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TMI Blog1977 (2) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... m property 125 Income from personal business 69,143 Share income from firm 5,776 ------ 75,044 ------ The Income-tax Officer completed the assessment on December 31, 1968, on a total income of Rs. 3,15,201, which consisted of: Rs. Income from property 1,347 Income from business 3,13,854 -------- 3,15,201 -------- The business income of Rs. 3,13,854 was made up of share income from Messrs. Murugan Talkies of Rs. 2,769 (income other than property income) and Rs. 1,440, (income from "local business") and income from export and import business of Rs. 3,09,645. The Income-tax Officer noted the following facts in computing the business income at Rs. 3,09,645. (i) The assessee had exported handloom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by about Rs. 1,50,000. The Inspecting Assistant Commissioner did not see any merit in these submissions and he levied the penalty in question mainly for the following reasons: (i) In the second return filed by the assessee on February 7, 1968, a further income of about Rs. 48,000 relatable to the assessee's trafficking in import licences was disclosed. Concealment had to be adjudged with reference to the return originally filed and with reference to the revised return. Hence, the assessee was guilty of concealment. (ii) Even the revised return was only an understatement because it did not clearly set out the basis on which the profit on sale of licences had been computed and what deductions had been claimed for expenses and on what basis. The assessee cannot, therefore, justifiably complain against the estimate adopted by the Income-tax Officer. (iii) The records showed that it was only after the Income-tax Officer started investigation into the bogus nature of the hundi transactions that the assessee came forward with a revised return, firstly, for 1962-63 and thereafter for 1963-64. The admission as to the falsity of the hundi loans came only after the hearing on Feb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs and conclusions, the Tribunal cancelled the penalty imposed on the assessee. It is the correctness of this order that is challenged by the Commissioner of Income-tax, Madras (Central), Madras, who applied for and obtained a reference on the following question, arising out of the order of the Tribunal, for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee had not concealed the income or furnished inaccurate particulars of income and in cancelling the penalty of Rs. 47,500 levied under section 271(1)(c) of the Income-tax Act, 1961?" Section 271 of the Act dealing with the levy of penalty in so far as it is relevant reads as follows: "271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person...... (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,....... (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id concealment will come within the scope of the provision in section 271(1)(c) of the Act which we have extracted already or not. The section uses the expression "has concealed the particulars of his income." It is implicit in the word "concealed" that there has been a deliberate act on the part of the assessee. The meaning of the word "concealment" as found in Shorter Oxford English Dictionary, third edition, volume I, is as follows: "In law, the intentional suppression of truth or fact known, to the injury or prejudice of another." Consequently, there can be no doubt, with reference to the facts stated above, that both in the first return as well as in the second return the assessee had intentionally and deliberately concealed the particulars of his income. The question then for consideration is whether the fact that the assessee filed a petition before the Commissioner under section 271(4A) of the Act and also filed a second return on February 7, 1968, will be sufficient to absolve him from liability to penalty under section 271(1)(c) of the Act. We may mention in this context that even in the second return the assessee had not given the true particulars of income and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atements" and not to cases of "concealment or false statements". This conclusion of ours derives support from the language used in section 139(5). As far as the present case is concerned, the second return filed by the assessee on February 7, 1968, whether the same was filed before any investigation was started by the income-tax department or after the investigation was started by it, will not be a revised return as contemplated by section 139(5) of the Act. All that can be stated is that if, after having filed the return on March 16, 1964, the assessee furnished further particulars to the Income-tax Officer with reference to his income, the Income-tax Officer was certainly bound to take note of those particulars, as he was bound to take note of the particulars even if they were furnished by a third party. Therefore, the fact that the assessee furnished the second return on February 7, 1968, even before any investigation was started by the income-tax department cannot be of any assistance to him, if the case does not fall within the scope of section 139(5) of the Act. As a matter of fact, whether the assessee furnished the particulars before any detection was made by the departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and make a revised return and as that has been accepted no penalty can be inflicted upon him for having concealed his income. That certainly is the correct statement of what an assessee is entitled to do, if he makes a bona fide discovery that he has made a previous incorrect return but it certainly does not apply to the facts of this case which show clearly that the previous return was deliberately dishonestly made. It is seriously argued that, notwithstanding that fact, the assessee is still enabled to put in a return correcting his former inaccurate one and that he is to be absolved from liability to have any penalty inflicted upon him. That, it seems to me, is to put a premium on dishonesty and nowhere in the Income-tax Act do we find any provision which does anything of the kind. The contention that this was a discovery within the meaning of section 22(3) is of course futile. As the Income-tax Commissioner points out in his order of reference the assessee did not discover on that day that he had made an incorrect return because at the time when he made his previous return he knew it was incorrect and he could not at any subsequent time have discovered something which he knew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court again, dealing with section 28(1)(c) of the 1922 Act, pointed out: "Now, Mr. Pandit on behalf of the assessee, in the first instance, has argued that every assessee has a right to file a revised return under section 22, sub-section (3), and if that return is in effect accepted, the earlier return must be treated as cancelled for all purposes and no penalty can be imposed in respect of any concealment in the earlier return. Now, it is perfectly true that every assessee has the right under section 22, sub-section (3), to submit a revised return if he discovers any omission or wrong statement in his original return before the assessment is made. But the omission or wrong statement may be accidental or deliberate. Where it is accidental, no result may ensue by reason of the omission; but where the omission is deliberate, the results of such deliberate omission cannot be got rid of merely by filing a revised return." Sivagaminatha Moopanar Sons v. Commissioner of Income-tax [1964] 52 ITR 591 (Mad) is yet another decision of this court dealing with section 28(1)(c) of the 1922 Act. In that judgment, this court observed: "If an assessee, therefore, makes a false return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return was filed, namely, whether it was done voluntarily or at the time when the department had probed into the matter and was at the point of discovering the concealment made by the assessee. As we have pointed out already, the second aspect will have no relevancy whatever to a case where there was concealment in the original return, because the concealment must necessarily imply a deliberate and intentional act, on the part of the assessee. After having originally concealed the income, if an assessee subsequently files a fresh return voluntarily before the income-tax department has made any investigation or detected concealment of income, even then he cannot escape from the consequence of his having concealed the income and he will be liable to penalty. If, on the other hand, the defect in the original return was merely an inadvertent omission or unintended wrong statement, certainly the assessee had a right to have the same corrected and to file a revised return under section 22(3) of the 1922 Act or under section 139(5) of the Act and whether the assessee so files a revised return voluntarily or after the Income-tax Officer has noticed the omission or wrong statement will b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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." If we may say so with respect, we entirely agree with the above observations of the Gauhati High Court. We may also point out that the liability to penalty under section 271(1)(c) of the Act and the filing of a revised return under section 139(5) of the Act are mutually exclusive. Section 139(5) of the Act proceeds on the basis of omission or wrong statement which had crept into the original return being inadvertent and unintentional, while section 271(1)(c) of the Act proceeds on the basis of concealment being deliberate and the furnishing of inaccurate particulars being wilful and intentional. Consequently, if a case falls within the scope of section 139(5) of the Act, there would be no chance for levy of penalty under section 271(1)(c) of the Act. If, on the other hand, the case does not fall within the scope of section 139(5) of the Act the fact that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the assessee has made a true disclosure of his income in the revised return before the assessment is completed, the assessee cannot be said to have deliberately concealed the true income. Normally, whether there was a deliberate concealment of income or not is a question of fact and the Tribunal has, on the facts and circumstances of this case, held that the assessee had not deliberately concealed income and that, therefore, the penalty levied under section 28(1)(c) was not justifiable. The Tribunal felt that merely because the assessing and appellate authorities made an addition to the income on the basis of an estimate of the gross profit, it will not lead to the inference that there was deliberate concealment of income on the part of the assessee in the revised return. We are not in a position to say that the assessment of the evidence in the case by the Tribunal and its conclusion thereon is in any way vitiated. We are also of the view that the explanation offered by the assessee for not disclosing the sum of Rs. 28,618 in the first return is possible of acceptance and in the face of such acceptable explanation, a deliberate intention on the part of the assessee-firm to conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 524 (Guj), which avowedly dealt with the Explanation to section 271(1)(c) of the Act introduced with effect from April 1, 1964. In the course of the judgment, that decision merely referred to the decision of this court in Commissioner of Income-tax v. Ramdas Pharmacy [1970] 77 ITR 276 (Mad), and extracted a portion of the head-note to that decision as reported in the Income Tax Reports. That decision dealing with the Explanation has not taken a view different from the one which we have indicated as flowing from the decisions we have discussed. In view of the conclusion of ours, it is unnecessary to consider whether the Explanation to section 271(1)(c) of the Act introduced with effect from April 1, 1964, is attracted or not to the facts of this case. Consequently, we answer the question referred to this court in the negative and against the assessee. Since the Tribunal held that the assessee was not liable to penalty at all, it did not go into the quantum of the penalty and in view of our present decision the Tribunal will have now to go into the quantum of penalty. There will be no order as to costs. The assessee was not represented before us and, therefore, we requested M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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