TMI Blog1976 (9) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ed return: (1) Commission of the year under consideration amounting to Rs. 40,588 was credited in the accounts of the following year. This has been the system followed by the assessee so long but it had now been decided that since the assessee is adopting mercantile method of accounting the system should be changed and commission receivable should be credited in the relevant accounting year, (2) In purchase account (Union Carbide goods) two invoices amounting to Rs. 28,742 were doubly posted, (3) In purchase account . (Hindustan Lever goods) invoices amounting to sum of Rs. 24,591 were also debited twice, and (4) That these defects were detected when the accounts were audited by the auditors in 1969-70. The Income-tax Officer held that the records and the accounts showed that the concealment in the purchase accounts above, made by the asssessee had been detected by the department during the course of examination of accounts and the assessee had been confronted with the same and it was after this that the accounts were given for audit and the auditors in their special report dated January 30, 1970, had considered the amount of Rs. 28,742 as cash defalcation and debite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Inspecting Assistant Commissioner and the appeal was numbered as I.T.A. No. 83 (Gauhati) of 1973-74. The Tribunal heard the parties and found that the concealment of income or furnishing of inaccurate particulars of income had been found out with regard to three items. Considering the materials on record the Tribunal has observed in its order with respect to the amount of Rs. 40,588 as follows: " The assessee was showing the commission on the basis of actual receipts when according to the mercantile system he should have shown the commission in the year in which it was receivable; thus it was a defect in the accounting system and so it cannot be said that the assessee had any intention of concealing this income of Rs. 40,588. It was a bona fide mistake of the assessee that the commission of Rs. 40,588 was not shown in the original return for the assessment year 1968-69, as the assessee had bona fide belief that the income can be shown when it is actually received by the assessee. Under the circumstances we hold that the assessee is not guilty of concealment of the amount of Rs. 40,588 relating to the commission nor he can be said to have furnished inaccurate particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 271(1)(c) lays down that where the total income returned by any person is less than 80% of the total income as assessed under section 143 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income which has been disallowed as a deduction), such person shall, unless he proved that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of income or furnished inaccurate particulars of such income for the purpose of clause (c) of this sub-section. In the present case the original returned income as shown by the assessee was only Rs. 66,369 and the finally assessed income is Rs.1,61,161. Thus, it is evident that the Explanation to section 271(1)(c) of the said Act is applicable in the case of the assessee and so the onus is on the assessee to prove that there was no fraud or any gross or wilful neglect on the part of the assessee ...... The circumstances show that the assessee was guilty of any fraud or any gross or wilful neglect. Hence, we hold that the assessee has failed to prove that there was no fraud or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this amount of Rs. 40,588. Regarding the item of Rs. 24,590.57, the Tribunal has observed in its order as follows : " Moreover no cash transaction was involved relating to the amount of Rs. 24,590.57 and a bona fide mistake is possible relating to this adjustment entry of Rs. 24,590.57. The assessee is entitled to file a revised return under section 139(5) of the said Act which lays down that if any person having furnished a return under sub-section (1) or sub-section (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made. If the assessee on the report of the chartered accountant detected the mistake relating to the amount of Rs. 24,590.57 and filed a revised return it cannot be said that the assessee had intention of concealing this income." Thus, it is found that the two items, namely, Rs. 40,588 and Rs. 24,590.57, could be included by the assessee in the revised return submitted under section 139(5) of the Act with immunity from section 271(1)(c) and so far as these two items are concerned the revised return is within the proper scope and ambit of section 139(5) of the Act. So, there cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed some omission or some wrong statement in the original return and in the revised return he makes correction of the omission or the wrong statement, a penalty proceeding for concealment of the particulars of income or furnishing inaccurate particulars of such income as contemplated under clause (c) of sub-section (1) of section 271 may not be attracted. But to avoid the penalty proceeding as contemplated under section 271(1)(c) by reason of submission of revised return, the revised return itself must be within the correct ambit and scope of sub-section (5) of section 139 of the Act. If it cannot be said that a revised return in fact does come within the correct ambit and scope of section 139(5), then immunity from section 271(1)(c) cannot be availed of by the assessee." Hence we find that the revised return filed by the assessee in the instant case with respect to the two items, namely, Rs. 40,588 and Rs. 24,591, was within the correct scope and ambit of section 139(5) of the Act. Therefore, for the purpose of penalty, these two items have to be excluded, or in other words, have to be added to the total income returned in the original return. Thus, the total income validly ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this ground alone the order of the Tribunal regarding the penalty imposed is not sustainable in law. The impugned order of the Tribunal is also not sustainable on another ground. The penalty proceeding was initiated by the Income-tax Officer for concealment of particulars of income and in this connection the following observation of the Income-tax Officer in the assessment order for the assessment year 1968-69 may be considered: " The records and the accounts, however, show that the concealments in the purchase accounts above made by the assessee had been detected by the department during the course of examination of accounts and the assessee had been confronted with the same. Apparently, after this the accounts were given for auditing. The auditors in their special report dated January 30, 1970, had considered the amount of Rs. 28,742 as cash defalcation and debited it to the proprietor's capital account. In the circumstances of the case, action under section 271(1)(c) is started. The concealment had already been made at the time the original return was submitted." In his order the Inspecting Assistant Commissioner has observed as follows: " From the facts available in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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