1. These appeals are directed against the imposition of penalties under Section 271(l)(c) of the Income-tax Act, 1961 ('the Act').
2. The assessee is an individual. For the assessment years 1963-64 to 1967-68, the assessee had initially filed returns on which original assessments had been made. However, on 25-3-1970 the assessee filed an application under Section 271 (4A) before the Commissioner stating that he had made certain investments, but the visible sources of income were not sufficient to explain the investments and, therefore, he was prepared to return the shortfall as income of the assessment years 1962-63 to 1968-69. He pleaded that in view of this voluntary disclosure of his affairs and the fullest co-operation for early finalisation of the settlement proposals, the penalty imposed may be waived. It is not in dispute that till today no action has been taken by the Commissioner on this application for waiver of the penalties.
But taking this application as information, notices under Section 148 of the Act were issued in response to which the assessee filed returns showing the income which he was prepared to disclose and assessments were completed on 24-11-1976. Treating the returns filed in response to notice under Section 148 as an admission of concealment of income penalties under Section 271(l)(c) were imposed on the assessee for all the assessment years by orders dated 14-3-1979. On appeal, the AAC also was of the opinion that the fact that the assessee had pleaded for waiver of penalty did not absolve him of his guilt of concealment which justified the imposition of penalties.
3. In the further appeal before us, reliance was placed on the decision of the Gujarat High Court in the case of Taiyabji Lukmanji v. CIT [1981] 131 1TR 643 and it was submitted that since the department had invited the assessee to file revised returns in case original returns were false, the penalties imposable had been waived even by the general order of the CBDT and could not, therefore, be imposed by the ITO. On the other hand, it was contended on behalf of the revenue that until there is a specific order of waiver of penalty, it was imposable on the facts of the case especially when the filing of the revised returns amounted to admission of concealment.
4. On a consideration of the rival submissions, we are of the opinion that the assessee is entitled to succeed. The admitted facts are that the assessee had filed returns originally which did not disclose the correct income. Subsequently, the assessee voluntarily disclosed the concealment and on the basis of that information reassessment proceedings were initiated and the assessee filed revised returns disclosing the real income. Assessments have been completed accordingly and it cannot be disputed by the assessee that the filing of the revised returns amounted to admission of concealment in the original returns. Prima facie, therefore, penalty under Section 271(l)(c) was imposable in respect of the concealment in the original returns but the case of the assessee is that such penalty must be deemed to have been waived by a general order of the Board. This refers to the advertisement by the Board reproduced in the case of Taiyabji Lukmanji (supra). In particular, the advertisement issued under the authority of the Board states that 'if the original returns filed by you is false, why not file a revised return to avoid the consequences of discovery'.
The Gujarat High Court observed that whether or not this amounted to a promissory estoppel and created a legal right was required to be examined from the stand point of credibility of the department. The revenue has referred to the decision of the Calcutta High Court in the case of Tarak Nath Paul v. CWT [1983] 142 1TR 468, to contend that a press note does not amount to a direction given under Section 119 of the Act and was not binding on the department. In that case the question was whether on the facts and in the circumstances of the case the imposition of penalty was at all justified without proper consideration of the press note, dated 2-6-1969, issued by the Ministry of Finance, Government of India, referred to in the Tribunal's order.
The High Court answered that question by saying that in the facts of the case the Tribunal has taken note of the press note and has come to the conclusion as to the effect of the press note and the Tribunal was justified in sodoing and further held that the Tribunal was right in holding that the law applicable was of the date when the default occurred and the default in that case occurred on the last date allowed for filing the return on which the assessee was obliged to file the return but did not do so. Though there is an observation that the press note in that case would stand on a different footing from a circular issued by the CBDT, it is not conclusive on the issue whether an advertisement, such as that referred to in the present case, would amount to a promissory estoppel. The doctrine of promissory estoppel has now come to stay because the Supreme Court has approved it in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR326. The department has clearly made it appear that the filing of revised returns will not invite the imposition of penalty. It is not possible for the department to resile from that position and claim that penalties should be imposed in spite of such a public advertisement. It was pointed out on behalf of the revenue that the advertisement was given by the Directorate of Advertising and Visual Publicity, which could not be treated as a circular of the Board. But we are of the opinion that executive functions are regularly carried out in exercise of proper authority duly exercised by statutory powers and can be repudiated only by a similar public statement. Whether the advertisement was made by authority of and on behalf of the Government by the CBDT in exercise of its statutory functions, is a matter of evidence and not for pleadings. The advertisement itself shows that it is issued under the authority of the CBDT and it is not in dispute that the Board does have the power to waive penalties in appropriate cases or class of the assessees. If the revenue wants to repudiate that position, the rebuttal has to be by way of evidence to the contrary which could in the circumstances of the case, be only by another advertisement or a public statement repudiating the effect of the original statement. In the absence of any evidence of a public withdrawal of that advertisement, the promise given by the advertisement continues to operate and has to be given effect to. It was again pointed out on behalf of the revenue that the assessee had disclosed the concealment on 25-3-1970 even before the advertisement which was issued in 1977 and, therefore, the assessee could not be entitled to the benefit of that advertisement. We cannot agree to this proposition either because it would be clearly arbitrary and discriminatory and there is no nexus between the date of the advertisement and the public statement that those who had voluntarily filed revised returns need not face the consequence. Thirdly, it was argued that since the petition under Section 271(4A) was still pending before the Commissioner, the assessee may seek redress under those proceedings. We do not see why the assessee should be made to wait for more than a decade for a simple waiver of penalty when prompt action has been taken to accept his statement as information for the purpose of making the assessments. Viewing the inaction of the Commissioner with the advertisement which came shortly after the assessee's disclosure, the only inference thatwe can draw is that the Commissioner found it unnecessary to pass any individual orders because in the cases of those kind, that is where revised returns have been filed voluntarily, the Board has itself issued a public statement that there there will be no penal consequences. We are, therefore, of the considered opinion that in the light of the policy statement of the department itself which will lose its credibility unless it is given effect to, there was no warrant for imposing penalties on the facts of this case. The penalties imposed are, therefore, cancelled. The appeals are allowed.