detection of concealment of the income by the income-tax authority before October 9, 1986, or earlier. We find that the income-tax authority had not acted upon the information passed on to them until the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the Income-tax Department would start investigation on the basis of the scrutiny or examination of the material before them. No investigation has since been initiated. Initiation of process under section 132A would not amount to an investigation. Until the documents are requisitioned the income-tax authority could not form an opinion about the concealment of the income. The only material information before them was in relation to the existence of an asset. Whether this asset represents a concealed income or not has to be scrutinized and investigated upon. If upon such investigation, there appears some material, then the concealment is detected and then only the absence of voluntariness would come into play. Therefore, the seizure of the assets by the customs authority, in the absence of any active consideration towards detection of concealment of income by the income-tax authority despite the information of seizure being passed on to them, cannot rule out the element of voluntariness. In our view, the disclosure was a voluntary one since the assessee had disclosed the income voluntarily. Mr. Saha had also pointed out that the finding in the quantum proceedings is staring on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty proceeding. Similar view was taken in Banaras Textorium v. CIT [1988] 169 ITR 782, 791 (All), holding that the finding in quantum proceeding is not res judicata in penalty proceeding. The Delhi High Court in CIT v. Chetan Dass Lachhman Dass [1995] 214 ITR 726, 729 had also taken the same view. The Kerala High Court and Gauhati High Court in CIT v. T. Govindankutty Menon [1989] 178 ITR 509, 515 and CIT v. Gurudayalram Mukhlal [1991] 190 ITR 39, 45-46, respectively, had taken the same view. Therefore, we are unable to agree with the contention of Mr. Saha that the question was closed in the quantum proceeding. The next condition is that the disclosure has to be made in good faith and such disclosure must be full and true. The question of full and true disclosure in good faith is intertwined with and implicit in each other. We are concerned with the question as to whether the disclosure was full and true and was made in good faith. Mr. Saha contended that disclosure in Part III is not a disclosure. The word "disclosure" means to disclose, reveal, unravel on bring to the notice. Disclosure in Part III satisfies the above test of disclosure. In our view, though disclosed in Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is payable only when according to the assessee's assessment the tax is payable and not otherwise. But, at the same time, it has to be found out whether the assessee did not pay tax under clause (b) bona fide or had attempted to avoid payment of tax. If it is found that there is an arguable claim for deduction, then in that event, it would shield the mischief of clause (b) even though tax is not paid within the time stipulated on the ground that the assessee is entitled to deduction and he has claimed for such deduction bonafide. Mr. Khaitan had relied upon the decision in Cement Marketing Co. of India Ltd. v. Asst. CST [1980] 124 ITR 15, 18 (SC) and contended that when there is an arguable claim for deduction, it cannot be said to be a non-disclosure. Having regard to the said principle, in our view, we have found in the quantum proceedings that there was an arguable claim for deduction, which was not free from doubt, therefore, non-payment of tax under clause (b) would not disentitle the assessee from the benefit of the amnesty scheme. In ITO v. Burmah Shell Oil Storage and Distributing Co. of India Ltd. [1987] 163 ITR 496, 509 (Cal) cited by Mr. Khaitan, it was held that a dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the ratio decided therein cannot be applied in the present case. On the facts, the said decision seems to be distinguishable. The decision in P. Govindaswamy v. CIT [2000] 244 ITR 510 (Mad), relied on by Mr. Saha, also does not help us in the present case, since the same is distinguishable on facts. In our view the disclosure in this case had satisfied almost all the conditions except that the disclosure was made bona fide or in good faith and a true disclosure and that there was co-operation in the enquiry, as we observed earlier, therefore, the assessee was not entitled to the benefit of the said scheme since at least one of the conditions was not fulfilled. The meaning of the phrase "in good faith" and "true disclosure" has to be construed in a wider amplitude. It is not the disclosure of the amount alone but also the nature of the amount of the concealed income of the assessee. If one claims that this was not a concealed income of the assessee and income of someone else, then it cannot be said to be a true disclosure of concealed income. The truthfulness of the concealment means that this income was the income of the assessee, which he was disclosing. There cannot be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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