DEEPAK CONSTRUCTION COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench 'A', at the instance of the assessee, has referred the following question for the opinion of this Court in IT Appeal No. 163/Ahd/1990 relating to the asst. yr. 1983 -84: Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the levy of penalty of Rs. 67,002 under Section 271(1)(c)?

(2.) THE short facts necessary for disposal of the present reference are that the assessee firm, which is engaged in the activity of construction of work, submitted a return of income, declaring the total income of Rs. 1,27,824 on 30th Oct., 1984. The assessment could not be completed upto October, 1985. The AO issued a notice to show cause to the assessee on 24th Feb., 1986 requiring the assessee to make compliance by 5th March, 1986. The said show -cause notice has been reproduced in verbatim in the assessment order dt. 31st March, 1986, the show -cause notice was also relating to the squared up cash credits, which were listed in tabular form in the said assessment order. Such squared up cash credits were detailed in the show -cause notice. After the service of the notice to show cause, the assessee filed a revised return on 7th March, 1986, declaring the total income to the tune of Rs. 2,27,824, which included a sum of Rs. 1 lakh in addition to the earlier income. Before the AO, the benefit of Amnesty Scheme was also claimed to avoid the liability of penalty proceedings under Section 271(1)(c) of the IT Act ('the Act' for short). The AO accepted the revised return and assessed the present assessee for the sum of Rs. 2,27,824, but opened penalty proceedings under Section 271(1)(c) of the Act. The assessee, vide its reply dt. 4th Nov., 1986, stated that the firm had filed the return for the accounting years 1983 -84 to 1985 -86 in terms of the circulars of the CBDT and, therefore, he was entitled to immunity and the penalty could not be levied. The explanation offered by the assessee was not palatable to the officer, therefore, he levied the minimum penalty of Rs. 67,002 only by his order dt. 30th March, 1988. The assessee, being aggrieved by the said order, took up the matter in appeal to the CIT(A); on dismissal of the same the matter was brought before the Tribunal. As the Tribunal rejected the submissions made by the assessee, the assessee made an application under Section 256(1) of the Act for a reference to the High Court. Accordingly, on the aforesaid question, the reference has been made.

(3.) ON the other hand, Mr. B.B. Naik, learned Counsel for the Revenue, submits that a fair understanding of Circular Nos. 450 and 451 would make it clear that protection is provided to an honest taxpayer or to a person who voluntary comes up for making the payment of the tax, and not to a person who, after being cornered on detection of suppression of the income, starts blowing trumpet of honesty. He submits that in the present case, the assessee did not file the revised return of his own to show his honesty, but, had submitted the revised return after the service of the notice to show cause. He also submits that there would be a distinction between the word 'detection' and 'determination' and in this case, the detection stands proved prior to filing of the revised return and, therefore, the determination, at a subsequent stage, would not change the factual scenario.