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1993 Supreme(Cal) 356
High Court Of Calcutta
AJIT K. SENGUPTA, BHAGABATI PRASAD BANERJEE
ANAND KUMAR SARAF - Appellant
Versus
COMMISSIONER OF INCOME-TAX - Respondent
Matter 1603 Of 1989
Decided On : 07/29/1993
J.P.KHAITAN, R.N.BAJORIA, S.K.MITRA
The mere stigma of search and seizure cannot shut out the assessee from the amnesty scheme.
Headnote:
INCOME TAX - Amnesty Scheme - Benefit - Assessee's premises searched - Seizure of documents - No scrutiny of seized documents by tax authorities prior to filing of revised returns - Assessee entitled to benefit of amnesty scheme - Income-tax Act, 1961, Ss. 132(1), 154.
Fact of the Case:
The appellant's premises were searched under Section 132(1) of the Income-tax Act, 1961, and certain documents were seized. The appellant filed revised returns under the amnesty scheme, disclosing fully his income and wealth and paying taxes in due time. The Commissioner of Income-tax initiated rectificatory proceedings under Section 154 of the Act, holding that the appellant was not entitled to the benefit of the amnesty scheme since his premises had been searched.
Finding of the Court:
The court held that the mere stigma of search and seizure could not shut out the assessee from the amnesty scheme. The scheme was an inducement to evaders to make a clean breast of past evasions and square up accounts with the Revenue. The persons who were left out from this opportunity were those whose concealments had come to light beforehand by investigations and search and seizure operations carried out by the Revenue. The clarifications of the Board in its answer to question No. 19 as to the meaning of the expression "before detection by the Department" show that if the assessing authority has a prima facie belief that would not mean detection.
Issues: Whether an assessee whose premises had been searched before the filing of revised returns under the amnesty scheme is entitled to the benefits of the amnesty scheme.
Ratio Decidendi: The court held that the scope of proceedings under Section 154 of the Income-tax Act, 1961, was very limited. It is by now well-settled that an issue which is debatable or on which there could conceivably be two opinions cannot be the subject-matter of rectification. A glaring and obvious mistake either of fact or law can alone be corrected under Section 154.
Final Decision: The court allowed the appeal and quashed both the impugned notices dated February 23, 1989, as well as the order dated January 1, 1990, passed by the Commissioner of Income-tax under Section 154 of the said Act in response thereto.
( 1 ) THIS appeal arises out of an order passed on March 31, 1989, by a learned single judge of this court, dismissing the writ petition filed by the appellant petitioner. The relevant facts leading to this appeal are as under : The appellant is being assessed to both income-tax and wealth-tax for last several years. During the previous years relevant to the assessment years 1980-81 to 1985-86, the appellant writ petitioner derived income from proprietary business carried on by him at Surat in the names of Messrs. A. K. Textiles and Messrs. Rachna Textiles and at Calcutta in the name of Messrs. A. K. Saree Centre. The business of the said concerns was that of buying and selling sarees. During September 30, 1980, to January 17, 1983, the appellant writ petitioner operated a current account with the Oriental Bank of Commerce, Surat, in the name of his proprietary concern, Messrs. A. K. Textiles. During the period from June 9, 1983, onwards, the appellant writ petitioner operated another current account with the Oriental Bank of Commerce, Surat branch, in the name of Messrs. A. K. Textiles. During the period from October 9, 1983, the writ petitioner operated a current account with the State Bank of India, Tharpa Bazar, Surat, in the name of his proprietary business "rachna Textiles". Further, during the period from May 3, 1979, to April 20, 1983, the appellant writ petitioner operated a current account with Catholic Syrian Bank Ltd. , Burra Bazar Branch, Calcutta, in the name of his proprietary concern "messrs. A. K. Saree Centre".
( 2 ) IT is an admitted fact that the appellant writ petitioner did not include the income derived by him from the aforesaid three proprietary concerns in his returns of total income filed in respect of the previous years relevant to the assessment years 1981-82 to 1985-86.
( 3 ) ON or about March 7, 1986, a search was conducted by the income-tax authorities in exercise of the powers vested in them under Section 132 (1) of the Income-tax Act, 1961, at the residential premises of the appellant writ petitioner at P-2, Kalakar Street, Calcutta, as well as at the business premises of five different firms, namely, "jaree and Saree Stores", "saraf Saree Centre", "annapurna Textiles", "sanwalram Raj Kumar" and "gouri Shankar Saraf" at 212, Mahatma Gandhi Road, as well as at Ramkumar Rakshit Lane, Calcutta, In the course of the said search, certain jewellery and ornaments and a sum of Rs. 2,600 in cash were found in the bedroom of the appellant writ petitioner. None of these items were seized by the income-tax authorities. On the same date, namely, March 7, 1986, the business premises of the partnership firm, Messrs. Annapurna Textiles, Surat, of which the appellant writ petitioner, was a partner in his capacity as karta of a Hindu undivided family was sealed by the income-tax authorities. Subsequently, on March 26, 1986, the seals on the said business premises of the said Annapurana Textiles, Surat, were removed and the searching officials came across certain cheque books and pay-in-slips in respect of the two bank accounts, namely, Current Account No. 253 with the State Bank of India in the name of Messrs. Rachna Textiles and the Current Account No. 1469 with the Oriental Bank of Commerce in the name of Messrs. A. K. Textiles. These two were the proprietary concerns of the appellant writ petitioner. The income of these two proprietary businesses had not been disclosed by the appellant writ petitioner in the income-tax returns filed by him so far. These cheque books and pay-in-slips were seized from the office of Messrs. Annapurna Textiles and the fact of such seizure was noted in the panchnama drawn in the name of the said firm.
( 4 ) ON or about March 31, 1986, the appellant writ petitioner filed revised returns of income and wealth under the amnesty scheme administered by the Central Board of Direct Taxes through its various Circulars, bearing numbers 423 (See [1985] 155 ITR (St.)
