Commissioner of Income-tax Vs. Savoy Enterprises Ltd. - Court Judgment

Excerpt:
- ajit kumar sengupta, j. 1. in this reference made at the instance of the revenue, the tribunal has referred the following question for the opinion of this court under section 256(1) of the income-tax act, 1961 :'whether, on the facts and in the circumstances of the case, on the amount disclosed under the amnesty scheme, interest under section 217 of the income-tax act, 1961, is liable to be charged ?'2. this reference relates to the income-tax assessment of the assessee-company for the assessment year 1984-85. for this year, the assessee-company originally filed a return on june 28, 1984, showing a loss of rs. 23,280. subsequently, on march 31, 1987, the assessee-company filed a revised return showing a total income of rs. 7,26,720 under the circular issued by the central board of direct taxes for declaration of higher income and/or wealth more popularly known as the amnesty scheme. while completing the income-tax assessment for the said assessment year, the assessing officer charged interest under section 217 of the said act. the assessee filed an appeal before the commissioner of income-tax (appeals) and urged that charging of interest under section 217 of the said act for the said year was against the amnesty scheme as well as the directions issued by the central board of direct taxes under the said scheme. the commissioner of income-tax (appeals), however, rejected this contention of the assessee-company and held that the amnesty scheme was only an executive action and the provisions of law could not be overlooked in preference to executive instructions. he, therefore, confirmed the order of the income-tax officer charging interest under section 217 of the said act for the said year.3. the assessee being aggrieved by the said order of the commissioner of income-tax (appeals) further agitated the dispute before the tribunal. the tribunal held that the assessee has disclosed the amount under the amnesty scheme and, therefore, the assessee-company is entitled to the benefit of the executive instructions, which are binding on the department. the tribunal, therefore, allowed the appeal of the assessee-company on this point.4. at the hearing before us, it has been contended by mr. bagchi, the learned advocate appearing for the revenue, that the amnesty scheme was not created under the statute. it was purely an executive direction which could not override the provisions of law. mr. bagchi relied on the decision of the supreme court in the case of state bank of travancore v. cit : [1986]158itr102(sc) .5. on the other hand, mr. poddar, the learned advocate appearing for the assessee, drew our attention to instruction no. 1720 issued in fileno. 225/86/85-ita-ii on july 29, 1986, wherein the central board of direct taxes had clearly directed all chief commissioners (administration)/ commissioner of income-tax, inter alia, as under :subject : clarification regarding instructions and circulars issued by the board on declaration of higher income or wealth under the amnesty scheme. board's attention has been drawn to certain questions relating to cases of returns covered under the various circulars issued from time to time regarding declaration of higher income or wealth. the following clarifications are hereby issued on these points : (i) a doubt has arisen in some quarters on the point as to whether in the cases of old assessees, a belated return filed for the first time under section 139(4) or in response to a notice issued earlier under section 139(2) or section 148 is covered under the scheme. from the various circulars and the intention of the schemes, it is clear that no such distinction is contemplated under the scheme. it is, therefore, clarified that such returns whether of old assessees or of new assessees fall under the scheme. the same position will hold good in the case of wealth-tax also. (ii) as regards interest under section 139(8), 215 and 217 of the income-tax act, attention is invited to instruction no. 1695 dated february 13, 1986, regarding reduction/waiver of such interest. it is hereby clarified that such interest ought to be wholly waived. this will also apply to cases already decided under the scheme.' 6. mr. poddar also submitted that it is an admitted fact in this case that the assessee had disclosed a sum of rs. 7,50,000 under the amnesty scheme and the revised return showing a total income of rs. 7,26,720 filed by the assessee-company on march 31, 1987, was also under the amnesty scheme. in this context, mr. poddar drew our attention to the observation made by the income-tax officer in the assessment order for the said year passed under section 143(3) of the said act, wherein the assessing officer had noted that the penalty proceedings are not applicable in this case since the relevant returns were filed under the amnesty scheme. mr. poddar also submitted that an executive instruction in so far as it grants a benefit to an assessee is certainly binding on the income-tax authorities. this point is fairly settled by several decisions of the supreme court as well as of the high courts throughout the country including this court.7. we have considered the rival contentions. it is an undisputed fact in this case that the revised return with reference to which the assessment of the assessee-company was completed by the assessing officer was, in fact, filed under the amnesty scheme. it is also an undisputed fact that the income-tax officer has himself applied one part of the instructions issued by the central board of direct taxes under the said scheme wherein it had made clear that no penalty proceedings should be initiated where higher income and/or wealth is disclosed through a revised return under the said scheme. if that be so, in our view, the assessing officer was wholly unjustified in not applying the other part of the instructions which clearly required him to waive the whole of the interest chargeable under section 217 of the said act. the assessing officer while completing the assessment under the amnesty scheme had no option to enforce and apply only one part of the instructions for not initiating penalty proceedings and not to apply the other part of the instructions wherein he was instructed not to charge and/or to waive the whole of the interest technically leviable in law under sections 139(8), 215 and 217 of the said act. even otherwise, the law is well-settled that an executive instruction issued by the central board of direct taxes in so far as it grants a benefit to the assessee is binding upon the tax authorities. in that view of the matter, we are of the opinion that the tribunal was fully justified in law in allowing the assessee's appeal by holding that no interest was chargeable in this case. we, therefore, answer the question referred by the tribunal in this case in the negative and in favour of the assessee.8. here will be no order as to costs.shyamal kumar sen, j. 9. i agree.