Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961-Penalty-For concealment of income-Assessee submitted revised returns showing additional income in accordance with advertisement published by CBDT encouraging assessees to do so to avoid consequences of discovery - ITO substantially accepted revised income and made assessment accordingly-He also imposed penalty under section 271 (1)(c ) which was upheld by AAC and tribunal-These authorities did not take aforesaid CBDT advertisement into consideration-Whether penalty exigible-Held, matter needed re-examination in the light of CBDT advertisement and case remitted to tribunal without answering question Facts The assessee, a registered firm, filed its return of income for the assessment years 1968-69 and 1969-70 on 31-6-1968 and 31 3-1971, respectively. The CBDT (Board), issued instructions in their advertisement dated 5-1-1971, published in the newspapers, saying that if the original return filed by an assessee was false, he might file a revised return to avoid the "consequences of discovery". In pursuance of this advertisement, the assessee filed revised returns on 9-11-1971 under section 139(5) declaring higher income for the said assessment years. The ITO substantially accepted the income returned in the revised returns and framed the assessments accordingly. The ITO also initiated penalty proceedings under section 271(1)(c) and eventually levied penalty which was confirmed by the AAC and the Tribunal in successive appeals. On reference: Held The Tribunal ought to have considered the question as regards the legality and propriety of levying penalty in the light of the instructions given by the Board in the advertisement referred to above. Whether or not it amounted to promissory estoppel and created a legal right, the question was required to be examined from the stand-point of the credibility of the department. It would cause greater harm to the department itself if the assessee who responded to its appeal and desired to cleanse themselves of their past sins were deterred from doing so. In a way, in the long run, it might be counter productive to do so. All these questions could not be elbowed aside. They had to be…

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