COMMISSIONER OF INCOME TAX vs MAYANK ROTOPLAST INDUSTRIES

RAJESH BALLA, J.

In all the 4 cases, the application under s. 256(2) has been made in identical circumstances. A survey was conducted at the business place of the

assessee during the previous year relevant to the assessment year in question. The assessee had initially filed a return declaring a loss. After the

survey was conducted the assessee filed a revised return disclosing income and claimed benefit of Amnesty Scheme which was then brought into

effect by a circular issued by the CBDT. The AO did not allow the benefit of Amnesty Scheme by holding that the filing of return after a survey

was conducted was not voluntary and suo motu filing of revised return and, therefore, made regular assessment giving no benefit of Amnesty

Scheme. On appeal, CIT(A) confirmed the order of the AO. The Tribunal, on further appeal, set aside the order by following its decision tendered

in the case of Vikas Sales Corporation, Surat vs. 1TO ITA No. 3421 & 342211990 in which it has held as under :

ITA No. 3422/Ahd/1990 relating to asst. yr. 1986-87. In this case also the assessee filed its return of income. under the Amnesty Scheme on

30th Sept. 1986 declaring income of Rs. 6,87,460 and tax due according to the return of income was paid by way of advance tax and self-

assessment tax. The Asstt. Director of Inspection had conducted action under s. 133A of the Act on 23rd Sept., 1986 in the assessee''s case,

however, nothing was seized nor any incriminating material was found. The assessee had also co-operated in its enquiry relating to assessment of

its income. The AO charged interests of Rs. 3,145 under s. 139(8) and Rs. 8,525 under s. 217 of the Act. The AO also initiated penalty

proceedings under s. 273(2)(aa) of the Act. The assessee held not entitled to the benefits of the Amnesty Scheme on the ground that the return of

income was filed after the survey operations conducted by the Department. The AO held that had there been no survey operations, the assessee

would not have come forward with disclosure.

In the instant case also, there is no allegation that the disclosure made in the return of income was not full and true. There is also no findings that

disclosure was not in good faith. During the course of survey operations nothing incriminating was found against the assessee. It is pertinent to note

that the facts in this appeal are identical to the facts in ITA No. 3421/Ahd/1990 relating to asst. yr. 1985-86 (supra). For the reasons stated in the

order in ITA No. 3421/Ahd/1990, this appeal too is allowed. Consequently the interest charged under s. 139(8) and s. 217 of the Act will also

have to be cancelled.

The Revenue has not challenged the result in ITA Nos. 3421 and 3422 of 1990.

In the present cases the Tribunal found that there is no allegation that the disclosure made in the returns were not full and true. There are no

allegations that disclosure made were not in good faith. During the survey operations conducted by the Revenue authorities nothing incriminating

was found and detected.

On this ground and referring to the circular of the CBDT making it clear that the assessee could make good with the assessment of income which is

not the subject-matter of appeal provided the same has not been found out in the course of search. On finding that nothing incriminating has been

found against the assessee during the course of survey and otherwise finding that the returns filed were true and correct and in good faith and not as

a result of detection, held that the assessee was entitled to benefit of Amnesty Scheme. Accordingly, it set aside the orders, emanating from the

rejection of assessee''s claim to benefit under the Amnesty Scheme. In the aforesaid circumstances, the following question was required by the CIT

to be referred to this Court for its opinion :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that filing of revised return prompted by survey

under s. 133A of IT Act would be a return filed prior to detection by the Department and thereby eligible to benefit of Amnesty Scheme ?

It is noticed that the decision in the present case is founded on Tribunal''s own decision in ITA No. 3421/1990 relating to Vikas Sale

Corporation, Surat, which has not been made subject of any reference application.

The Tribunal rejected the application under s. 256(1), hence the CIT has moved this application under s. 256(2) requiring the direction to the

Tribunal for referring the above question of law said to be arising out of Tribunal''s order.

Having heard learned counsel for the parties, we are satisfied that there is no error in the order of the Tribunal refusing to refer the aforesaid

question under s. 256(1) of the Act. The Revenue''s case has been that a return filed after survey of the business premises of an assessee is a return

on detection of concealment and cannot be treated as voluntary disclosure of income. The Tribunal has found as a fact that nothing incriminating

has been found against the assessee during the course of detection. The question whether a detection has been made as a result of survey is a

question of fact.

It is obvious that mere conduct of survey or for that matter even search at any premises by itself cannot give any ground to hold that assessee

has not disclosed anything or is guilty of non-disclosure. Whether assessee is found to be in possession of anything which can indicate about non-

disclosure of income on his - part is a question of ultimate conclusion reached by the competent officer concerned with such proceedings. Answer

to question of law whether a return filed by an assessee after a survey has been conducted is involuntary and in pursuance of detection of material

incriminating the assessee is obvious and in the negative. Whether as a result of any proceedings the AO has detected something incriminating and

thereupon the assessee has filed a return is always a question of fact. If the question is referable to abstract question that conducting of survey itself

is sufficient to brand a return as involuntary and on detection of any material non-disclosure on the part of the assessee the answer being obvious,

the question is not required to be referred. The Tribunal has not reached and could nor have reached any such conclusion that in no case a return

filed after conduct of survey but before any search can ever by involuntary return. In fact it has assumed that such can be the case, but the

proceedings must disclose that during survey something incriminating has been found against the assessee and that has led to filing of return. This

part of the controversy is a question of fact which has been found in favour of assessee and against the Revenue on considering material before it.

This later part does not give rise to question of law which may be required to be referred except in case a question is raised about vitiating such

findings on such ground that renders the finding reached the Tribunal open to interference.

Without expressing any opinion even if it be assumed for the sake of argument that a return filed after conduct of survey can give rise to a

presumption that assessee has filed returns after detection, it at best is a reputable presumption of fact which can be upturned during the course of

proceedings. What amount of evidence would be necessary for rebutting the presumption arising out of such survey is a matter in the realm of

sufficiency or adequacy of evidence necessary for reaching a conclusion of fact. It does not given rise to a question of law.

The Tribunal in each of the cases has found that during the course of survey no incriminating material has been found and there are no allegations

against full and true disclosure or good faith on the part of the assessee. These are all findings of fact. If the Tribunal has reached its findings of fact

by taking into consideration the fact of survey that no detection has been found in our opinions no question of law arises as suggested by the

Revenue in these applications.

The applications are, therefore rejected. Notices are discharged. There shall be no order as to costs.

OPEN