TMI Blog1999 (11) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment without explanation". Assessment was completed on February 2, 1988, on a total income of Rs. 6,24,640 including the sum of Rs. 3,24,650 offered by the assessee as income under the head "Other sources" in the revised return filed on October 16, 1987. In the course of assessment proceedings, the Assessing Officer initiated penalty proceedings under section 271(1)(c) on the view that the revised return filed by the assessee admitting a higher income could not be treated as a voluntary one as the same was filed only after the Department had started enquiries with regard to the credit balances and with regard to the demand draft accounts. The Assessing Officer held the view that the second return filed by the assessee could not be considered as a revised return under section 139(5) as the same was filed after the Department had started making enquiries and that the mere fact that the additional income offered by the assessee was accepted would not absolve the assessee of the liability for penalty in the light of the decision of the Madras High Court in CIT v. Krishna and Co. [1979] 120 ITR 144. On this view of the matter, the Assessing Officer levied a penalty of Rs. 1,62,325 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her sum of Rs. 3,24,650. In support of the application, learned counsel for the Revenue submitted that the second return cannot be termed a return within the meaning of section 139(5) of the Act and whatever the assessee had disclosed subsequently was by way of an attempt to forestall further action after the omissions were detected. Learned counsel for the assessee, on the other hand, submitted that there was no suppression of purchases made. Certain credit facilities were availed of by the assessee which it thought can be proved. But later on after discussions with its authorised representatives, it was considered prudent to offer the amount voluntarily for taxation. That itself is sufficient to term the second return a revised return, and no mala fides are involved to warrant imposition of penalty. The Tribunal, after considering the factual aspects, has cancelled the penalty. Its conclusions are essentially factual giving rise to no question of law. At this juncture, it is necessary to refer to the legislative history so far as section 271(1)(c) is concerned. There are three stages of amendment of section 271(1)(c). The periods are (a) prior to April 1, 1964, (b) April 1, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer shall not issue any direction for payment by way of penalty without the previous approval of the Inspecting Assistant Commissioner. Explanation 1.--Where in respect of any facts material to the computation of the total income of any person under this Act,-- (A) such person fails to offer an explanation or offers an explanation which is found by the Income-tax Officer or by the Appellate Assistant Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed : Provided that nothing contained in this Explanation shall apply to a case referred to in clause (B) in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bona fide and all the facts relating to the same and material to the computation of his total income have been disclosed by him." The question of onus is of primary and added importance i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d knowledge of". There may be cases where the facts may attract both the offences, and in some cases there may be overlapping of the two offences. If in the facts and circumstances of a particular case and on the materials before it, the Tribunal reaches a conclusion that concealment was not proved, it is a question of fact and no question of law arises from such order. Similarly, whether the burden in a given case has been discharged on a set of facts or not is a question of fact. Where a finding of fact arrived at by the Tribunal is based on no material or is perverse or is based on irrelevant, extraneous or inadmissible considerations or is arrived at by the application of wrong principles of law, a question of law arises. Where the Tribunal fails to arrive at its own conclusion of fact after due and proper consideration of the entire materials for and against the assessee and cancels the penalty, a question of law arises. Similar is the case where conclusions of the Tribunal suffer from infirmity on account of relevant materials and evidence being ignored. A conspectus of the Explanation added by the Finance Act, 1964, and the subsequent substituted Explanations makes it cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant and cogent. It is for the fact-finding body to judge the relevancy and sufficiency of the materials. If such a fact-finding body, bearing the aforesaid principles in mind, comes to a conclusion that the assessee has discharged the onus, it becomes a conclusion of fact, and no question of law arises. As observed earlier, the initial burden is on the assessee. Once the initial burden is discharged, the assessee would be out of mischief unless further evidence is adduced. It is plain on principle that it is not the law that the moment any fantastic or unacceptable explanation is offered, the burden placed would be discharged and the presumption rebutted. As pointed out by the apex court in CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14, the burden placed upon the assessee is not discharged by any fantastic explanation. It must be an explanation acceptable to the fact-finding body. The position on and after April 1, 1976, is clear that where, in respect of any item of credit, the assessee has offered an explanation which the taxing officer has considered to be false or the assessee has offered an explanation but no material or evidence to substantiate it, he shall be deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer. Where a revised return is made by the assessee on his own volition before concealment was detected in the course of the assessment proceedings, the conduct of the assessee has to be taken note of. Section 139(5) applies only to cases of omission or wrong statement and not to cases of concealment or false statements. Section 139(5) has application to a limited category of cases, namely, where in the original return there was an omission or any wrong statement. The very word "omission" denotes an omission bona fide. Equally, the words "wrong statement" will not take in "a statement known to be false to the person who made the statement". However, tire word "discovered" coming in section 139(5) makes it clear that at the time of discovering only a person who has furnished a return finds out that an inadvertent omission or an unintended wrong statement had crept in the return filed by him. If a person who filed a return was aware of the falsity of statement and incorrectness of the particulars of income even at the time when he filed the original return, there is no question of that person subsequently discovering the existence of an omission or creeping in of a wrong st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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