TMI Blog1980 (8) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... ch these questions of law have been founded are that penalty proceedings, under s. 271(1)(c) of I.T. Act, were initiated against the assessee, a manufacturer of carpets, maintaining its accounts from Diwali to Diwali, for the non-disclosure of Rs. 61,460, Rs. 50,810 and Rs. 3,200 in its return filed under s. 139(1) for the assessment year 1968-69, received from Damodar Das and Co., Bombay, M/s. C. A. Agarwal Ltd., Bombay, and Amrit Silk Store, Bombay, respectively, as incentive profit for sale of import licence. The sum of Rs. 61,460 was recorded in the balance-sheet of 1966-67. The ITO, therefore, asked the assessee to supply details of the transaction and particulars of the company at Bombay. But as the assessee avoided and took adjournments the ITO took action on his own under s. 131 and sent summons to the company at Bombay. The company informed that goods as per import entitlements were delivered to them at Bombay as far back as September 2, 1966, and they, after obtaining the bill dated March 20, 1967, from the assessee, closed the transaction in the last week of March, 1967. They also sent a photostat copy of the original bill signed by one of the partners'submitted on Augus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st disclosure. This sub-section only gives statutory recognition to what was otherwise inherent in it. But if the disclosure is to cover up or was in the knowledge of the assessee or made in bad faith then it does not come within the ambit of s. 139(5), nor can the assessee claim any benefit on it. The original and revised return become one if they are in accordance with s. 139(1) and (5) but not otherwise. The guilt of non-disclosure is not washed off by the admission of confession. The mere filing of a revised return, therefore, does not rule out the applicability of s. 271. In Amjad Ali Nazir Ali v. CIT [1977] 110 ITR 419, it was held by a Division Bench of this court (p. 426): " In cases where an assessee has deliberately omitted particulars of his income or made wrong statement in the return, the revised return filed by him would be outside the pale of section 139(5) of the Act, and it would not be a revised return as contemplated by the Act. Once this position is reached the question of considering the revised return for the purposes of penalty would hardly arise, for, in the eye of law, there would be no revised return as contemplated by section 139(5). Such a revised retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st have known about its contents. It only held that whether the requisition was served or not was immaterial, as assessee must have known that inquiries regarding the transaction with the company at Bombay were going on since 1968. And it cannot be said that this inference was unreasonable or unjustified. As none of the submissions advanced by the learned counsel for the assessee have been found to have any merit, the finding of the Tribunal that the assessee was guilty of concealment of Rs. 61,460 appears to be well founded. In fact, the plea of mistake in the circumstances of the case, was so flimsy that no reasonable inference could be drawn except the one arrived at by the Tribunal that it was not a case of discovery of mistake after the filing of the return but of the deliberate omission of fact which was in the knowledge of the assessee which it attempted to conceal with a view to evade payment of tax till the end and came out with the disclosure only when it became sure that its game was up. In respect of Rs. 50,810 also the assessee filed a revised return on 6th February, 1970. But for this amount there was no evidence nor was it the subject-matter of the inquiry by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmal procedure, places the burden to prove that the concealment was not due to fraud or gross or wilful conduct, on the assessee if the difference (sic) between the returned and the assessed income is less than eighty per cent. As the nature of the burden is negative and it is part of a penal provision in a taxing statute it has to be construed strictly. The Act is silent on the manner and method of discharge of this burden although it uses the word " proves ". According to the Evidence Act, fact is said to be proved when after considering the matter before it the court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. It is true that the Evidence Act does not apply to the I.T. Act, but in the absence of anything contrary, it is reasonable to accept the test of a reasonable man. A fact, therefore, can be said to be proved if, on the evidence led, a prudent man would assume its existence. While considering the nature of the burden of proof contemplated by the Explanation, a Division Bench of the Gujarat High Court in CIT v. S. P. Bhatt [1974] 97 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with disclosure which, with more alertness, an assessee could have had made. The one assumes knowledge, the other negatives it. The difference between " has " or "could have had" is vital and significant. Knowing something to exist and disclosing it only when a fear of detection is there may amount to fraud or gross or wilful conduct. But a fact of which knowledge could have been had cannot be fraudulent or gross or wilful as the primary ingredient of intention of these well-established strong concepts in law is missing. The proof that disclosure was not due to care amounts to saying that it was not due to fraud or gross or wilful conduct. As the assessee succeeded in establishing that the disclosure of Rs. 50,810 could have been given in the first revised return if it had taken care, the burden placed on it by the Explanation stood discharged and it could not be said that assessee failed to prove that disclosure (sic) was not due to fraud or gross or wilful conduct. In this view no, presumption could be raised and the assessee could not be deemed to be guilty of concealment. The order of the Tribunal imposing a penalty for the disclosure (sic) of Rs. 50,810 cannot be upheld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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