SHYAM OIL MILLS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee has filed this application under Section 256(2) of the Income-tax Act, 1961 (for short "the Act"), seeking direction to the Tribunal to state the case and refer the undernoted questions, labelled as of law, arising out of the order dated March 17, 1994, passed by the Tribunal in I. T. A. No. 680/Ind. of 1989 for the assessment year 1982-83 after rejection of the application, presented under Section 256(1) of the Act and registered as R. A. No. 67/Ind. of 1994 on October 5, 1994, for our opinion :

(2.) BRIEFLY stated, the facts of the case are that the assessee had income from manufacture of groundnut and other edible oils. In the course of the assessment proceedings certain additions were made. Firstly, according to the Assessing Officer, purchases were not verifiable and there was no day to day production record. An addition of Rs. 76,040 was made on account of low yield of oil out of which an addition of Rs. 10,340 was confirmed by the Commissioner of Income-tax (Appeals). During the previous year, the flying squad of the Sales Tax Department had conducted a raid at the business premises of the assessee and seized certain books of account which were examined by the Assessing Officer also in the presence of the assessee. Certain discrepancies were noticed due to which the Assessing Officer made an addition of Rs. 29,970 as income from undisclosed sources and further an addition of Rs. 44,074 as income on account of alleged unaccounted payment. The assessee felt dissatisfied by these additions and, therefore, filed an appeal before the Commissioner of Income-tax (Appeals), in regard to the above two additions. Later, the assessee withdrew the appeal and filed a revised return offering a sum of Rs. 74,044 as income from undisclosed sources. It was claimed that the benefit of the Amnesty Scheme be given to the assessee since the revised return was filed on March 31, 1986, and no penalty be levied. The Assessing Officer, however, negatived the contention and levied the minimum penalty of Rs. 56,000 on account of the above three additions. The Commissioner of Income-tax (Appeals) observed that the assessee had written a letter to the Commissioner of Income-tax showing the position of the return filed under the amnesty scheme and requesting that no penalty and interest be charged as the appeal had been withdrawn. The attention of the Commissioner of Income-tax was also invited to the Central Board of Direct Taxes Circular No. 451 (see [1986] 158 ITR (St.) 135), dated February 17, 1986. The Commissioner of Income-tax (Appeals) accepted the contention of the assessee and held that the imposition of the penalty was premature and unwarranted. The penalty was, therefore, deleted. The Department felt aggrieved by the order of the Commissioner of Income-tax (Appeals) and thus filed the appeal before the Tribunal. The Tribunal allowed the appeal in part. The Tribunal held that levy of penalty with respect to the two additions totalling Rs. 74,044 was just and liable to be restored. The Tribunal, however, also held that no penalty under Section 271(1)(c) was leviable with reference to the addition of Rs. 10,340. The appeal was thus partly allowed. Aggrieved by the order of the Tribunal, the assessee filed an application for rectification which was registered as M. A. No. 15/Ind. of 1994. That was rejected on August 3, 1994. The applicant then filed an application under Section 256(1) of the Act. That was rejected on October 5, 1994, by an elaborate order. The assessee thereafter filed this application under Section 256(2) of the Act.

(3.) THE question to be considered is whether it was obligatory to obtain instructions from the Commissioner in regard to the revised return under the amnesty scheme ? Further question is whether minimum penalty was liable to be foisted and additions of Rs. 74,044 in the face of the revised return having been filed under the protective umbrella of Circular No. 451 (see [1986] 158 ITR (St.) 135), dated February 17, 1986, were to be made ?