TMI Blog1985 (10) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... between the original and the revised return arose on account of the exclusion of two debit entries of Rs. 82,393 loss on account of speculation in alsi, and (ii) Rs. 5,000 on account of loss in gram, palwal and also on account of right adjustment of provision for bonus payable of the relevant year. On January 20, 1971, the Income-tax Officer made a reference under section 274 of the Income-tax Act, 1961, to the Inspecting Assistant Commissioner. The grounds on which reference was made and recorded by the Income-tax Officer which were as follows : "In this case, return was originally filed on August 29, 1969, declaring an income of Rs. 50,720. During the course of examination of accounts, it was noticed that the assessee has claimed full deduction in respect of bonus whereas the bonus admissible as per rules ought to have been claimed. It was further noticed that the speculation losses were also added back in the return. The assessee has, therefore, filed a revised return declaring an income of Rs. 1,63,370. As the assessee did not disclose truly and materially all the facts in the original return, there are reasons to believe that he has concealed the particulars of income wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king outside. The Tribunal held that the assessee is guilty of concealment of the particulars of income with regard to the loss in speculation only and not with regard to the excess debit in the bonus account, the quantum of penalty will stand reduced to Rs. 87,293 which is the minimum under the provisions of the Act as it stood on April 1, 1968. An application for making a reference to the High Court for opinion was submitted by the assessee before the Tribunal. The Tribunal partly accepted the application and referred the question to this court for opinion. The questions referred by the Tribunal are as under : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the order of the Inspecting Assistant Commissioner, imposing penalty on January 18, 1974, had not become time-barred, as the limitation for passing the order by the Inspecting Assistant Commissioner in this present case, on the basis of the penalty proceedings, initiated by the Income-tax Officer, vide his notice dated January 20, 1971, would be governed by the provisions of section 274(2) of the Income-tax Act, 1961, as amended with effect from April 1, 1971 ?" ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onus cast under the Explanation to section 271(1)(c) when the Income-tax Officer has categorically stated that the charge against the assessee was of concealment of income ? 7. Whether the assessee's failure to add back the speculation loss amounted to concealment of particulars of income or of submission of inaccurate particulars thereof ? 8. Whether, on the facts and in the circumstances of the case, the learned Inspecting Assistant Commissioner could have imposed a penalty on the assessee by holding that the latter has failed to discharge the onus cast under the Explanation to section 271(1)(c) ? 9. Whether the learned Income-tax Appellate Tribunal was justified in holding in law that the charge of concealment of income covers also the charge of furnishing of inaccurate particulars of income ? 10. Whether the Income-tax Appellate Tribunal could, after categorically holding that the error is one which borders on the verge of wilful negligence or inadvertence, hold the assessee guilty of offence under section 271 (1)(c) ? 11. Whether the learned Inspecting Assistant Commissioner had jurisdiction to pass the penalty order on January 13, 1974, when the penalty proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of loss arising in a speculative transaction to the commercial profits on the basis of bona fide belief cannot be said to be concealment of income or furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Act. Learned counsel for the petitioner has also cited before us some cases to show that in the matter of imposition of penalty, considerations are altogether different and in every case of non-disclosure or no proper disclosure of the details of the income, expenditure or any other items in the return, penalty cannot be imposed as a rule. The Tribunal, while disposing of the application, has discussed in detail the submissions made by the assessee-petitioner. The Tribunal held that in the instant case, the farts on record clearly go to show that the Income-tax Officer had initiated penalty proceedings and the assessee did not disclose truly and fully all the facts in his original return. This was the reason recorded by him in his order dated January 20, 1971. It was also held by the assessing authority that the assessee had concealed the particulars of his income and in the notice served, the grounds of concealment of income and furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view taken by the Tribunal in this matter. As far as question No. 2 is concerned, it was submitted by the assessee that the Tribunal has raised a presumption of concealment under the Explanation to section 271(1)(c) and no notice under section 271(1)(c) read with Explanation was given to the assessee. A notice was only given under section 271(1)(c) of the Income-tax Act. It was also submitted that the provision of the Explanation to section 271(1)(c) is not attracted. Explanation is a part of the main section and the Explanation clears the ambiguity, if any, in the main section. The Explanation cannot be read in isolation. The intention of adding the Explanation is that if anything is not clear in the main section, then it should be made clear by adding the Explanation. For the purpose of taking any action or for the purpose of interpreting any law, the foundation is the main section and the Explanation is a subordinate part for the purpose of arriving at a particular conclusion in the matter of interpretation of the statute. It will not be out of place here to mention that the aid of the Explanation can be taken and it is not necessary to refer the Explanation in the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in it. It may be said that in some cases where there is no evidence to the contrary, but any perverse view is taken by the Tribunal, then this court has a jurisdiction to take the matter on hand as it may amount to a question of law on the ground that it is a case of no evidence. Appreciating and apprising the material facts which are on record, however, it can be said that drawing an inference on the basis of the admitted facts may be a question of law. The Tribunal below has already held on the basis of the material on record that the Inspecting Assistant Commissioner was justified in holding that it is a case of wilful neglect and the Tribunal has taken a view that it is a question of fact and no question of law is involved and it cannot be said that the view taken by the Tribunal is bad in law. We are in conformity with the view taken by the Tribunal. As far as questions Nos. 7 and 8 are concerned, the Tribunal has given similar finding in both these questions. The Tribunal, taking into consideration question No. 4, has held that no question of law is involved in it and it is a pure and simple matter of fact. We are in conformity with the view expressed by the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes a question of fact also and it cannot be said that being a border case, the view taken by the Tribunal is perverse. Learned counsel for the petitioner has submitted that the Tribunal has itself taken it as case bordering on negligence and, as such, the Tribunal was not justified in imposing the penalty and was not also competent to do so. As far as the question of competence and jurisdiction is concerned, the Tribunal was competent to do so and the Tribunal had the jurisdiction in the matter. Even if it is assumed that it is a borderline case, it cannot be said that it was not a case for imposing penalty, especially when a minimum penalty has been imposed which is imposable under the law. We are in conformity with the view taken by the Tribunal in this matter and, as such, we need not express our opinion in detail. The revised return and the original return have to be considered for the purpose of penalty in a different way. If there is a voluntary disclosure by filing a revised return, it may be a case in which the party may submit that the question of wilful neglect does not arise at all. But, in a case where there are queries and queries by the Tribunal or the authority co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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