$~39
* IN THE HIGH COURT OF DELHI AT NEW DELHI
DECIDED ON: 08.05.2014
+ CM APPL.4649 & 4650/2014 IN ITA 36/2002
M/S JYOTI PERSHAD JAGAN NATH ..... Appellant
Through: Mr. Anoop Sharma, Advocate.
versus
THE COMMISSIONER OF INCOME TAX, DELHI-X
..... Respondent
Through: Mr. Sanjeev Sabharwal, Sr. Standing
Counsel with Mr. Ruchir Bhatia, Jr. Standing
Counsel.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE VIBHU BAKHRU
MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT)
CM APPL.4650/2014 (for condonation of delay)
Allowed, subject to all just exceptions.
CM APPL.4649/2014 (for restoration)
For the reasons mentioned in the applications, this Court is of
the opinion that the interest of justice requires that appeal should be
restored on the file of this Court. Ordered accordingly.
CM APPL.4649/2014 is allowed.
ITA 36/2002
Issue notice. Mr. Sanjeev Sabharwal, Sr. Standing Counsel
accepts notice on behalf of respondent.
ITA 36/2002 Page 1
The following question of law arises for consideration: -
"Whether the Tribunal was justified in law in holding
that the assessee's case was not covered under the
amnesty scheme of 1986 and hence penalty under section
271 (1) (c) of the Income-tax Act, 1961 was leviable
particularly when the Tribunal while dealing with
assessee's appeal in respect of assessment year 1983 -84
against penalty under section 273(2)(a) of the Act had
held that the assessee was entitled to the benefit of the
amnesty scheme?"
The brief facts are that the assessee had filed returns for AY
1983-84 on 26.12.1983; the assessment was completed on
10.07.1994. After completion of the assessment, an amnesty scheme
appears to have been promulgated by the income tax authorities. The
assessee sought to avail the benefit of the scheme and surrendered
certain amounts towards investment allowance and depreciation. In
the meanwhile, prior to the surrender made on 25.03.1987, a notice
under Section 263 seeking to revise the assessment was issued by the
Commissioner on 6.3.1987. Prior to this, income tax authorities had
issued a letter dated 23.2.1987 in respect of AY 1983-84 and 1984-85
seeking certain particulars which included the question of
admissibility of depreciation and investment allowance. In his reply
given on 27.2.1987, i.e., prior to issuance of Section 263 notice, the
assessee/appellant reiterated the claim made. Subsequently,
reassessment notice was issued on 6.3.1987 and the amount was
disallowed; penalty proceedings were initiated under Section 271 (1)
(C) as well as under Section 273 (2). The matter went up to the
Tribunal. In its earlier order of 1.6.2001 in respect of the same years,
ITA 36/2002 Page 2
i.e., 1983-84, the Tribunal directed deletion of the penalty under
Section 273 (2) observing as follows: -
"8. After hearing both the sides and going through the
record as well as circular of the Board, I find that benefit of
amnesty cannot be denied to the assessee, in view of facts and
circumstances of the case, as assessee has opted under the said
scheme and it has not been stated by either of the authorities
below that assessee has not fulfilled any of the conditions for
grant of amnesty. However, when amnesty is applicable to the
proceedings u/s 147 (a) or cases pending in appeals, therefore,
in my considered view assessee is also entitled to the benefit of
the said scheme. While accepting the appeal of the assessee I
delete the penalty as imposed by AO and to the extent
confirmed by Ld. CIT (A)."
In respect of the penalty under Section 271 (1) (c), however, by
the impugned order, the assessee's claim was rejected. The relevant
findings of the ITAT in this regard are: -
"11. Now the second question that falls for our consideration
is that if the revised return was filed subsequently on the basis
of which the assessment was completed, would it call for the
levy of penalty under section 271 (1) (c) or not. From the facts
narrated in the preceding paragraph it becomes obvious that
the revised return filed by the assessee was not a voluntary. It
was only filed when the assessing Officer had recorded
satisfaction as regards concealment and laid his hands over the
necessary documents in this regard and compelled the assessee
to furnish correct particulars of its income, which were earlier
not disclosed. That being the situation, the revised return filed
by the assessee, does not satisfy the condition of section 139 (5)
being the discovery of any omission or wrong statement in
earlier return. Under these circumstances, we are satisfied
that the assessee has concealed its income and, therefore, the
action of the learned CIT (Appeals) in this regard is
justified............"
ITA 36/2002 Page 3
The assessee urges that the surrender was made voluntarily and
relied upon the answers to questions-1, 19 & 26 in terms of Circular
No.451 dated 17.2.1986, comprising clarifications on the amnesty
scheme. It was submitted that in terms of these answers given by the
Department to these questions, the surrender of amounts was
voluntary and was not made after detection of the wrongful claim. It
was lastly urged that, given the view of the Tribunal in respect of the
penalty under Section 273 (2) of the Income Tax Act, the finding that
penalty under Section 271(1)(c) is warranted is in clear error of law
inasmuch as it has resulted in inconsistent views in regard to the same
subject matter.
The Revenue urges that having regard to the conspectus of
circumstances, this was a clear case where assessee had made
wrongful claim, persisted in its reply to the query and reiterated its
earlier submissions as late as 27.2.1987. It was urged that the
surrender was made when virtually the writing on the wall was seen,
after issuance of notice dated 6.3.1987. This clearly indicated
detection of wrongful claims and, therefore, benefit of the Circular to
escape penalty could not have been availed of. It was, therefore,
urged that the impugned order of the Tribunal does not require any
interference.
It is evident from the above discussion that in respect of the
same assessment year 1983-84 for the same act, i.e., claim for
investment allowance and depreciation which was otherwise
inadmissible, the assessee surrendered the amount on 25.3.1987. It is
perhaps possible to take either view as to whether the assessee in the
ITA 36/2002 Page 4
circumstances of the case had, in fact, surrendered these amounts after
detection, which would of course justify the penalty. However, this
Court is of the opinion that the Tribunal in its earlier order having
concluded that the penalty was not justified under Section 273 (2)
could not have, without distinguishing that reasoning, upheld the
penalty under Section 271 (1) (c). In these circumstances, the
question of law is answered in favour of the assessee and against the
Revenue. The appeal is consequently allowed.
S. RAVINDRA BHAT
(JUDGE)
VIBHU BAKHRU
(JUDGE)
MAY 08, 2014
/vks/
ITA 36/2002 Page 5
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