1. The appeal by the assessee arises out of the order dated 25-4-1991 of the CIT(A)-I, Indore, pertaining to the assessment year 1986-87.
2. The assessee is a firm of three partners, namely, Dr. Radhika Singh with 50 per cent share income, Dr. (Mrs.) Kusum J. Singh and Smt. S.K.Bais, having 25 per cent share income each. It derives income from running a Nursing Home at 11 /2, Old Palas, Indore. For the assessment year 1986-87 presently under consideration, the relevant accounting period ended on 31 -3-1986. Survey under Section 133A of the Act was conducted at the business premises of the assessee after the end of the accounting period. During survey certain diaries were found in which income was noted at Rs. 6,15,078, whereas in the books of account, the income was shown at Rs. 2,58,463 only. The assessee filed the return on 30-9-1986, declaring total income at Rs. 2,08,260. In the income and expenditure statement filed along with the return, the receipts have been shown as per the diaries. The Assessing Officer completed the assessment on total income of Rs. 2,30,825 vide his order dated 6-3-1989 under Section 143(3) of the Act. He directed charging of interest under Sections 139(8), 215 and 216. He also initiated penalty proceedings under Sections 271(1)(a) and 273(2)(aa) of the Act.
Aggrieved, inter alia, by the Assessing Officer's direction for charging interest under the said sections and initiation of penalty proceedings under the above sections, the assessee carried the matter in appeal 3. Before the CIT(Appeals), it was contended by the assessee that the return was filed on 30-9-1986 voluntarily under the amnesty scheme. The assessee is, therefore, eligible for immunities against levy of interest under various sections. The contention of the assessee did not find favour with the CIT(Appeals). According to him, the assessee has disclosed income recorded in the diaries after the same was discovered by the Department during the survey operations, otherwise the same would have escaped assessment. He further observed that the disclosure was not complete and full as income of Rs. 2,907 reflected in the diaries, but not recorded in books had not been disclosed and the same has been added in the assessment. Further, out of the claim of expenses, disallowance of Rs. 10,000 has been made. This has been accepted by the assessee. The CIT(Appeals), thus, arrived at the conclusion that the case of the assessee is not covered by the amnesty scheme. He further held that the appeal against initiation of penalty proceedings is premature as appeal would lie only if penalties are levied. He upheld levy of interest under Section 216 as no case was made out for non-levy of such interest. Regarding interest under Sections 139(8) and 215, he directed that interest under the said Sections be worked out as per law after giving effect to his appellate order, the same being only consequential in nature. Dissatisfied, the assessee is in further appeal before the Tribunal.
4. Inviting our attention to the copy of the acknowledgement receipt bearing No. 21719 (copy at page 1 of the paper book), the Id. counsel for the assessee submitted that the assessee filed the return on 30-9-1986 under the amnesty scheme. Before filing the return, the assessee paid self-assessment tax of Rs. 28,992, which is evident from the copy of challan available at page 2 of the paper book. The Id.
counsel further submitted that as per income and expenditure statement (copy at page 4 of the paper book), the total of credit side came to Rs. 8,73,341 and that of debit side at Rs. 6,82,339. The net profit worked out to Rs. 1,91,002. The credit side included the income of Rs. 6,15,078 as per the diaries. Thus, the return was submitted after taking into account the income as reflected in the diaries. It has been argued by the Id. counsel that the return having been filed voluntarily and the tax having been paid before filing the return, the return ought to have been treated as filed under the amnesty scheme. In support of the above contention, he relied on the question No. 4 and reply thereof contained in the resume of answers given by Shri M.C. Joshi, Chief Commissioner (Admn.) and CIT(A)-I, New Delhi, to the specific questions raised by the Members, Bar Association, on 2-1-1986. A copy thereof has been placed on file and appears at pp. 8-9 of the paper book. Reference was also made to the question No. 19 and answer thereof contained in Board's Circular No. 451, dated 17-2-1986. A copy of this circular is available at pages 10-18 of the paper book. Reliance was also placed on the decision of this Bench of the Tribunal rendered in the case of M/s.
JaiKishan Gopi Kishan of Sanawad of 30-12-1991 (copy at pp. 19-30 ol the paper book), wherein the Tribunal held that the returns for the assessment years 1983-84 and 1984-85 had been filed under the amnesty scheme and accordingly cancelled the interest charged under Section 215 as also penalty levied under Section 271(1)(c) of the Act. The Id.
counsel concluded his arguments by urging that the return having been filed under the amnesty scheme, the assessee is entitled to immunities allowed thereunder. The CIT(Appeals) was incorrect in holding that the case of the assessee is not covered under the amnesty scheme.
5. The Id. DR, on the other hand, submitted that the assessee filed the return declaring higher receipts only after survey conducted by the Department. He argued that it was the survey operation, which brought to light large variation in the receipts reflected in the diaries found and those recorded by the assessee in the books of account. Relying on the Q.No. 19 and the answer thereof in Board's Circular No. 451, dated 17-2-1986, the Id. DR submitted that though concealment was detected in survey, no quantification of concealed income could be done prior to filing of the return. Hence the return filed by the assessee cannot be treated as amnesty return and the CIT (Appeals) was justified in holding that the astessee's case is not covered under the amnesty scheme. He further argued that in the case of Jaikishan GopiKishan (supra), there was no survey operation and the 1 acts of that case were entirely different. He opposed the contention of the Id. counsel for the assessee that the return was filed voluntarily. According to him, it was not so and, therefore, the findings of the CIT(Appeals) does not call for any interference.
6. We have considered the rival submissions and perused the orders of the authorities below and the materials placed before us. It is an admitted position that survey was conducted by the Department in the business premises of the assessee-firm after the close of the accounting year relevant to the assessment year under consideration and before the return of income was due/filed. It is also not in dispute that the assessee is maintaining regular books of account, wherein the receipts and expenses are recorded. During survey, certain diaries were found. These diaries reveal that the receipts in the year of account amounted to Rs. 6,15,078 but receipts of Rs. 2,54,463 only was recorded in the books ol account. No doubt, in the return filed by the assessee on 30-9-1986, the assessee disclosed the receipts as per the diaries and claimed in the return that there was Voluntary - declaration of income under new directives', the question for our consideration is whether, the claim of the assessee is tenable in the light of various circulars of the CBDT.7. The Id. counsel for the assessee has argued that following question No. 4 raised by the Members, Bar Association and reply thereto given by the CC (Admn.) and CIT(A)-I, New Delhi, on 2-1 -1986 supports the contention of the assessee :-- Q. No. 4 - Whether higher income can be shown in cases where assessments have been set aside in appeal are pending reassessment being reopened under Section 147 Answer - Yes. The assessee would avail of benefit under these circulars.
8. From the above question, it is obvious that the questioner has in his mind two types of cases :-- (i) An assessee, who has already been assessed for a particular assessment year on certain income and such assessment stands set aside and fresh assessment is pending finalization; and (ii) An assessee whose assessment for a particular assessment has been reopened under Section 147 and the reassessment is pending.
9. Two common factors are noticeable in the above two situations, namely, the original assessment has been completed and fresh assessment is still pending. In the above two situations, if the assessee shows higher income in the return filed under the amnesty scheme, as per the reply given, the assessee could avail the benefit under Circular No.423, dated 26-6-1985, and Circulars No. 432, 439, 440 and 441, dated 15-11-1985.
10. In the case of the assessee before us, neither of the two situations visualized in the question, namely, the completion of the original assessment and pendency of the fresh assessment are existent.
The return for the assessment year 1986-87 was due on 30-6-1986 and was filed on 30-9-1986. The assessment was completed on 6-3-1989. So, in the situation, in which the assessee is placed, there is no occasion for it to show higher income in the revised return than that shown in the return filed originally. The argument of the Id. counsel is that the assessee is on a better footing, as it came forward and declared higher income in the return filed at the original stage itself. No doubt, the argument is tempting at the first sight, but the charm of this argument vanishes, when we give a look to the Circulars of the CBDT mentioned above. On perusal of the said circulars, we find that underlined theme therein is that the taxpayer should voluntarily make a full and true disclosure of his concealed income, prior to its detection by the ITO. It is implicit in the word 'conceal' that there has been a deliberate act on the part of the assessee to conceal, i.e., to hide the income. Shorter Oxford English Dictionary, IIIrd Edition - Volume I, has given the meaning of the word 'Concealment' as "in law, the intentional suppression of truth or fact known, to the injury or prejudice of another".
11. As stated earlier, the assessee has maintained regular books of account recording therein the income earned and expenditure incurred in the course of running its business of Nursing Home. The assessee has recorded receipts of Rs. 2,54,463 only in the books of account. The receipts as disclosed in the books of account would have formed the basis of return of income for the assessment year under consideration.
However, this was not to be. The Department exercised its power of survey under Section 133A of the Act and the survey operations carried on at the business premises of the assessee resulted in finding out certain diaries in which the actual receipts were found recorded at Rs. 6,15,078. There is, thus, absolutely no doubt that there was concealment of income by way of suppression of receipts in the books of account, which was detected as a result of survey operations. Now there was no go, but to disclose the correct receipts in the return. The assessee was compelled by circumstances to file return declaring receipts at Rs. 6,15,078 as reflected in the diaries as against the receipts recorded at Rs. 2,54,463 in the books of account. In the given situation, it is hard to swallow the argument of the Id. counsel for the assessee that the return filed by the assessee on 30-9-1986 was voluntary. The return disclosing higher income was the direct consequence of the material found by the Department in the form of diaries, which eloquently proved the fact of concealment by the assessee of real receipt/income in the books of account maintained by it. If that be so, the question No. 19 and answer thereto in Board's Circular No. 451, dated 17-2-1986 will not render any assistance to the assessee. The expression 'before detection by the Department' has been clarified in the answer to Q. No. 19 in the following words :-- If the ITO has already found material to show that there has been concealment that we would mean the Department has :detected the concealment. If the ITO only had prima facie belief that would not mean concealment has been detected.
12. As stated earlier, the Department had already found material in survey in the form of diaries, which showed that there has been concealment in the books of account maintained by the assessee. It is not a case, where the Department was groping in dark and there was only prima facie belief that the assessee had concealed income. The fact of concealment was proved beyond doubt as the diaries found in survey revealed that the correct receipts were of the order of Rs. 6,15,078 and not Rs. 2,54,463 as recorded in the regular books of account.
13. We have perused the Tribunal's order in the case of M/s. Jai Kishan Gopi Kishan & Sons (supra). In that case, the assessee had claimed loss of Rs. 3,13,630 in the assessment year 1983-84 on transactions of purchase and sale of cloth through a commission agent of Calcutta, namely, M/s. Terrytex Corpn., Calcutta. Inquiry into the genuineness or otherwise of the assessee's claim was under way and the assessee offered the amount of losses as income by filing revised return. On the basis of the material collected by the Department, the Tribunal recorded a finding of fact that it could not be positively said that the losses claimed by the assessee were fictitious. The ITO had only prima facie belief of them being fictitious, which does not fall within narrow compass of 'detection'. In the case before us, the facts are totally different. As stated earlier, there was a survey and in survey diaries recording therein real receipt/income had been found, which compelled the assessee to file the return disclosing therein the correct receipts/income as against those recorded by it in the books of account maintained in its regular day-to-day business. Therefore, the decision supra of the Tribunal does not render any help to the assessee.
14. For the reasons aforesaid, we hold that the return filed by the assessee cannot be treated to have been filed under the amnesty scheme.
Accordingly, we decline to interfere with the order of CIT(Appeals) and endorse his findings.