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June, 17th 2014

                                                  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.


                                                       ..... Respondent
                    Through: Mr. Sanjeev Sabharwal, Sr. Standing
                    Counsel with Mr. Ruchir Bhatia, Jr. Standing


              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

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
              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

                                                         VIBHU BAKHRU
     MAY 08, 2014

ITA 36/2002                                                           Page 5
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