TMI Blog1986 (4) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Whether, on the facts and in the circumstances of the case, and particularly in view of the fact that the assessee made a disclosure under section 2111(4A) of the Income-tax Act, 1961, disclosing a sum of Rs. 1,14,092 being the peak credit for the relevant assessment year long before the assessment was taken up and completed, the Tribunal was justified in law and on a proper interpretation of the provisions of section 271(1)(c) of the said Act, in holding that the assessee had clearly concealed the income relating to the sum of Rs. 1,14,092 and the provisions of section 271(1)(c) were clearly attracted ? " On August 29, 1978, this court directed the Income-tax Appellate Tribunal to prepare a supplementary statement of case annexing thereto all documents and records referred to in the appellate order and produced and filed before the Tribunal, in particular those which have been referred to by the Tribunal in its said order. Pursuant to the said order, a supplementary statement of case annexing copies of documents and records produced and filed by the assessee before the Tribunal had been submitted. The facts of this case as would appear from the statement of case and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment records, it appears that the assessee-firm was discovered on the basis of a survey and that the firm filed its return of income for the first time for the assessment year 1964-65 in response to a notice under section 139(2) of the Income-tax Act showing an income of Rs. 30,886. I also find that some of the so-called creditors in whose names the undisclosed income has been introduced in the books of account had confessed before the Department prior to the filing of the present petition by the assessee that they had only lent their names in some cases and that no money as such had, in fact, been advanced by them in those cases. The petition cannot, therefore, be said to be voluntary. In the circumstances, the petition is rejected." By order dated August 2, 1971, the Appellate Assistant Commissioner confirmed the assessment and dismissed the said appeal of the assessee. It was contended before the first appellate authority that as the assessment was not completed within the period of four years specified in section 153(1)(a), it was barred by time and should, therefore, be cancelled. The Appellate Assistant Commissioner agreed with the finding of the Income-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 before the Appellate Assistant Commissioner. Only after the disposal of the appeal by the Appellate Assistant Commissioner, the assessee filed an affidavit stating that it did not instruct the advocate to withdraw ground Nos. 2 and 3-ground No. 2 relates to the addition of Rs. 1,14,092. Even before the Tribunal, the assessee has raised the ground with regard to the addition of Rs. 1,14,092 but at the time of hearing, it has withdrawn this ground. The conduct of the assessee would clearly show that it has been contesting the addition of Rs. 1,14,092 even after the disclosure petition. Thus it is very clear that the disclosure petition was not filed voluntarily as the disclosure petition was filed after the survey. Thereafter, also, the assessee did not admit that it was its income. Thus the assessee has clearly concealed the income relating to the sum of Rs. 1, 14,092 which was not disclosed in the return filed. Thus the provisions of section 271(1)(c) are clearly attracted. Under section 153(l)(b), in a case which falls within section 271(1)(c), the period for completing the assessment would be eight years. Since this is a case where the concealment is clear and the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detected by the Department on the basis of the survey did the assessee file a disclosure petition on May 19, 1967. Even then the assessee did not file revised returns declaring the correct incomes. The Tribunal also held that the assessee was contesting the addition of Rs. 1,14,092 before the Appellate Assistant Commissioner. Thus it is very clear that the disclosure petition was not filed voluntarily as it was filed only after the survey. According to the Tribunal, the assessee clearly concealed the income relating to the sum of Rs. 1,14,092, representing "loans " which was not disclosed in the returns filed. Thus, according to the Tribunal the provisions of section 271 (1)(c) are clearly attracted. The said findings of the Tribunal are not warranted by the facts on record. As a matter of fact, the finding of the Tribunal is contrary to the evidence on record. The survey report was filed by the Inspector on March 31, 1964. The, assessee filed the return for the assessment year 1962-63, on July 30, 1962. In the survey report, there was no allegation that the assessee had concealed any income. The Inspector only stated that the firm had taxable income and a file may be started. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 147 for reopening the assessment would be completely nugatory. In the instant case, although the return was filed by the assessee on July 30, 1962, the Income-tax Officer did not initiate any proceeding till March 31, 1967, when the normal period of limitation expired. It was only on July 21, 1969, that the Income-tax Officer initiated the proceeding by a notice under section 142(1) of the Act. Since the assessment was already barred, the Income-tax Officer could not avail of the longer period of limitation. No proceeding can be initiated by the Income-tax Officer after the expiry of the normal period without recourse to section 147 of the Act. Since in this case the return was filed but no proceeding was initiated, the Income-tax Officer lost the right to invoke the provisions of section 147 as it could not be said that the income had escaped assessment. That is why the Income-tax Officer wanted to take the benefit of the longer period of limitation of eight years. The period of limitation cannot be extended under section 153(1)(b) at the discretion or the free will or option or choice of the Income-tax Officer. He cannot sit over the assessment with the expectation that af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 1949 and a provisional assessment was made. The Income-tax Officer found later that the assessee had concealed some income in his return and he issued a notice under section 28(1)(c) on February 21, 1952, and an assessment was made in 1952, on a voluntary disclosure. The court observed as follows (p. 463): " Under section 34, as it stood at the material time, no order of assessment under section 23 or of assessment or reassessment under subsection (1) of the section could be made after the expiry, in any case to which clause (c) of sub-section (1) of section 28 applied, of eight years and in any other case of four years from the end of the year in which the income, profits or gains were first assessable. The statement of the case before us shows that it was after the provisional assessment in November, 1949, that the Income-tax Officer found that the assessee had done some business in stationery which had not been disclosed in the return and he, consequently, issued notice under section 28(1)(c) on February 21, 1952. The case was, therefore, one where the assessment could have been completed within eight years from the end of the year in which the income, profits or gains were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Officer was required to make an assessment on the basis of the voluntary returns filed by the assessee, he was bound to complete that assessment under section 23 of the Act within the normal period of four years provided for the completion of all assessments under section 34(3) of the Act, unless there existed a prima facie case for the applicability of the provisions of section 28(1)(c) of the Act. If for four long years the Income-tax Officer had not been able to glean any information from any outside source of any concealment and no notice under section 28(1)(c) was issued when the assessment under section 23(4) was completed by him, he cannot, on any theoretical considerations or on the remote possibility of discovering some concealment in the future, arrogate to himself the right to complete the assessment after the lapse of four years. If that were the law, then no assessment need ever be completed within the normal period of four years and the sword of Damocles could be kept hanging over the head of the assessees for all time to come. The Income-tax Officer cannot by merely saying to himself that some day he may discover something which might justify his applying the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer also issued a notice under section 271(1)(c) of the new Act as he was of the opinion that the assessee had concealed a part of his income. On appeal, the Appellate Assistant Commissioner and the Appellate Tribunal held that the assessment was time-barred. The court observed (p. 753): " There is, however, a decision of a Division Bench in Mir Suba Hari Bhakta v. ITO [1960] 39 ITR 617 (All), which says that proceedings under section 22(4) or section 23(2) can be taken even after the expiry of four years, because the appropriate stage for finding out as to whether the period of limitation is four years or longer is when the assessment order is passed. The period of limitation contained in section 34(3) applies to the passing of the order and not to any anterior stage of taking proceedings. This decision lays down that an assessee cannot question the jurisdiction of the Income-tax Officer to take assessment proceedings after the expiry of the period of four years from the end of the relevant assessment year on the ground of limitation. But this decision is no authority against the proposition that the Income-tax Officer must within the normal period of four years initiate pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee filed return on July 30, 1962, for the assessment year 1962-63. On March 31, 1964, a survey report was given by the Inspector of Income-tax. He merely suggested that the assessee was having taxable income and a file might be started. There is no question of detection of any concealment. Had the return not been filed, it could have been said that detection was made about concealment. But where the return is filed and no assessment is made by the Income-tax officer and he allows the assessment to get time-barred, even if any disclosure petition is filed after the assessment is barred, it cannot be ground for imposing any penalty. The disclosure petition made under section 271(4A) was rejected by the Commissioner in 1971. On the basis of the disclosure petition, assessment could have been reopened and appropriate proceedings could have been initiated. But in this case, that was not possible as, after the return was filed, no assessment was made by the Income-tax Officer. The assessee in the disclosure petition did not admit that the peak credit was an income for the assessment year 1962-63. The Commissioner of Income-tax who rejected the disclosure petition also proceeded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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