TMI Blog1997 (3) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... above, the assessee-company declared total income of Rs. 108 lakhs under section 273A. Out of this, a sum of Rs. 54 lacs pertains to asstt. year 1985-86 and the other Rs. 54 lacs were offered for assessment in three assessment years, viz., assessment years 1986-87, 1987-88 and 1988-89 at the rate of Rs. 18 lacs in each year. Thereupon on 14-2-1989, the assessee filed revised returns for all the three years, viz., assessment years 1985-86, 1986-87 and 1987-88. As the assessments for the above three years were already concluded, obviously the said returns could not be processed. Under the circumstances, the Assessing Officer issued notices dated 11-8-1989 under section 148 of the Act for each of the three assessment years and in reply thereto the assessee addressed a letter dated 28-8-1989 placed on record that the returns filed by it in February 1989 be treated as having been filed in compliance with the notices for reopening of assessments under section 148. In the meantime, the Dy. Director of Income-tax (investigation), Surat also conducted certain inquiries regarding the purchases of the assessee company on the basis of specific information. Again the assessee-company could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, levied penalties at the maximum rate, ie., Rs. 1,69,43,380 for assessment year 1985-86; Rs. 10,39,500 for assessment year 1986-87 and Rs. 22,57,872 for assessment year 1987-88. 5. On appeal, the learned CIT(A) confirmed the penalties. Like the Assessing Officer, the CIT(A) held that the disclosures made by the assessee were not voluntary but were made as a result of detection by the department on the basis of surveys/inquiries made by the D.D.I., Bombay and D.D.I., Surat. He held that the assessee did conceal the particulars of income and, hence, levy of penalty at the maximum rate was justified. 6. Shri S.N. Soparkar, the learned counsel for the assessee, submitted that there is no justification for the impugned penalties. He submitted that pursuant to the revised/voluntary returns, the Assessing Officer started assessment proceedings and during the course of assessments for the asstt. year 1985-86, the Assessing Officer decided to look into the genuineness of the supplies made by various parties to the assessee. The Assessing Officer examined a large number of parties. Except for one, viz., M/s. Shreeji Corporation each and every party confirmed before the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns filed by the assessee on that basis, it is not open to the department to go back upon the same. In support of this contention, he relied upon the decision reported as Taiyabji Lukmanji v. CIT [1981] 131 ITR 643/7 Taxman 211 (Guj.). Without prejudice to the above, the learned counsel submitted that the penalty notices are vague and devoid of any particulars. Again without prejudice to what is stated hereinabove, the assessee submitted that the Assessing Officer came to the conclusion that the assessee had not correctly disclosed the income on the ground that its purchases had been inflated. This inference was made because of higher consumption ratio, i.e., lower G.P. rate for this year. According to the learned counsel, the inference drawn by the Assessing Officer is patently bad and incorrect. 6.1 For the assessment year 1986-87, the learned counsel submitted that no defects were found by the Assessing Officer and in this regard, he drew our attention to para-4 of the assessment order relating to assessment year 1986-87 of the Assessing Officer which reads as under:-- "4. The results of the enquiry undertaken are all incorporated in the order of this assessee for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn person of Shri Shantilal B. Shah to the said Bank as Babulal Doshi of International Steels. When only Rs. 31 lacs worth of cheques issued by the assessee-company were found to have been encashed by the assessee's own employee, one Najmu Lukmanji Vora through Shantilal B. Shah Ramanna Bhandari Shetty during a very small period of time, i.e., within a very few days of the depositing of the cheques, the investigations and survey operations were taken up. Shri Shantilal B. Shah admitted that the amount of cheques encashed through the Syndicate Bank, Nana Chowk, Bombay was being refunded back to the assessee-company through its employee, Najmu Vora after deducting 10 per cent of the value of cheques. According to the learned DR, this 10 per cent cut from the value of the cheques so encashed was only 'Hawala charges' in which no goods were being purchased by assessee-company, but bogus purchases were being debited to the accounts. This is evident from Shri Shantilal B. Shah's statement to which he drew our attention. The learned DR concluded that the one and the only one finding arrived at after the two surveys were carried out by the investigation wing of the Income-tax Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As such, it can be said that the disclosures were made by the assessee after detection of concealment of income by the department as a result of extensive inquiries conducted by the revenue during the course of two surveys during the course of which the statement of the Managing Director and the statement of the partners of the firms from whom the assessee had allegedly made bogus purchases were recorded. The word 'detection' has not been defined in the Act. In Black's Dictionary, the word 'detection' has several meanings. One of them is investigation while the other is to follow up a step by step by patient inquiry or observation. It would therefore mean that even a case where the Assessing Officer starts investigation by laying open what was concealed or hidden or what continued to elude observation, would also be covered in a case of detection within the meaning of that word. In the instant case, it is only when the revenue detected the concealed income that the assessee came forward with the disclosures. Hence, we reject the contention of the ld. counsel for the assessee that the disclosures made by the assessee were voluntary. We also do not find any evidence on record or wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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