TMI Blog2001 (6) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal before The Commissioner of Income-tax (Appeals), Calicut. The appeal was dismissed and the assessment was confirmed. The firm filed a second appeal before the Income-tax Appellate Tribunal, Cochin Bench, Ernakulam. During the pendency of the said appeal, the firm filed a revised return for the year 1983-84 declaring the assessed income of Rs. 2,64,090 as the total income. This revised return was filed along with a covering letter dated March 21, 1987 (exhibit P-2), addressed to the Income-tax Officer, A-Ward, Circle I, Calicut. It is specifically stated in the said covering letter that this revised return is filed under the Amnesty Scheme and that the appeal filed before the Income-tax Appellate Tribunal, Cochin Bench, Ernakulam, has been withdrawn and a letter to that effect is enclosed. The firm had also requested that the tax of Rs. 13,428 payable as per the revised return may be adjusted from the refund that is due for the assessment year 1981-82. The firm sought for grant of immunity from penal proceedings under the provisions of the Income-tax Act, 1961, in terms of amnesty circulars issued by the Central Board of Direct Taxes. The Department, however, initiated pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment was completed by the Income-tax Officer. The assessee did not care to avail of the benefits of the circulars till it became certain to the assessee that the second appeal filed by the assessee also will meet with the same result as the appeal before the Commissioner of Income-tax (Appeals). Exhibit P-1 circular issued by the Central Board of Direct Taxes was not applicable to the assessee's case. The assessee has not filed any return suo motu disclosing the additional income before the detection of concealment by the Department. The criminal complaint (C. C. No. 62 of 1987), was filed after due and proper consideration of all the material facts at all levels of the Department and only after the satisfaction, the prosecution of the petitioners was warranted in this case. In those circumstances, the Commissioner of Income-tax (Cochin) rejected the request of the petitioners made in exhibit P-3, by exhibit P-4 letter. By filing a revised return by the petitioners after the final assessment has been made, admitting the very same amount as assessed by the Income-tax Officer, there is no suo motu filing of the return within the amnesty circulars. The disclosure made by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised return availing of the benefit Of the Amnesty Scheme then in force. The senior counsel further submitted that Circular No. 451, dated February 17, 1986, issued by way of clarification regarding the press note and circulars issued by the Ministry of Finance regarding declaration of higher income or wealth clearly provided for filing of revised return even in cases where assessments are made and appeals pending and that the appellants honestly believing the said circulars made a true disclosure of their income by filing a revised return claiming benefits and advantages declared under the above circulars and also withdrew the appeal that was pending before the Income-tax Appellate Tribunal. Counsel also submitted that the appellants have filed revised returns for the years 1980-81 to 1986-87 to avail of the benefits under the Amnesty Scheme and thereby settling all disputes and outstanding matters, that for the assessment year 1980-81 appeal was pending before the Commissioner of Income-tax (Appeals) and for the assessment years 1983-84 and 1984-85 appeals were pending before the Income-tax Appellate Tribunal, Cochin Bench, that all the three appeals were withdrawn in the light o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel pointed out that the appellants have filed a petition before the Central Board of Direct Taxes, New Delhi, on October 8, 1987, and that they have approached this court without waiting for the result of the same. The assessment of the appellants for the year 1983-84 was completed on January 7, 1986. A sum of Rs. 1,47,888 was added to the returned income under unaccounted sales and the total income was fixed at Rs. 2,64,090. The stand taken by the assessee before the assessing authority was that for obtaining a loan from the Union Bank of India, Calicut, the assessee in the statement furnished before the bank has shown a stock of 200 quintals of copra which, according to the assessee, was only to satisfy the requirement of the bank. It was also contended before the assessing authority that the difference in stock was due to driage. The assessing authority did not accept the said contentions and had adopted the figures furnished before the Union Bank of India as the correct figure which resulted in the addition. The appellate authority confirmed the addition accepting the reasoning of the assessing authority. The assessee had filed a second appeal before the Income-tax App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se whether the assessee should merely declare the income relevant to those years and pay the tax according to the rates prevalent in those years on such declared income or whether he is required to file the return of income showing the additional income ? Answer : As mentioned above, he must file a fresh return of income including the additional income." The above will show that in cases where the assessments are already completed, the taxpayer should approach the concerned Commissioner of Income-tax with the full disclosure of the amounts of income concealed and should also file returns for the said year. The assessee should also produce evidence of payment of taxes. The filing of the returns will be regularised by issue of formal notices under section 148 of the Income-tax Act. It also shows that the assessee must file a fresh return of income including the additional income. Question No. 4 is with regard to immunity from penalty and prosecution. The answer is that immunity from penalty and prosecution applies in all cases where the assessee admits the truth and pays taxes properly. Question No. 19 seeks clarification of the expression "before detection by the Department". T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the view that there were unaccounted sales to the tune of Rs. 1,47,888 the said question was pending before the final fact-finding authority, viz., the Income-tax Appellate Tribunal. Probably it is in view of the fact that the benefit of the amnesty circulars declared by the Central Government was due to expire on March 31, 1987, the firm would have chosen to settle the matter with the Department itself by availing of the benefit of the scheme. The revised return along with exhibit P-2 letter was submitted to the assessing authority on March 21, 1987, seeking the benefit of the aforesaid circulars. As already noted, Circular No. 451, clearly provides that the benefit of the amensty circulars referred to therein applies even in cases where the assessments are already completed. In a case where the assessment has been set aside on appeal and/or assessment proceedings are pending under section 147(a)/(b), an assessee can surrender the amount which is the subject-matter of the dispute and further in a case where an addition is contested in appeal, the assessee can withdraw the appeal and make a declaration before the Administrative Commissioner. Thus, it would be clear that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order has been made prior to that date and the revised return was filed only on March 21, 1987, fourteen months after the expiry of the period of amnesty. It was also observed in the judgment that there is no disclosure involved since the income returned in the revised return is only the income which is assessed. We have already stated that the benefit of the Amnesty Scheme was extended up to March 31, 1987, by Circular No. 472 dated October 15, 1986. Probably, neither the appellants nor the Department had brought the said fact to the notice of the learned single judge. It is in those circumstances, the learned judge happened to observe that the amnesty period came to an end on March 31, 1986. According to us, the judge happened to hold that there was no disclosure so to say and that the scheme does not apply to the appellants, without properly adverting to the various questions and answers contained in Circular No. 451, which we have already referred to in this judgment. In these circumstances, we are of the view that the learned judge grossly erred in holding that the amnesty period came to an end on March 31, 1986, and that the scheme does not apply to the appellants. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng his additional income even though it cannot be said to be taken as entirely voluntary, the Commissioner is obliged to take a lenient view in the matter, which has not been done in the present case. (4) The assessing authority initiated penalty proceedings under section 271(1)(c) of the Income-tax Act against the appellants but the same was later dropped after the filing of the revised return along with exhibit P-2 petition in view of the answer to question No. 4 of Circular No. 451. (5) The appellants also state that the firm had filed revised returns for the years 1980-81 to 1986-87 to avail of the benefits under the Amnesty Scheme and the Department had accepted all the returns filed under the Amnesty Scheme except the return filed for 1983-84, for which no reasons are given. The Central Board of Direct Taxes, New Delhi, is directed to dispose of exhibit R-2(d) application pending before it in accordance with law and in the light of the observations and directions contained hereinabove within a period of four months from the date of receipt of a copy of this judgment. The appellants will also be afforded an opportunity of being heard before passing orders as directed abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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