Rajasthan H.C : Whether, on the facts and in the circumstances of the case, the Tribunal is legally justified in finding that the case of the assessee is covered under the amnesty scheme and that no penalty is leviable in the assessee’s case under s. 271(1)(c) of the IT Act, 1961 ?

Counsel Appeared

Sundeep Bhandawat, for the Applicant : Rajendra Mehta, for the Respondent

ORDER

BY THE COURT

These four applications under s. 256(2) of the IT Act, 1961 (‘the Act’) are directed against the order dt. 29th Dec., 1997, passed by the Tribunal, Jaipur, in Reference Application Nos. 201 to 204 of 1997 filed by the applicant, the CIT, Jodhpur, in respect of the different assessment years levying penalty against the assessee-respondent.

2. The brief facts of the case are : that a search under s. 132 of the Act was conducted from 12th Dec., 1986 to 15th Dec., 1986, at the premises of Pannalal, father of the respondent-assessee. During the course of that search, certain incriminating documents relating to the assessee’s income were found there, which were seized and sealed. Thereafter, the assessee filed the revised returns of income for the four asst. yrs. 1982-83 to 1985-86, respectively. The assessments were completed under s. 143(3)/147 of the Act on 8th Feb., 1988, and the proceedings under s. 271(1) (c) of the Act were also initiated for levy of penalty for concealment of income and/or particulars of the income. For the two assessment years, the orders of penalty made by the AO were affirmed by the Dy. CIT(A) against which the assessee preferred appeals before the Tribunal and for the two assessment years, the orders of penalty were set aside by the CIT(A), against which the Revenue filed appeals before the Tribunal. The Tribunal accepted the appeals of the assessee and also rejected the appeals of the Revenue relying on the circular issued by the CBDT floating amnesty scheme in voluntary disclosure and issuing clarification about the scheme to those assessees who voluntarily disclose their income and which promised amnesty from penalties. The principal ground on which the Tribunal relied on, is that where search is authorised against one person and any document or valuable articles or assets of the person other than the person against whom search has been authorised are seized from the premises where search has been authorised, he cannot be considered to be a person against whom search has been conducted and he does not fall within the purview of the person against whom concealment is detected until a finding to that effect is reached by the authority concerned in appropriate proceedings. Such a person is not excluded from the purview of availing the benefit of amnesty scheme.

3. The CIT made an application under s. 256(1) before the Tribunal raising four questions alleging to be the questions of law arising out of the Tribunal’s appellate order for referring the same to this Court for its opinion, which are as follows : “1. Whether, on the facts and in the circumstances of the case, the Tribunal is legally justified in finding that the case of the assessee is covered under the amnesty scheme and that no penalty is leviable in the assessee’s case under s. 271(1)(c) of the IT Act, 1961 ? Whether, on the facts and in the circumstances of the case, the Tribunal is legally justified in observing that the Department as a whole has accepted the contention of the assessee regarding filing of returns under amnesty scheme while processing the case for waiver of interest ? Whether, on the facts and in the circumstances of the case, the Tribunal is legally justified in not accepting the contention of the Department that search in the case of Shri Pannalal, assessee’s father, was also a search in the case of the assessee ? Whether, on the facts and in the circumstances of the case, the Tribunal is legally justified in finding that the case of the assessee is covered by question Nos. 7 and 19 of Circular No. 431 and answers to such questions ?” However, the Tribunal rejected the application filed under s. 256(1) by the Revenue holding that no question of law arises and the questions sought to be referred by the Revenue are the questions of fact or at any rate answer to them is self-evident, hence this application under s. 256(2) by the Revenue.

Having heard the learned counsels for the parties, we are of the opinion that the Tribunal has erred in rejecting the application under s. 256(1) filed by the Revenue inasmuch as in our opinion, the Tribunal’s order in appeal does give rise to the questions of law about interpreting the scope and ambit of the amnesty scheme and the circular issued by the CBDT and its applicability to the assessee in the facts and circumstances of the presenst case. The controversy referred to above cannot be considered to which answer is self-evident.

In our opinion, the following two questions of law arise from the Tribunal’s orders in each case, which shall sufficiently cover the controversy raised in these proceedings : “1. Whether, on the facts and in the circumstances of the case, the Tribunal is legally justified in finding that the case of the assessee is covered under the amnesty scheme and that no penalty is leviable in the assessee’s case under s. 271(1)(c) of the IT Act ?2. Whether, on the facts and in the circumstances of the case, the Tribunal is legally justified in finding that the case of the assessee is covered by question Nos. 7 and 19 of Circular No. 431 and answers to such questions ?”

6. Accordingly, these applications under s. 256(2) are allowed. The Tribunal is directed to submit the statement of the case and to refer the aforesaid two questions of law to this Court for its opinion.

[Citation : 249 ITR 398]