SATISH CHANDRA AGARWAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner, Satish Chandra Agarwal, carried on business in the name and style of " Diamond Jewellers " in Sarrafa Bazar, Meerut. He has filed this writ petition praying that the order of the Commissioner of Income-tax, Meerut, dated July 10, 1986, be quashed and the subsequent penal proceedings as well. It was further prayed that a writ of mandamus be issued commanding the respondents to drop the penalty proceedings initiated against the petitioner and not to give effect to the notice served by the Department.

(2.) THE petitioner had failed to file a return for the assessment year 1984-85 within time. A raid was organised by the Income-tax Department into both the business as well as residential premises of the petitioner on February 8, 1985. THE petitioner had thereafter on January 28, 1986, voluntarily filed his income-tax return under Section 139(4) of the Act for the assessment year 1984-85. THE petitioner also filed the income-tax return for the year 1985-86 on January 28, 1986, within 35 days from the service of notice under Section 139(2) of the Act. THE Income-tax Officer accepted the returns of the petitioner and determined the amount of tax payable for the two assessment years. But the Income-tax Officer directed the Department to issue penalty notice under Sections 271(1)(a), 271(1)(c) and 273 of the Act in respect of both these assessment years. THEreupon, notices have been served upon the petitioner and the Income-tax Officer, Central Circle, Meerut, is proceeding in the matter. During the search, valuable ornaments, papers and account books were seized by the Department and it was found that there was unaccounted business and money to the tune of Rs. 1,11,000 which has not been explained and disclosed by the petitioner. THEreupon, the Income-tax Officer, vide his letter dated February 11, 1985, invited the petitioner's attention to the Explanation 2 to section 273A of the Act which reads as under :

(3.) THE principal question before us was whether subsequent disclosure made by the assessee could be considered to mitigate the rigours of penalty proceedings. Explanation 2 to Section 273A makes it clear that full and true disclosure is to be made within fifteen days from the date of the search. THE search was done on February 8, 1985, and the first disclosure was made on February 23, 1985, which was within time but it was not a full and true disclosure. THE subsequent disclosure made on June 3, 1986, was long after the expiry of the period of fifteen days as provided in Explanation 2 as mentioned above.