ORDER
R.M. Mehta, A.M.
1. All these appeals involve identical facts and having been heard together are disposed of by means of a consolidated order.
2. Taking up for consideration the appeals pertaining to the levy of penalty under s. 271(1)(c), the assessee is in appeal for the asst. yrs. 1979-80, 1980-81, 1983-84, 1984-85 and 1986-87 whereas the Revenue is in appeal for the asst. yr. 1982-83. This situation has arisen because in the formal assessment years the Dy. CIT(A) confirmed the levy of penalties under s. 271(1)(c) whereas in the last mentioned assessment year, viz., 1982-83, the CIT(A) cancelled the penalty taking note of identical facts. To appreciate the matter it would be necessary on my part to set out the following facts and figures as extracted from the order of the Tribunal in ITA No. 3220/Del/90, dt. 6th Feb., 1992, that being the assessee’s appeal under s. 143(3) (sic) pertaining to asst. yr. 1986-87 :
Income
———————————————————————
"Asst. year Originally Addl. income Total income Finally
assessed shown in disclosed assessed
Amnesty Scheme under Amnesty
Scheme
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(1) (2) (3) (4) (5)
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1979-80 23,910 29,506 53,416 56,416
1980-81 21,250 13,965 35,215 40,250
1982-83 27,900 45,763 73,663 86,882
1983-84 27,180 9,850 37,030 40,210
1984-85 28,537 7,271 35,808 38,990
1985-86 30,000 33,424 63,424 64,740
1986-87 - - 69,890 79,000"
3. It may also be stated that the assessments for the first six assessment years were originally completed on the basis of the returned incomes but “revised” subsequently on 21st Jan., 1987. In respect of asst. yr. 1986-87, the original return was filed on 21st Jan., 1987, as against the due date of 31st July, 1986. The other relevant fact which is required to be noted is that there was a survey under s. 133A on 12th Nov., 1986, and as per the Assessing Officer (AO) certain incriminating papers and documents were found from the premises of the assessee and impounded. A further reference is made to a diary found at the time of said survey and which contained particulars of certain NSCs and FDRs purchased in the name of the assessee and her family members. It is also necessary to mention that the ITO issued notices under s. 148 for the various assessment years as under :
Date Assessment years 27-3-1987 1979-80, 1980-81 26-11-1986 1982-83, 1983-84, 1984-85 and 1985-86
4. The assessments were completed by the ITO with slight variations vis-a-vis the income shown by the assessee in the revised returns for the first set of assessment years and the income shown in the original return for the asst. yr. 1986-87. He also initiated penalty proceedings under s. 271(1)(a), 271(1)(c) and the relevant section pertaining to filing/non-filing of advance tax estimate whichever was applicable to the facts of the relevant assessment year. It is an accepted fact between the parties that the penalties under s. 271(1)(a) as also the relevant provision for payment of advance tax, etc., were dropped by the AO himself for the various years in question excluding penalty under s. 271(1)(a) for the asst. yrs. 1985-86 and 1986-87 and of course, the penalty for concealment under s. 271(1)(c) for the various years under appeal. The learned counsel for the assessee has placed on record these orders of the AO at pages 14 to 20 of the supplementary paper book.
5. By means of identically worded orders passed under s. 271(1)(c) on 4th May, 1992 (27th May, 1992, for asst. yr. 1982-83), the ITO levied penalties for concealment being of the view that the revised returns as also the original return filed for the asst. yr. 1986-87 did not fall under the Amnesty Scheme since a survey under s. 133A had taken place and it was only thereafter that the assessee had come up with the returns purported to be under the said Amnesty Scheme. As noted in the penalty orders, the survey conducted is purported to have brought forth incriminating papers and documents as also a diary which revealed investments in NSCs and FDRs by the assessee and her family members. Being aggrieved, the assessee preferred appeals to the first appellate authority and as already stated by me earlier, one set of appeals came before the Dy. CIT(A) who confirmed the view taken by the ITO whereas for the asst. yr. 1986-87 the CIT(A) cancelled the penalty on the following lines :
“8. I have carefully considered the submissions of the counsel. It is true that survey was conducted in the premises of the appellant and certain incriminating papers were found by the Department and the Department contemplated action under s. 148. It is also true that the appellant filed revised return to obtain the benefit of Amnesty Scheme on 21st Jan., 1987. It is again true that the Amnesty Scheme was extended upto 31st March, 1987. Thus the revised returns were filed well within the time when Amnesty Scheme and had its way. The returns thus filed were wrongly treated as late. They were not late at all (Circular No. 472 refers). I have again gone through the appellate order passed by the Dy. CIT(A), Bareilly, and I find that he dismissed all the appeals just because question No. 7 of Circular No. 451 was not helping the appellant. No other issue was considered in the said appellate orders by the Dy. CIT(A). I have again gone through the penalty order of the AO which states that though the Amnesty Scheme was in prevalence, yet the appellant did not avail the benefit of the said Scheme and filed the return late when the Scheme was no more in existence. It only indicates that the appellant did not bring to the notice of the AO and also to the notice the Dy. CIT(A) Circular No. 472. It is also revealed that the appellant did not bring to the notice of the learned Dy. CIT(A) question No. 26 of Circular No. 451 wherein it has been provided that even if proceedings under s. 147(a), (b) are pending, one can make a surrender under the Scheme. If surrender is made within the intention of to be honest even at this stage, the lenient view will be taken. Now in this case it is apparent that the appellant has made an honest surrender under the Amnesty Scheme. Though it was incorrectly treated that the surrender was late, yet it was a surrender and an honest surrender. The said returns were treated by the AO to have been filed in compliance to notice under s. 148.
Thus the surrender was made even otherwise when the proceedings under s. 148 were pending. Thus the assessee’s case gets fully covered by question No. 26 of the Circular No. 451. The surrender was found to be true as no addition was made in the case of the appellant, except a mere disallowance of part of the credit of one creditor on estimate basis. Thus the surrender was proper and has been made in order to turn herself to the honesty. When the appellant had decided to turn honest even at the stage when proceedings under s. 147(a), (b) were pending, the benefit of circular has to be provided to the appellant. The circular is binding on all departmental officers specially on all AOs. In view of above, I am convinced to conclude that the AO should have taken the lenient view as provided in the circular. It is unfortunate that this point was not properly put up either before the AO or before the learned Dy. CIT(A). Since it has been brought to my notice, I am supposed to take cognizance of it. Since circular provides for taking lenient view, I am constraint to conclude that penalty of concealment in the case of the appellant is not justified. Lenient view warrants that the penalty imposed by the AO must be cancelled. I accordingly cancel the same.”
6. As both the parties are in appeal in respect of the two sets of orders passed by the first appellate authority, the following arguments set out their respective stand before the Tribunal. The learned counsel for the assessee asserted that the returns for the various assessment years were filed under the Amnesty Scheme, no doubt, after the survey under s. 133A, but according to him, nothing had been unearthed during the course of the survey and more so when the subsequent notices issued under s. 148 were only meant to regularise the returns already filed. As regards asst. yr. 1986-87, the learned counsel stated that it was the case of an original return filed by the assessee. The learned counsel admitted that there were certain variations between the incomes shown in the revised return as also the income shown in the original return for the asst. yr. 1986-87 but these, according to him, were nominal and not in the realm of concealed income. By reference to the assessment orders for these years it was stated that income from profession had been estimated and in certain assessment years deposits of nominal amounts had been added although the assessee had discharged the onus by placing on record relevant evidence, confirmations and in some cases even producing the persons concerned before the ITO.
7. The learned counsel further argued that there had only been a survey in this case and not a search and both these terms were absolutely different. According to him, the survey had not resulted in a detection of any concealed income by the assessee who in good faith and prior to any detection by the Department proceeded to file revised returns for various assessment years other than asst. yr. 1986-87 including therein additional incomes and all these returns had been filed when the Amnesty Scheme was in operation. The learned counsel further invited attention to the order of the Tribunal in the quantum appeal pertaining to the asst. yr. 1986-87 contending in the process that the stand taken by the assessee to the effect that the return was filed under the Amnesty Scheme had been accepted. To the same effect were the submissions with reference to the consolidated order of the Dy. CIT(A) deciding the quantum appeals in all the assessment years presently in appeal before the Tribunal. According to him, the first appellate authority had cancelled the interest charged under ss. 139(8) and 215 of the IT Act, 1961, for all the assessment years with the exception of asst. yr. 1986-87. The learned counsel further went on to state that on second appeal by the Revenue, the Tribunal vide order dt. 18th Nov., 1991, in ITA Nos. 3855 to 8861/Del/90 (SMC) had dismissed the appeals of the Revenue whereas the appeal of the assessee in respect of asst. yr. 1986-87 had been allowed in a separate order passed by the Tribunal on 6th Jan., 1992, in ITA No. 3230/Del/90 supra. The learned counsel also placed reliance on an unreported decision of the Tribunal in the case of WTO vs. R. L. Arya, Bareilly in WTA No. 803/Del/88 dt. 27th Feb., 1989, in support of his argument that the returns filed by the present assessee were also entitled to the benefit of the Amnesty Scheme vis-a-vis the levy of penalty.
8. The other arguments of the learned counsel which can be termed as additional/alternative arguments were to the effect that additions made to the returned income did not necessarily attract penalty proceedings as also the non-specification of the relevant clause of s. 271(1)(c) in the penalty notices by the ITO vitiated the proceedings. Further, penalty proceedings were separate and distinct from quantum proceedings. According to him, the penalties were even required to be cancelled on these two grounds although he reiterated his main argument for treatment of the returns filed pursuant to the survey as returns under the Amnesty Scheme. In support of the aforesaid arguments, the learned counsel placed reliance on the following decisions :
Navnitlal K. Zaveri vs. CIT (1980) 125 ITR 385 (Guj); Radhey Shyam Chandrika Prasad vs. CIT (1983) 139 ITR 274 (All); A. N. Sarvaria vs. CWT (1986) 158 ITR 803 (Del); CIT vs. Dharam Chand L. Shah (1993) 204 ITR 462 (Bom).
9. The learned Departmental Representative, on the other hand, strongly supported the consolidated orders passed by the Dy. CIT(A) vis-a-vis the appeals filed by the assessee and supported the order of the AO in respect of asst. yr. 1982-83 since this was the year in which the Revenue was in appeal before the Tribunal. According to him, there were additions on account of cash credits in certain assessment years and it could not be said that the returns filed by the assessee pursuant to the survey were voluntarily filed and that no detection had been made by the Department in respect of the concealed income of the assessee. The learned Departmental Representative stressed on the fact that the returns were not entitled to the benefit of the Amnesty Scheme and, therefore, the penalty under s. 271(1)(c) was exigible for all the assessment years under appeal.
10. I have considered the rival submissions and have also perused the orders passed by the tax authorities. The decisions cited at the Bar by the learned counsel have also been taken into account. I would at the outset refer to the order of the Tribunal for the asst. yr. 1986-87 in the quantum appeal, moreso para 3 of the said order which reads as under :
“We have considered the rival submissions. We have gone through the order of the CIT(A) and found that there is a factual mistake in the order of the CIT(A) where he has said that no amount has been ever surrendered for assessment by the assessee to avail Amnesty Scheme. The ITO himself mentioned that this amount was surrendered under the Amnesty Scheme. Therefore, so far as factual part is concerned, this is incorrect. Keeping in view of CBDT’s Circular No. 451, dt. 17th Feb., 1986 and instructions mentioned above and keeping in view the amount involved, we are of the opinion that no interest under ss. 139(8) and 217 could be charged against the assessee.”
11. It is apparent that interest under s. 139(8) and s. 217 have been cancelled keeping in view the CBDT Circular No. 451, dt. 17th Feb., 1986 pertaining to the Amnesty Scheme (quantum appeal). Similarly, the Dy. CIT(A) in his consolidated order pertaining to the assessment years under appeal before me has recorded the following facts, submissions on behalf of the assessee, as also his decision to delete the interest charged under various sections as follows :
“In these appeals the main ground is against the AO’s action in charging interest under ss. 139(8) and 215 of the IT Act, 1961. It has been submitted that the returns for asst. yrs. 1979-80, 1980-81, 1982-83, 1983-84, 1984-85, 1985-86 and 1986-87 have been filed under the Amnesty Scheme and the assessments from asst. yrs. 1979-80 to 1985-86 had already been completed earlier. However, these were later on taken up for reassessment after issue of notice under s. 148 of the IT Act, 1961, and the appellant availed of benefits of the Amnesty Scheme. It has also been submitted that as per the provisions of Amnesty Scheme, interest were not to be charged. Besides, these cases were not regular assessments and have been completed under s. 148 of the IT Act, 1961. Therefore, interest are not to be charged.
2. I have considered the submissions made and agreeing with the same, I delete the interest charged by the AO for asst. yrs. 1979-80, 1980-81, 1982-83, 1983-84, 1984-85 and 1985-86.”
12. I have mentioned in the earlier part of my order that the appeals filed by the Revenue against the aforesaid relief allowed were rejected by the Tribunal whereas the quantum appeal for the asst. yr. 1986-87 which was rejected by the Dy. CIT(A) by means of the same consolidated order came to be allowed by the Tribunal vide ITA No. 3230/Del/90, dt. 6th Jan., 1992 (supra).
13. It would be quite appropriate on my part to maintain consistency with the orders passed by the Tribunal accepting more or less the arguments advanced on behalf of the assessee to the effect that the returns filed by the assessee were under the Amnesty Scheme and, therefore, entitled to the immunity provided by the said Scheme. I would, however, like to record the following further reasons, namely, that it was a “survey” under s. 133A which took place and not a “search”. Both the terms are quite distinct. The intention in introducing the Amnesty Scheme becomes quite apparent from the CBDT Circular No. 451, dt. 17th Feb., 1986, and I would like to extract the following questions and answers :
Question No. 7 – Where the investigations in the case of persons other than the assessee indicate concealment of income by the assessee and the assessee makes a true and full disclosure of his income, would he be entitled to immunity under these circulars ?
Answer – Yes
Question No. 12 – Can immunity given by the circulars be availed of by assessees whose premises have been searched by the tax authorities ?
Answer – No.
Question No. 19 – Kindly clarify the expression “before detection by the Department”?
Answer – If the ITO has already found materials to show that there has been concealment, that would mean the Department has detected the concealment. If the ITO only had prima facie belief, that would not mean concealment has been detected.
14. It is apparent that immunity is being provided even in a case where investigation in the case of a person other than the assessee indicates concealment of income by the assessee and the assessee makes a true and full disclosure of his income. Further, immunity is not available where the premises of an assessee have been “searched” by the IT Department and I have already drawn a distinction between a “search” and a “survey”. Then again, question No. 19 is very relevant since the expression “before detection by the Department” is sought to be clarified. The view expressed is to the effect that there should be a positive detection of material to show that concealment has been detected and prima facie belief does not amount to detection of concealment. To the aforesaid questions and answers may be added question No. 26 as also the answer thereto, the latter suggesting a lenient view to be taken even where an assessee decides to turn honest during the pendency of s. 147(a) / (b) proceedings.
15. In the present case some of the revised returns were filed by the assessee prior to the issue of notice under s. 148 whereas some of these were filed after the issue of said notice. No material has been cited or brought on record by the Revenue either in the assessment proceedings or in the appellate proceedings including those before the Tribunal now which would go to show that the survey brought forth such type of evidence and material which conclusively proved concealment on the part of the assessee since a mere belief does not amount to detection of concealment. The reasons which have been recorded at the time of reopening under s. 148 for some of the assessment years have not been highlighted or referred to in the orders of the tax authorities and neither have these been shown to the Tribunal on behalf of the Revenue by the learned Departmental Representative. Then again, the variations in the income shown in the revised returns for various years as also the income shown in the original return for the asst. yr. 1986-87 are either on account of estimating the professional income or making certain disallowances out of interest and for some of the years cash credits have been added but a perusal of the relevant assessment orders shows that confirmations had been filed along with other evidence and some of these creditors had also been produced before the AO. No doubt, the explanations may not have been sufficient or the evidence may have been insufficient for the purposes of acceptance in the quantum proceedings but it does not necessarily follow that there has been concealment inviting levy of penalty under s. 271(1)(c).
16. In the final analysis I accept the arguments advanced by the learned counsel for the assessee and confirm the order of the CIT(A) for the asst. yr. 1982-83 whereby he has cancelled the penalty under s. 271(1)(c) and applying the same line of reasoning to the other appeals, which have been filed by the assessee with reference to the same penalty I cancel the penalties under s. 271(1)(c). I also follow two judgments of the Tribunal supra in assessee’s own case relied upon by the learned counsel to maintain consistency along with other independent reasons which have been recorded by me in the preceding paras.
17. Before I part with these appeals, I would like to refer to the grounds taken in the Revenue’s appeal for the asst. yr. 1982-83. A stand has been taken to the effect that the conditions under the Amnesty Scheme were not fulfilled since the assessee had not furnished evidence of apparent payment of tax on the returned income. No argument has been advanced by the learned Departmental Representative in support of the aforesaid ground and a perusal of the orders passed by the tax authorities shows that this was never the ground taken for rejecting the stand taken by the assessee to have the return treated as one falling under the Amnesty Scheme. As the ground has not been supported, this stands rejected.
18. Taking up for consideration the appeals under s. 271(1)(a) filed by the assessee for the asst. yrs. 1985-86 and 1986-87 I am of the view that the order passed by me in respect of the penalties under s. 271(1)(c) would be squarely applicable since these penalties have been levied by the ITO and confirmed by the first appellate authority on the same set of facts as discussed in the s. 271(1)(c) appeals. No other reasons have been recorded by the tax authorities for penalising the assessee. In this view of the matters, the penalties under s. 271(1)(a) are also concelled following the views expressed by me earlier in respect of penalties under s. 271(1)(c).
19. In the result, all the appeals filed by the assessee are allowed whereas the appeal filed by the Revenue in respect of the penalty under s. 271(1)(c) of the asst. yr. 1982-83 is dismissed.