D.K.Seth, J. -
(1.)The assessee and another were intercepted by the customs authority on November 19, 1983, and from them US $ 47,700 and Indian currency of Rs. 1,500 were recovered. A proceeding under Section 135(1) of the Customs Act was initiated against the said two persons for possessing and dealing with smuggled currency. The customs authority had passed on the information to the Income-tax Department. The Income-tax Department did not take any steps. On October 9, 1986, the assessee filed a return seeking immunity under the voluntary disclosure scheme. The assessee denied the ownership but made out an alternative case, if found otherwise, for deduction of the amount confiscated by the customs authority as business loss. This was not accepted by the Assessing Officer, the Commissioner (Appeals) as well as the learned Tribunal. Reference under Section 256(1) of the Income-tax Act, 1961, therefrom was pending adjudication before this court. Subsequent to the conclusion of the assessment proceeding, a proceeding, for imposition of penalty under Sections 271 (1) (c), 273 (1) (b) and 271 (1) (a) of the 1961 Act was initiated. The Assessing Officer and the Commissioner (Appeals) had rejected the claims of the assessee for amnesty. However, the learned Tribunal, in the penalty proceeding, found favour with the assessee's claim and held that the assessee was entitled to immunity under the amnesty scheme ; though in the quantum appeal the learned Tribunal found that the assessee was not entitled to the benefit of amnesty scheme (page 106, PB). In these circumstances, the following question was referred to this court:
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the penalty orders passed by the Commissioner of Income-tax (Appeals) and the Assessing Officer and in directing the Assessing Officer to cancel the penalties levied under Sections 271 (1) (c), 273 (1) (b) and 271 (1) (a) of the Income-tax Act, 1961 ?"
(2.)Admittedly, the return under the voluntary disclosure scheme was filed on October 9, 1986. The information was passed on by the customs authority to the Income-tax Department before that date. But the Income-tax Department did not take any steps till October 9, 1986. Therefore, in the penalty proceeding, it was treated by the learned Tribunal to be a voluntary disclosure. If it is a voluntary disclosure, then it would enable the assessee to avail of the immunity under the amnesty scheme. A voluntary disclosure is a disclosure of undetected concealed income without any compulsion to disclose the income concealed. Once it is detected, it would not attract the provisions of the amnesty. If it is disclosed before detection, then it would not attract the provisions for penalty provided in the Act, since been applied by the Assessing Officer and the Commissioner (Appeals) against the assessee.
(3.)Having regard to the facts and circumstances of the case, we are now to consider whether the disclosure was made before the detection or after detection or whether the other provisions provided in the amnesty scheme were satisfied or not. Mr. Sana, however, raised another point that the very amnesty scheme is not applicable in the case of the assessee. He has also pointed out that there must be an element of voluntariness in the disclosure itself.