TMI Blog1993 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... r operated a current account with the Oriental Bank of Commerce, Surat, in the name of his proprietary concern, Messrs. A. K. Textiles. During the period from June 9, 1983, onwards, the appellant writ petitioner operated another current account with the Oriental Bank of Commerce, Surat branch, in the name of Messrs. A. K. Textiles. During the period from October 9, 1983, the writ petitioner operated a current account with the State, Bank of India, Tharpa Bazar, Surat, in the name of his proprietary business " Rachna Textiles ". Further, during the period from May 3, 1979, to April 20, 1983, the appellant writ petitioner operated a current account with Catholic Syrian Bank Ltd., Burra Bazar Branch, Calcutta, in the name of his proprietary concern " Messrs. A. K. Saree Centre ". It is an admitted fact that the appellant writ petitioner did not include the income derived by him from the aforesaid three proprietary concerns in his returns of total income filed in respect of the previous years relevant to the assessment years 1981-82 to 1985-86. On or about March 7, 1986, a search was conducted by the income-tax authorities in exercise of the powers vested in them under section 132( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they came forward to declare their correct income and wealth suo motu before the Tax Department. The taxpayers were also invited to disclose their true income and wealth even in respect of past assessment years irrespective of whether the assessments for those years were pending or completed. It was represented by the Board that the taxpayers would have to pay taxes at the rates applicable to those years, but would not be subjected to any penalty or prosecution. It was further represented that interest would be waived in all such cases. The said amnesty scheme was extended from time to time up to March 31, 1987, and was made applicable in the case of returns of income and wealth for the assessment year 1986-87 and earlier assessment years. In its Circular bearing No. 451, dated February 17, 1986, the Central Board of Direct Taxes issued certain clarifications on the Press Note issued by it in connection with the said amnesty scheme. Questions Nos. 7, 12, 19 and 30 contained in the said Circular bearing No. 451 and the replies thereto are relevant for the purpose of this appeal and the same are set out hereunder (at pages 136, 137, 138, 139) : " Question No. 7 : Where the inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments relevant to the income and wealth now disclosed by the assessee had been duly seized. The appellant writ petitioner, however, contended before the tax authorities that he was entitled to declare the hitherto undisclosed income of his said two proprietary businesses, namely, Messrs. A. K. Textiles and Messrs. Rachna Textiles, under the amnesty scheme for the following reasons : (a) No books of account or documents were seized from the possession of the assessee writ petitioner in the course of the said search. The jewellery and cash found in the course of the search were also not seized. (b) The cheque books and pay-in-slips in respect of the said two bank accounts in the names of Messrs. A. K. Textiles and Messrs. Rachna Textiles were recovered from the possession of Messrs. Annapurna Textiles of Surat and included in the purported panchnama prepared in the name of the said firm. The said cheque books and pay-in-slips did not indicate the name of the proprietor. The said bank accounts were in existence from 1983 onwards. (c) No examination of the said bank accounts was made by the Income-tax Officer assessing the writ petitioner till March 31, 1986. The Income-tax D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March 11, 1989, sought clarification as to the nature of mistakes which were sought to be rectified through the said impugned notice. The Commissioner of Income-tax, West Bengal-VI, Calcutta, issued necessary clarifications through his letter of March 7, 1989. It was stated by the Commissioner that the miscellaneous order passed by his predecessor-in-office on November 11, 1988, was erroneous and a mistake had crept therein inasmuch as the said order was passed under a mistaken belief that the income-tax and wealth-tax returns filed by the appellant writ petitioner were covered by the amnesty scheme. The succeeding Commissioner of Income-tax, West Bengal-VI, now felt that the returns filed by the appellant writ petitioner were not covered by the amnesty scheme and he, therefore, wanted to rectify the miscellaneous order passed by his predecessor-in-office under section 154 of the Income-tax Act, 1961, as well as under section 35 of the Wealth-tax Act, 1957. At this stage, the appellant writ petitioner moved a writ petition under article 226 of the Constitution challenging, inter alia, the initiation of proceedings under section 154 of the Income-tax Act, 1961, as well as section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of service thereof on the appellant-petitioner who will have liberty to challenge the same by way of a supplementary affidavit in the present proceeding on all available grounds. The applicant-petitioner will show cause on or before September 15, 1989. The proceedings will conclude in accordance with law and keeping in view the observations made in the course of this order by passing the final order on or before December 31, 1989. Liberty is reserved to the appellant-petitioner to file a fresh application seeking appropriate interim relief, if any, after the service of such order. The application is disposed of in terms of the foregoing order. " Pursuant to the leave granted by the appeal court, the appellant writ petitioner appeared before the Commissioner of Income-tax, West Bengal-VI, Calcutta, and contested the validity of the rectificatory proceedings initiated by the said impugned notice dated February 23, 1989, proposing to rectify the miscellaneous order dated November 11, 1988, passed earlier in his case. The Commissioner of Income-tax, West Bengal-VI, Calcutta, however, felt that the initiation of rectificatory proceedings was in order and that the law nowhere pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax, West Bengal-VI, Calcutta, under section 154 of the Income-tax Act, 1961, and the subsequent order dated January 1, 1990, passed by his successor-in-office holding that the original miscellaneous order dated November 11, 1988, passed by his predecessor-in-office was not valid and it disclosed a mistake apparent from the records and that the appellant-writ petitioner was not entitled to any benefit of the amnesty scheme since this was a case of search and seizure. The short point for consideration in this case is whether an assessee whose premises had been searched before the filing of revised returns under the amnesty scheme is entitled to the benefits of the amnesty scheme. As already stated earlier, the amnesty scheme was announced by the Central Board of Direct Taxes through Press Notes and the same was administered through various Circulars issued by the Central Board of Direct Taxes from time to time. Circular No. 451, dated February 17, 1986, purported to explain the various questions raised in connection with the amnesty scheme. Four questions, namely, questions Nos. 7, 12, 19 and 30, which are relevant in this context have already been quoted earlier. It is tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seized papers and had not carried out investigation prior to March 31, 1986, it cannot 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 by the assessee had been detected. Even if there had been such prima facie belief, the existence of such belief could not deprive the assessee from claiming the immunity and benefits given under the amnesty scheme provided the assessee disclosed his true income and wealth in the revised returns and paid taxes based on such revised returns in due time as prescribed in the amnesty scheme. This has been clearly explained by the Central Board of Direct Taxes in reply to question No. 19 in the said Circular No. 451, dated February 17, 1986. On the facts and circumstances of this case, it cannot 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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