1. At the instance of the assessee, the Income-tax Appellate Tribunal has referred the following question for our opinion under s. 256(1) of the I.T. Act, 1961 (hereinafter referred to as 'the Act') :
'Whether, on the facts and in the circumstances of the case, the decision of the Tribunal that the penalty was leviable for concealment of income or filing inaccurate particulars of income within the meaning of section 271(1)(c) of the Act, even though the assessee had submitted the revised returns for the assessment years 1968-69 and 1969-70 was correct in law ?'
2. Since, for the reasons stated hereafter, we are remitting the matter to the Income-tax Appellate Tribunal, we do not consider it necessary to set out the facts in detail. The assessee, a registered partnership firm, filed its return of income for the assessment years 1968-69 and 1969-70 on July 31, 1968, and March 31, 1971, respectively. The assessee filed revised returns for the said assessment years on November 9, 1971, under s. 139(5) of the Act showing additional income for the said assessment years. The ITO substantially accepted the income returned in the revised returns and framed the assessments accordingly for the said assessment years. However, since the assessee had not disclosed the correct income in the original returns filed by it, the ITO initiated penalty proceedings under s. 271(1)(c) of the Act and, after hearing the assessee, levied a penalty under the said provision. the AAC and the Tribunal confirmed the ITO's order levying penalty. It is in the background of these facts that the question referred to above is referred to us for our opinion.
3. It is brought to our notice that the CBDT had issued instructions in their advertisement dated January 5, 1971, wherein the Board had stated to the effect that if the original return filed by an assessee is false, he may file a revised return to avoid the consequences of discovery. The said advertisement which had appeared in the newspapers and which is reproduced by the Gauhati High Court in its judgment in F. C. Agarwal v. CIT reads as under :
'FILING FALSE TAX RETURNS :
DO YOU KNOW THE CONSEQUENCES
Beware : Filling of false tax returns is severely punishable under the Income-tax, Wealth-tax of Gift-tax Acts. It may cost you more than what you have concealed.
4. Under the Income-tax Act, a minimum penalty equal to the amount of the concealed income and a maximum penalty equal to twice that amount, is prescribed. Besides, there can also be prosecution and conviction-rigorous imprisonment for not less than six months which can be extended to two years.
5. Similarly, evasion of wealth-tax is also severely punishable under the Wealth-tax Act. A minimum, penalty of an amount equal to the value of the asset so concealed or to the extent of understatement in the value of an asset or understatement in the value of any debt, is prescribed. This penalty can be as high as twice this amount. In addition, there can be prosecution and conviction with rigorous imprisonment for not less than six months extendible to two years.
6. Furnishing inaccurate particulars of any gift is punishable with a sum of not less than 20% but not more than one an a half times of the tax which would have been avoided if the return had been accepted as correct. Apart from this, you can be prosecuted. Conviction can mean simple imprisonment extendable to one year or with fine up to Rs. 1,000 or both.
REMEMBER If the original return filed by you is false why notEVASION OF TAX file a revised return to avoid the consequences ofIS A CRIME discovery. CENTRAL BOARS OF DIRECT TAXES (Department of Revenue & Insurance) MINISTRY OF FINANCE, GOVERNMENT OF INDIA.'
7. It was in pursuance of this advertisement published by the CBDT (hereinafter referred to as 'the Board'), that the assessee filed the revised returns as stated hereinabove. It is state before us that though the above advertisement was brought to the notice of the ITO, the AAC and the Tribunal; they have failed to consider the question whether in view of the advertisement given by the Board any penalty was leviable. It was submitted that under s. 119 of the Act, the Board may, from time to time, issue such orders, instructions an directions to the other I.T. authorities as it may deem fir for the proper administration of the Act an such authorities and all other persons employed in the execution of the Act shall observe and follow such orders, instructions an directions of the Board. It was argued that the I.T. authorities are bound by he instructions given by the Board contained in the advertisement referred to above and, therefore, no penalty under s. 271(1)(c) is leviable. However, as pointed out above, the ITO, the AAC and the Tribunal failed to take into consideration the above instructions issued by the Board. The grievance of the assessee is that effect ought to have been given to this circular of the Board before deciding the question of levying penalty under s. 271(1)(c) of the Act. We see no reason to doubt the statement made by the counsel for the assessee that a request for abstaining from imposing penalty in the context of the above instructions was in fact made. In our opinion, the Tribunal ought to have considered the question as regards the legality and propriety of levying penalty under s. 271(1)(c) of the Act in the light of the instructions given by the Board in the advertisement referred to above. Whether or not it amount to promissory estoppel and created a legal right apart, the question was required to be examined from the standpoint of the credibility of the department. Would it not cause greater harm to the department itself if assessees who respond to its appeals and desire to cleanse themselves of the past sins are deterred from doing so In a way, in the long run, it might be counter productive to do so. All these questions cannot be elbowed aside. they have to be met squarely in the face by the revenue authorities an the Tribunal by addressing themselves to it and answering the same in the manner considered right by them on policy and principle. We are, therefore, not incline to answer the question referred to us. In our opinion, the proper course to adopt is to remit the matter to the Tribunal for deciding the question of levying penalty afresh in the light of the dimension regarding the instructions contained in the advertisement issue by the Board referred to above.
8. In the result, we decline to answer the question referred to us for our opinion and remit the matter back to the Tribunal for deciding afresh the question of levying penalty under s. 271(1)(c) of the Act. There will be no order as to costs.