TMI Blog1979 (9) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... Mohan Singh Sons 20,000 (iii) Interest in the name of M/s. Amir Chand 2,075 Moti Ram The said officer issued penalty notice under s. 271(1)(c) of the Act for concealment of income and since the minimum penalty imposable exceeded a sum of Rs. 1,000, he referred the case to the IAC of Income-tax under s. 274(2) of the Act. On appeal, the AAC reduced the addition in the account of M/s. Amir Chand Moti Ram to a sum of Rs. 17,000 but maintained the addition of Rs. 20,000 in the account of M/s. B. Mohan Singh Sons and the addition of interest amounting to Rs. 2,075 in the account of M/s. Amir Chand Moti Ram. The IAC, vide his order dated March 15, 1971, after allowing the assessee an opportunity of being heard, imposed a penalty of Rs. 38,592 on the assessee under s. 271 (1)(c) of the Act. Aggrieved by the order of the IAC, the assessee went up in appeal before the Income-tax Appellate Tribunal. The said Tribunal held that no penalty was imposable in respect of the cash credit of Rs. 17,000 in the account of M/s. Amir Chand Moti Ram as this addition had been deleted by the Appellate Tribunal. The penalty leviable in respect of the addition of Rs. 20,000 being the cash credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding the submission of wrong particulars has to be given on the basis of such original return. In support of this submission, reliance is placed on C1T v. Gopal Krishna Singhania [1973] 89 ITR 27 (All) [FB]. On behalf of the revenue, our attention is drawn to a Division Bench judgment of this court in Smt. Kamla Vati v. CIT [1978] 111 ITR 248, in which it was held that the words " regular assessment " appearing in s. 273 of the Act did not take in its ambit reassessment contemplated under s. 147 of the Act. It is submitted that if proceedings under s. 147 are separate proceedings, any return filed pursuant to a notice under s. 148 of the Act would attract the penalty provisions contained in s. 271(1)(c) of the Act. In that case, however, the attention of the Division Bench was not drawn to Gopal Krishna's case [1973] 89 ITR 27 (All) [FB]. The matter is not free from difficulty and is likely to arise in a large number of cases and in our opinion can more properly be decided by a Full Bench. We, accordingly, direct that orders of hon'ble the Chief justice may be obtained in this regard. JUDGMENT OF THE FULL BENCH D. S. TEWATIA J.--In this reference under s. 256(1) of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellate Tribunal on an appeal from the order of the AAC. The penalty in respect of the addition of Rs. 20,000 pertaining to the cash credit in the account of Messrs. B. Mohan Singh and Sons was held to be leviable and was, therefore, maintained. Quantum of penalty was computed by it with reference to the penalty provisions of s. 271(1)(c)(iii) of the Act as it existed prior to April 1, 1968, for, according to it, the offence of concealment was committed when the original return of the income had been filed by the assessee and that was on April 21, 1967. In the light of the aforesaid view, the Tribunal fixed the penalty at 30 per cent. of the tax sought to be avoided on the income finally determined in the appeal. The parties are not at variance with each other in regard to the fact that on the day on which the original return was filed by the assessee, i.e., April 21, 1967, the quantum of penalty imposable followed the tax-avoided base, i.e., it had reference to the quantum of tax sought to be avoided by concealing his income and that on the day on which the return in response to a notice under s. 148 of the Act was filed, i.e., 19th February, 1969, the quantum of penalty f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to be concealed by the assessee by omitting to file a return. In this regard, the following observations of Venkataramaiah J., in Addl. CIT v. Bagalkoti Sons [1978] 115 ITR 131, 139 (Kar), expressing the Division Bench view of the Karnataka High Court with which, with respect, I entirely concur, can be quoted with advantage : " The offence of concealment of particulars of income or furnishing of inaccurate particulars of such income is committed when a return is filed. The mere non-filing of a return may not be considered either concealment of income which is liable to tax or furnishing inaccurate particulars regarding it (vide S. Santhosa Nadar v. First Addl. Income-tax Officer [1962] 46 ITR 411 (Mad))." There is judicial consensus that such concealment of income as attracts the penal provisions of s. 271(1)(c) of the Act takes place when the return is filed by the assessee. Since the offence of concealment of income is penal in nature in that it is visited with punishment, and since in view of the provisions of art. 20(1) of the Constitution of India, a person is liable to only such quantum of punishment as was imposable when the offence was committed, it becomes nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny wrong statement therein, he may furnish a revised return at any time before the assessment is made." " 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139 ; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section." Perusal of the aforesaid provisions would show that an assessee is required under compulsion of law to file a return under s. 139(1) and (2) and under s. 148. He can also voluntarily file an amended return under s. 139(5). This leads to a poser whether an assessee would ever file more than one return for a given year ? Answer is in the affirmative, for, he may file one return either under s. 139(1) or when required under s. 139(2). He may voluntarily file an additional return under s. 139(5). He may also file another return when required to do so under s. 148 of the Act. One may ask does such an assessee commit an offence every time when he, under statutory compulsion, filed those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to such a case, the doctrine of double jeopardy be attracted ? In my opinion, although it is true that what constitutes an offence is the concealment of income of a given assessment year in a return, yet it is a misconception to think that the said offence committed repeatedly would attract only one punishment and that too the one which was provided for by the law operating on the date when the said offence was committed for the first time. The doctrine of double jeopardy is attracted only to a case where a person is sought to be punished twice over for the very offence but where that is not the case, i.e., where a certain offence for which a person is sought to be convicted and punished is an offence distinct from the first offence, then the doctrine of double jeopardy would have no applicability. Take, for example, a case of perjury. A person in a given proceeding makes a false statement in regard to a given fact. He commits the offence of perjury. If that very person in proceedings which are not the continuation of the earlier proceedings, but distinct though supplemental to the earlier proceedings, happens to make again a false statement about the very fact regarding whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awn by the learned counsel to the following extract from Ram Achal Ram Sewak's case [1977] 106 ITR 144 (All), which contained the reasoning of the court in support of the view which it took (p. 150) : " The question that arises is as to whether in a case where an assessee has concealed the particulars of his income or furnished inaccurate particulars of such income in the original return, and as such he becomes liable to penalty, a second penalty can be imposed for concealment or inaccurate furnishing of particulars of income when he files a return in pursuance of a notice under section 148. The repercussions of the acceptance of the argument raised by counsel for the department may be examined with reference to particular cases. To begin with, we shall take a case where an assessee has concealed the particulars of his income or furnished inaccurate particulars of such income in his original return as also in the return filed in pursuance of a notice under section 148. If the argument of the department is accepted, the assessee would become liable to two penalties, one in respect of the concealment or inaccurate furnishing of particulars in respect of the original return, and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Bangkok branch to be Rs. 37,500 and completed the assessment and on the same day initiated proceedings for the imposition of penalty for concealment of income and imposed a penalty of Rs. 20,000. In the meantime, in the assessment proceedings for the next year the assessee produced the account books of the Bangkok branch which disclosed that the assessee had made a profit of Rs. 1,25,520 for the previous assessment year for which the assessment had been completed. The ITO issued a notice under s. 34 of the Indian I.T. Act, 1922 (which is equivalent to s. 148 of the I.T. Act, 1961), in respect of the previous assessment year and the assessee submitted a return showing the correct profits of the said previous year of Rs. 1,25,520. The ITO then issued a notice under s. 28(3) of the Indian I.T. Act, 1922 (which is equivalent to s. 271(1)(c) of the I.T. Act, 1961), and levied a second penalty of Rs. 68,501 for concealment of income in the original return. The Tribunal quashed the penalty of Rs. 20,000 pertaining to the escaped income of Rs. 37,500 but confirmed the penalty of Rs. 68,501. The contention, inter alia, raised before their Lordships was that the second order imposing pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a notice under s. 148 of the Act and was, therefore, liable to be punished for each offence separately. Although the assessee committed two separate and distinct offences liable to be punished separately for both, yet the revenue authorities under the mistaken view of law proceeded to punish him only for the last offence committed as a result of filing a false return in pursuance of a notice under s. 148 of the Act. Since this later offence was committed at a time when the amended provisions of s. 271 (1)(c)(iii) of the Act attracting the " income-avoided base " penalty were in operation, the Tribunal, in my view, erred in holding that the assessee had committed only one offence of concealment when it filed the original return (which event occurred prior to the amendment of s. 271(1)(c)(iii) of the Act) and in imposing penalty the quantum whereof was computable in accordance with the unamended provisions of s. 271(1)(c)(iii) of the Act operative on the date on which the original return was filed. In the result, I answer the reference against the assessee and in favour of the revenue holding that the quantum of penalty in the case of the assessee was rightly held to be compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct from April 1, 1976, reads as under : " (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income :..." A comparative reading of sub-cl. (iii) which prevailed at three different times would show that the first and the third are tax-based whereas the second one was income-based. The difference between the first and the third is that in the first provision the minimum penalty was twenty per cent. of the tax avoided and the maximum was 1 1/2 times of the tax avoided whereas in the third the minimum is equal to the tax avoided and the maximum is twice the amount of tax avoided. So, the history of sub-cl. (iii) shows that at one stage Parliament thought of prescribing penalty on the basis of tax avoided and it was amended to make the base of penalty the income to be avoided and again the present provision is on the basis of tax avoided although the minimum and maximum percentage of penalty which can be levied has been increased. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of penalty in the Act from time to time and, on the other hand, the ITO may keep on issuing notices under s. 148 of the Act from time to time against the same assessee or against different assessees. The will of Parliament to frame a law and to make it applicable from a particular date is understandable but what the courts have to see is that it is uniformly applied in a reasonable manner in such a way that it does not become capable of abuse by arbitrary or discriminatory exercise by the officers concerned. This point for consideration arises apart from the point of violation of the doctrine of double jeopardy which shall be discussed in the later part of this judgment. In the case of the assessee in hand the year of assessment is 1963-64, during which period the law of penalty contained in s. 271(1)(c) of the Act was different from what it came into being with effect from 1st April, 1968. The amendment which came into being with effect from 1st April, 1968, came up for consideration before this court in Bhan Singh Boota Singh's case [1974] 95 ITR 562. The argument which was raised on behalf of the assessee in the aforesaid case has not been raised before us and acceptin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir favourites merely by issuing a notice under s. 148 of the Act calling upon them to file another return. So, in the aforesaid view, it will be reasonable and harmonious to hold that the date of filing of the original return will govern the law for imposition of penalty. Deriving support from the above view, now I proceed on to consider the next point as to what concealment Parliament was considering while framing s. 271(1)(c) of the Act. On a literal reading of s. 271(1)(c), I find that concealing of particulars of income or furnishing of inaccurate particulars of such income is considered as an offence under this provision. For a particular year, an assessee can commit offences only once when he furnishes incorrect particulars of his income and that he does by filing the return. So, even if he is asked to file a number of returns for that very year and he sticks to his original position, to my mind, he will not be committing the offence again and again. The offence will be one which he committed for the first time when he filed the return concealing his income and by filing subsequent returns, on being called upon to do so, what he does is that he shows persistence that he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my mind, this again leaves the entire matter in a dilemma and it will be open for the various assessing authorities to abuse the penalty provisions from time to time and from case to case on their whims, either to favour the assessee or to harm him. This was never the intention of the legislation. I am not unmindful of the fact that under s. 139(5) of the Act, an assessee has been provided with an opportunity of making a clean breast of his previous default and furnish a fresh revised return at any time before the assessment is made. Only in that eventuality, his original filing of the false return is excusable and no penalty can be imposed thereon under s. 271 of the Act but it does not mean that the ITO will keep on issuing notices from time to time to the same or different assessees under s. 148 of the Act and every time it will be for the ITO to choose any one of the returns in order to fix the liability on an assessee for purposes of penalty which may either help an assessee or may go against him. Therefore, counsel for the department was also not sure as to which return should be treated as the return for purposes of fixing of penalty. In a nutshell, the answer of the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h income ". A reading of this provision would show that it is not the filing of the return which is the basis for the imposition of penalty but the concealment of income or furnishing of inaccurate particulars of such income. In other words, the moment income is concealed or inaccurate particulars are furnished, the offence for the imposition of penalty under this clause is committed by the assessee but the offence becomes complete when the document in which concealment is made is placed in the hands of the ITO and this is done by the filing of the return. So, the offence for purposes of penalty is complete the moment the return is placed before the ITO and that is why all courts have held that, under s. 271 (1)(c) of the Act, the offence of concealment of income or furnishing of inaccurate particulars of income takes place by the filing of the return by the assessee. In this regard, reference may again be made to C.V. Bagalkoti's case [1978] 115 ITR 131 (Kar), Bhan Singh Boota Singh's case [1974] 95 ITR 562 (Punj), CIT v. Gopal Krishna Singhania [1973] 89 ITR 27 (All) [FB], Smt. Kamlavati v. CIT [1978] 111 ITR 248 (Punj) and Amjad Ali Nazir Ali v. CIT[1977] 110 ITR 419 (All). Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but maintained the penalty of Rs. 68,501. This decision was maintained by the Supreme Court. Therefore, according to the Supreme Court view, only one penalty for one assessment year can be imposed and more than one penalty for the same year on the basis of different returns cannot be imposed. The question which is before us on the facts of this case was not involved in that case. Accordingly, I am of the opinion, that the imposition of penalty on various returns filed for the same year but realisable subject to the maximum provided under the law is not justified. For the reasons recorded above, I conclude that the provisions of s. 271(1)(iii) of the Act would be applicable in this case as it existed (that is, before its amendment which came into force with effect from 1st of April, 1968) and which prevailed at the time of the filing of the first return dated 21st April, 1967. Consequently, my answer to the question, which has been referred for the opinion of this court, would be in the affirmative, that is, in favour of the assessee and against the revenue. The assessee would be entitled to his costs from the revenue. S. S. SANDHAWALIA C.J.--I have had the privilege of perusing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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