C CHRISTOPHER Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) ON September 17, 1987, a search was conducted in the residential premises, at three business premises situated at Tuticorin and one business premise situated at Pavoor Chatram, Tirunelveli District, of the assessee under section 132 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). As a result of the search, a quantity of 842 gms. of jewellery valued at Rs. 2, 50, 000 was recovered from the residence of the asses-see, cash of Rs. 30, 000 was recovered from the business premise at Pavoor Chatram and account books, documents and pronotes were recovered from the residence of the assessee. During the course of the search, the assessee expressed his desire to settle the tax matters with the Department by making disclosure, but no disclosure was made on the day of the search, or before the search was completed. No statement was given by the assessee under oath under section 132(4) of the Act. Thereafter, the assessee made a disclosure on October 1, 1987, and offered additional income for assessment in the case of the assessee as also in the case of his wife. He disclosed an income of Rs. 13, 35, 000 in his own case and a sum of Rs. 5, 50, 000 in the case of his wife. While making disclosure, he showed investments in the residential house purchased in his name and in the name of his daughter, credits in the name of his staff, amounts outstanding from a textile company, money lent outstanding outside the accounts as also silver jewels. The assessments of the assessee's income for the assessment years 1984-85 to 1988-89 were thereafter revised on the basis of the revised return filed by the assessee on November 25, 1987. ON reassessment, the assessee was found to have additional taxable income for all those years and tax was levied accordingly.

(2.) PENALTY proceedings were initiated thereafter and the penalty was levied on March 25, 1991, under sections 271(1)(c) and 273 of the Act. The assessee filed a petition before the Commissioner of Income-tax on or about April 30, 1991, seeking waiver of the penalty levied. In that he pleaded that he had disclosed the concealed income in his hands as also in the hands of the family members on the understanding that he will not be penalised for the excess income. No other reason was set out in the petition.

(3.) THE argument was that the detection is at terms different from seizure or search as something more may have to be done after the search in order to enable the Assessing Officer to come to a conclusion that there had been concealment of particulars of income or inaccuracy in the particulars furnished in respect of the income. His further argument was that if the statement of disclosure was made by the assessee before the Assessing Officer completed his scrutiny of the material that was seized and came to a conclusion that the concealment had been established and had quantified the same, the disclosure made by the assessee should be regarded as voluntary and in good faith and, therefore, the Commissioner should have exercised the discretionary power under section 273A of the Act, in favour of the petitioner, Counsel also referred to the word "voluntarily" in section 273A(1)(b) and submitted by placing reliance on the decision of a Full Bench of the Allahabad High Court in the case of Bhairav Lal Verma v. Union of India, submitted that the word "voluntarily" in section 273A of the Act means out of free will without any compulsion and the assessee's disclosure being one made without any compulsion even before the detection of the concealed income by the Income-tax Officer, the disclosure must be treated as voluntary. Counsel also relied on the decision to support his argument that it cannot be said as a principle of law that disclosure of concealed income after the day of search cannot be voluntary, as the disclosure may extend to matters which could not have been detected even after scrutiny of the material that was seized during the course of the search. For the same proposition, reliance was also placed on the decision of the High Court of Kerala in the case of A. V. Joy, Alukkas Jewellery v. CIT, wherein it was observed that the disclosure or the filing of return after the search by itself would not be decisive of the fact that the returns and disclosures were not voluntary.