ASSISTANT COMMISSIONER OF INCOME TAX Vs. A G C HOSPITAL
INCOME TAX APPELLATE TRIBUNAL
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P.K. Ammini, Judicial Member -
(1.) THESE appeals are by the revenue against the cancellation of penalty under Section 271(1)(c) of the Income-tax Act and they relate to the assessment years 1980-81 to 1985-86. THESE appeals were filed after a delay of three days for which a condonation petition has been filed. We are satisfied with the reasons for the delay in the filing of the appeals. Hence we condone the delay and entertain the appeals.
(2.) The common grounds of appeal in all these cases are as follows :
1. The learned CIT (Appeals) erred in cancelling the penalty levied under Section 271(1)(c) holding that the same is unjustified as the applicability of provisions of Section 271(1)(c) has not been established. The learned CIT (Appeals) ought to have appreciated that the Assessing Officer had recorded in the penalty order the fact that the additional income brought to tax would not have been admitted by the assessee but for the search & seizure under Section 132 of the Income-tax Act.
2. The learned CIT (Appeals) erred in holding that there is no concealment of income in view of the true and complete disclosure of income as provided under Section 273A. The learned CIT (Appeals) failed to appreciate that only for the purpose of Section 273A these disclosures are deemed not to be concealment of income and that the benefit under Section 273A can be given to the assessee only by the Commissioner of Income-tax.
The assessee was running a clinic under the name of A.G.C. Hospital, Quilon. Its premises were searched under Section 132 of the Income-tax Act of 7-3-1985. Before reassessment was made pursuant to the search, the assessee submitted a petition under Section 273A of the Income-tax Act, dated 18-3-1985, making full disclosure of the income amounting to Rs. 14 lakh. A copy of the petition is found in the assessee's paper book (Pages 1 to 3). It is not in dispute that the application under Section 273A was made within 15 days from the date of search, disclosing the particulars of investments made by the partners of the assessee-firm and its sister-concern namely, A.G.C. Nursing Home. The Assessing Officer estimated the income and spread it over the assessment years 1980-81 to 1985-86 on the basis of accretion to the net wealth. The assessee appealed against the assessments questioning the apportionment of the income and the Commissioner (Appeals), while confirming the quantum of addition, directed the Assessing Officer to apportion the addition in the ratio of 2 :1 as between the assessee-firm and its sister-concern. The assessee did not file any appeal against the order of the Commissioner (Appeals). The department filed an appeal against the said order but subsequently it was withdrawn. The Assessing Officer was of the view that the disclosure was made only subsequent to the search and it was for the Commissioner of Income-tax to waive the penalty in view of the full disclosures made in the petition filed under Section 273A of the Income-tax Act. But as no order was passed on the petition, he was bound to levy penalty as required under Section 271(1)(c) of the Income-tax Act. Thus, penalty was levied for the following assessment years in the following sums :
The assessee appealed. The Commissioner (Appeals) after narrating the history of assessments, adverted to the remark of the Assessing Officer in the penalty order that the disclosure made by the assessee included certain bank accounts about which the department did not have any information even after the search. Thus, it was a case of full and true disclosure of income of the assessee within the period allowed under Section 273A of the Income-tax Act as it then stood. He also noticed that the penalty order did not speak of any concealment of income by the assessee and therefore, the provisions of Section 271(1)(c) are not attracted. In this view of the matter, he cancelled the levy of penalty for all the years under appeal. The revenue is on appeal and we have already extracted the grounds of appeal before us.
We have heard rival submissions and perused the records. Except for the assessment year 1985-86, in all other cases the assessments were completed originally prior to the initiation of proceedings under Section 132 of the Income-tax Act. Search and seizure took place on 7-3-1985. Soon after the search and seizure, the assessee filed a petition under Section 273A of the IT Act within a period of 15 days allowed under the then Explanation 2 to Section 273A of the Income-tax Act, making a full and true disclosure of the income and spreading it over the assessment years 1983-84 to 1986-87. However, the Assessing Officer in completing the reassessments spread the income over the assessment years 1980-81 to 1985-86 but the sum total of the income assessed for all these years did not exceed the income disclosed by the assessee in respect of the three years in the disclosure petition under Section 273A of the Income-tax Act. Penalty proceedings under Section 271(1)(c) were initiated in the course of the reassessment proceedings for and from assessment years 1980-81 to 1984-85. As the non-disclosure of full and true income had occurred in the returns filed by assessee leading to the original assessments, initiation of penalty proceedings in the course of reassessment proceedings in respect of the default found with the first returns filed by the assessee is proper and is upheld. In this view of the matter, we hold that he Commissioner (Appeals) erred in holding that the ingredients of offence of concealment are not established so as to attract the provisions of Section 271(1)(c) of the Income-tax Act. In terms of Section 273Ait is for the learned Commissioner of Income-tax to pass such orders as he may deem fit in reducing or waiving the penalty imposed or imposable. In the case of the assessee even before the completion of the reassessment proceedings in the course of which penalty proceedings were initiated, the assessee had approached the Commissioner of Income-tax with a petition under Section 273A praying for the waiver of penalty impossed or imposable. We are told that no action has been taken so far on such petition and apparently it appears that the Assessing Officer was forced to levy penalty as he himself cannot waive or reduce the penalty imposed or imposable in terms of Section 273A of the Income-tax Act. Shri Kalathu the learned Chartered Accountant of the assessee, argued that this is a case where even according to the Assessing Officer the assessee had made full and true disclosure of the income though under Section 273A and had approached the Commissioner for waiver of the penalty in terms of Explanation 2 to Section 273A as it then stood and because the Commissioner of Income-tax had not passed any order, the assessee should not be penalised with the visitation of penalty. In our opinion, the Assessing Officer cannot arrogate to himself the powers of the Commissioner of Income-tax. The powers of the authorities - the Income-tax Officer and the Commissioner of Income-tax are well defined and the tail cannot wag the head. On a perusal of the records, we are of the opinion that this is a fit case for the Commissioner to intervene under the powers given to him under Section 273A of the Income-tax Act and it is for him to pass such orders as he may deem fit in accordance with law and in the interests of substantial justice, we do hope that he will not abdicate his responsibility. With these remarks, we allow the appeals of the revenue for the assessment years 1980-81 to 1984-85. However, for the assessment year 1985-86, the assessee had filed the return after the search. But before the revenue could detect any concealment, the assessee had suo motu filed its returns of income making full and true disclosure of its income. Therefore, the ingredients necessary to constitute the factum of concealment are wanting in respect of the assessment year 1985-86 and hence, we uphold the order of the Commissioner (Appeals) in cancelling the penalty for assessment year 1985-86.
(3.) IN the result, the appeals of the revenue for the assessment years 1980-81 to 1984-85 are allowed and the appeal for the assessment year 1985-86 is dismissed.;
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