TMI Blog1992 (1) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... rough Shri A. L. Ghael along with a forged certificate prepared under the signature of non-resident donors with the connivance of the bank officials, who showed that the drafts have been given out of NRE accounts standing in the names of various parties. This was done to give colour of a genuine NRE account gift. 3. The appellant, Shri S. R. Chandel had received such bogus bank drafts aggregating to Rs. 2,90,000 in assessment year 1985-86 and Rs. 1,00,000 in assessment year 1987-88. In similar manner the second appellant Shri C. V. Gaba had obtained gifts through such bogus bank drafts aggregating to Rs. 2,70,000 in assessment year 1985-86 and Rs. 1,00,000 in assessment year 1987-88. He also had certain unexplained cash deposits in his bank account amounting to Rs. 54,512 pertaining to assessment year 1987-88. 3.1 About one week after the said proceedings of search in the case of V. C. Shroff and A. L. Gheal, both the abovenamed appellants submitted returns of income for assessment year 1985-86 in which the amount received by such bogus drafts were surrendered as income liable to tax. Estimate of advance tax payable was also furnished in the prescribed form for assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 5521 and 5524 in the case of S. R. Chandel C. V. Gaba respectively relate to levy of penalty under section 271(1)(c) for assessment year 1985-86. 7. Before us the learned counsel for the assessee contended that it is apparent from a perusal of the assessment orders that these returns were submitted under the amnesty scheme. The amnesty scheme was made effective w.e.f. 15-11-1985 and continued to remain in force till 31st March, 1987. The assessees voluntarily disclosed the amounts of bogus gifts etc. as their income in the returns of income voluntarily submitted under the said amnesty scheme. Such returns were submitted by the assessees on 30th September, 1986 i.e., within a period of less than one week from the date when proceeding of search in the cases of V. C. Shroff and A. L. Ghael were made. No enquiry whatsoever was made in the cases of the present assessees prior to voluntary submission of the returns by them, in which the amounts of bogus gifts were voluntarily shown by them as income liable to tax. The income has been assessed under section 143(3) by accepting the declared income as true and correct. Therefore, the assessees undoubtedly made true and full disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(2) was also held to be a voluntary disclosure of income and penalty levied under section 271(1)(c) was cancelled. 7.4 On the aspect that such returns were voluntarily submitted by the assessee suo motu without any detection of any concealment in the cases of the assessee, our attention was invited towards letters dated 29th September, 1986 accompanying the returns of income for assessment year 1985-86. In the returns of income the amounts of such bogus gifts, giving complete details of the bogus bank drafts, were voluntarily and fully surrendered by the assessee as income and the entire amount of tax thereon was promptly deposited before furnishing of such returns. The assessee thus fully satisfied all the requirements of a valid return under the amnesty scheme. He, therefore, urged that the ITO should have accepted the correctness of the returns without issuing any notice for hearing under section 143(1) or under section 143(2) and should not have charged any interest nor should have initiated any penalty proceedings. The levy of interest and penalty is clearly a breach of promise made by the Government in the said amnesty circulars. 7.5 For assessment year 1987-88 it was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the statements of one Shri Raj Gulshan Gaba, recorded on 19-6-1989 and statement of one Shri Vijaykumar Shroff recorded on 23-9-1986 during the course of search conducted at the premises of V. C. Shroff. 8.1 As regards levy of penalty, the learned Sr. D. R. relied upon the detailed reasons mentioned in the orders passed by the learned departmental authorities and submitted that the penalties have rightly been levied and confirmed. 9. We have carefully considered the rival submissions and have also gone through the orders of the departmental authorities as well as various other documents to which our attention was drawn during the course of hearing. We have also carefully gone through all the decisions cited by the learned representatives. 9.1 The position of income declared and assessed in the case of these two assessees is as under : Shri C. V. Gaba --------------------------------------------------------------------------------------------------------------------------------------------------- Assessment Date of Income declared Date of Income Income year original revised declared assessed return return ------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any query in relation to such bogus gifts was raised in the cases of the present appellants or any specific item of gift relating to these appellants was noticed by the department and enquiries in relation to the bogus gifts received by the assessee were conducted and concluded prior to submission of such returns by the appellants. Various circulars issued under the amnesty scheme requires that such returns should be furnished voluntarily and in good faith and the disclosure of income should be full and true. The returns of income were furnished on 30th September, 1986 prior to issue of any notice under section 139(2) or 148 and prior to issue of any query letter in the case of the appellants and prior to any specific deduction by the assessing authority in the cases of the present appellants. It is a common experience that under all voluntary disclosure schemes and amnesty schemes, the persons who have evaded that in the past, on account of fear, discloses their unaccounted income and wealth in the disclosure petitions or returns submitted pursuant to such amnesty schemes and voluntary disclosure schemes. The element of fear compelling them to come forward for voluntary disclosu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty under section 271(1)(c) is levied with reference to the act of commission of a default at the time of filing of the return. The intention to conceal is not the subject matter of the provisions of section 271(1)(c). It is only the act of concealing the income or furnishing the inaccurate particulars of income in the return of income, which alone can be subjected to levy of penalty under section 271(1)(c). In the present case, the income which has been finally assessed by the ITO is the same amount of income which was declared by the assessee in the returns submitted for the assessment year under consideration. Hence levy of penalty in the case of both the appellants for assessment year 1985-86 is not justified and the same is, therefore, cancelled. 10. Coming to assessment year 1987-88 the return of income in the case of Shri C. V. Gaba was furnished on 31st March, 1987 i.e., prior to commencement of the assessment year in question. The return of income in the case of S. R. Chandel for assessment year 1987-88 was furnished on 23rd February, 1988. Thus the return in the case of C. V. Gaba filed prior to commencement of the assessment year could not have been validly fil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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