TMI Blog1993 (10) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... account which showed huge losses as compared to the earlier years' result and, therefore, called upon the assessee to furnish various qualitative and quantitative details such as date-wise purchase and sale of yarn, production and sale of cloth manufactured, etc. It was noticed by the Assessing Officer, in the course of enquiry that the consumption of yarn as shown by the assessee was more than double. Out of 50615 mts. of cloth manufactured during the year under appeal, 2/3rd was shirting cloth and 1/3rd sarees. As against normal consumption of yarn at 7 to 9 kgs. per 100 mts. for shirting cloth, the assessee claimed 19 kgs. per 100 mts. According to the Assessing Officer, if these figures of consumption were to be accepted, the assessee would have had to incur heavy losses keeping in view the sale price of such shirting cloth which varied from Rs. 20 to Rs. 26 per metre. The consumption of 19 Kgs. per 100 mts. of yarn was not acceptable to the Assessing Officer. He therefore, requested the assessee to produce challan-books used for sending yarn to the manufacturer and also corresponding challans sent by the manufacturers along with the cloth manufactured by them. The Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock of yarn valued at Rs. 5,50,456. The tax of Rs. 97,684 in respect of the income declared in the revised return was also paid. According to the assessee, this revised return was filed under the so-called 'Amnesty Scheme'. The assessment was completed by the Assessing Officer on the basis of the revised return computing the income in a sum of Rs. 6,02,475 and after deduction of firm tax of Rs. 1,46,919, the total divisible income was determined at Rs. 4,55,556. The Assessing Officer also initiated proceedings under section 271(1)(c) of the Act for concealment of income. Penal proceedings under section 273(1)(b) of the Act was also initiated, but we are not concerned with the same. Before imposing any penalty on the assessee, the Assessing Officer called for an explanation from the assessee. To the show-cause notice so issued by the Assessing Officer, the assessee's representative M/s. Natvarlal Vepari Co., C.As. contended inter alia vide their letter dated 6-4-1987 as under: "... As regards the revised return flied, it was filed under the Amnesty Circulars which have in clear terms stated that any assessee can take benefit of the above circulars and will be granted amnesty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with this imposition of penalty, first appeal was preferred before the Appellate Commissioner (A/c). In the first appeal, it was contended that the revised return was filed suo motu and voluntarily and without any detection by the Assessing Officer. It was also submitted before the A/c that the revised return was filed pursuant to various Circulars of the CBDT (Board) from time to time and which are popularly called as Amnesty Circulars or Amnesty Scheme. It is the case of the assessee before the A/c that since the revised return was filed on 17-2-1987, the penalty under section 271(1)(c) was not leviable as per instructions issued under the socalled Amnesty Scheme. The very fact that the income declared in the revised return representing the value of the unsold closing stock of the yarn was accepted by the Assessing Officer without any addition whatsoever clearly goes to establish that it is only after discussion with the Assessing Officer the revised return was filed on the specific assurance that the assessee will be immune from penalty and prosecution on the basis of instructions issued under the various Amnesty Circulars. Reliance was placed before A/c on certain questions f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cularly, Circular No. 451, dated 17-2-1986, which has been published in 158 ITR 135 (Statute). He drew our attention to answer of the Chairman of the CBDT to question No. 4 wherein he has answered that immunity from penalty and prosecution will be given in income-tax or wealth-tax cases where the assessee admits the truth and pays tax properly. Thus, according to the assessee's counsel, the assessee has made a truthful disclosure and also paid the tax as per higher income declared in the revised return. Our attention was also drawn to several answers given by Shri M.C. Joshi, Chief Commissioner of Income-tax (Administration), New Delhi on 2-1-1986 in connection with batch of Circulars issued from time to time and which are published in 157 ITR 53 (Statute). Mr. J.P. Shah, assessee's counsel submitted that the answers given by the said Chief Commissioner of Income-tax, New Delhi were binding on the Assessing Officer and on the strength of those answers and assurances given, no penalty should have been levied on the assessee under section 271(1)(c). According to the assessee's counsel, the replies given by the Chief CIT, New Delhi constituted instructions as envisaged under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 1992 since reported in Santdass Nihal Chand v. ITO [1992] 43 TTJ (Jp.) 503. On a query from us, the assessee's counsel fairly conceded that the assessee was aware about the enquiry being made by the Assessing Officer as one of the partners was also cross-examined one of the deponent who was summoned by the Assessing Officer under section 131 of the Act. On a further query from us as to how the answers given by Shri M. C. Joshi, Chief CIT, New Delhi can be construed as instructions under section 119 of the Act, the assessee's counsel submitted that the answers and assurances given by Shri M. C. Joshi, Chief CIT, New Delhi even if not construed as instructions under section 119 of the Act, then the same are still binding on the Assessing Officer, as the Chief CIT is a very senior responsible income-tax authority and being an agent of the Government, his answers and assurances are binding upon the lower authorities and have to be given effect by them. 6. We have heard the rival submissions and applied our mind to the facts of the case. We have also gone through the relevant answers given by the Board's Chairman, M.S. Narayanan (as he then was) in Circular No. 451, dated 17-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmunity from levy of penalties attracted under various provisions of the Income-tax Act particularly, the impugned penalty levied under section 271(1)(c) of the Act, on the basis of answers to question Nos. 4 19 of the Board's Chairman as contained in Circular No. 451, dated 17-2-1986. The Board's Chairman has stated in answer to question No. 4 of the said Circular that immunity will be granted from penalty and prosecution under the Income-tax and Wealth-tax Laws if the disclosure by any assessee/or taxpayer is true and the taxes are already paid. Again, while giving answer to question No. 19, the Board's Chairman had stated that if there is disclosure of concealed income by an assessee after detection by the income-tax department and not on the basis of mere prima facie belief of concealment by the Assessing Officer, then there will be no immunity from penalty or prosecution. We have, therefore, to examine whether the assessee has been truthful and whether there has been any detection of concealment of income by the Assessing Officer. In short, it has to be seen whether the revised return was filed by the assessee suo motu and voluntarily or whether it was done so after detectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and prosecution under the relevant provisions of the Income-tax Act, 1961, taking the aid of answers given by the Board's Chairman in Circular No. 451, dated 17-2-1986 which has been discussed by us above. In our view, the revised return declaring higher income in the shape of unsold closing stock on hand was due to detection by the Assessing Officer from the facts found in the course of enquiry and investigation and it cannot be gain said that the Assessing Officer merely entertained a prima facie belief of concealment of income by the assessee-firm. We are unable to agree with the submission of the assessee's counsel that since the assessee found mistake and omission in the original return, another return revising income on the higher side was filed as laid down under section 139(5) of the Act and, therefore, penalty proceedings under section 271(1) (c) got distracted. The reasons for disagreeing with the submissions of the assessee's counsel are that under section 139(5) a revised return can be filed where the assessee discovers any omission or wrong statement in filing the return. The discovery of the omission or wrong statement may be by the assessee himself or may come to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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