1. This is an application under Section 256(2) of the I. T. Act, 1961 (hereinafter referred to as 'the Act'), to call upon the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati (hereinafter referred to as 'the Tribunal'), to submit the statement of the case on the following question, supposedly question of law, for decision at this end :
'Whether, on the facts and in the circumstances of the case, and on a proper construction of Section 271(1)(c) of the Income-tax Act, 1961, read with Explanation thereto, the Tribunal was justified in holding that no penalty could be levied in respect of Rs. 24,591, which was doubly debited in the purchase accounts (Hindusthan Lever Goods) ?'
2. The relevant facts necessary for a disposal of the application may be compacted as under :
The assessee, an HUF, submitted its return of income on December 13, 1968, showing total income of Rs. 66,369. On February 2, 1970, a revised return was submitted showing an income of Rs. 1,61,607. In the revised return, the assessee included the three items, namely, Rs. 40,588, Rs. 28,742 and Rs. 24,591. Due explanations were submitted by the assessee for the omissions or wrong statements. Regarding the last item, which is the subject-matter of the present application, the assessee claimed that in the purchase account (Hindusthan Lever Goods) invoices amounting to a sum of Rs. 24,591 was debited twice. According to the assessee all these mistakes including the mistake in respect of Rs. 24,591, were detected when the accounts were audited by the auditors in 1969-70 and on discovery of the mistakes, the assessee immediately furnished the revised return before the assessment. The Income-tax Officer (hereinafter referred to as 'the I.T.O.'), on a consideration of the facts and circumstances of the case, initiated proceedings under Section 271(1)(c) of the Act, as, according to him, concealment had been made at the time when the original return had been submitted. However, as the minimum penalty imposable exceeded the pecuniary jurisdiction of the ITO, he referred the matter to the IAC. The IAC applied the provisions contained in the Explanation to Section 271(1)(c) of the Act and imposed a penalty of Rs. 94,792, on the assessee. The assessee preferred an appeal before the Income-tax Appellate Tribunal which was numbered as ITA No. 83 (Gau)/73-74. The Tribunal upheld the order of penalty imposed on the assessee in respect of Rs. 28,742, but accepted the explanation of the assessee in respect of the sums of Rs, 40,588 and Rs. 24,591 that the assessee had detected the mistakes and filed a revised return and, accordingly, it could not be said that the assessee had any intention of concealment. It held that the two items could be included by the assessee in the revised return under Section 139(5) of the Act and as such Section 271(1)(c) had no application. The assessee asked for and obtained a reference from the Tribunal to the High Court under Section 256(1) of the Act in respect of the penalty imposed in respect of the amount of Rs. 28,742 and this court in Padma Ram Bharali v. CIT , answered the question referred in the negative and against the Department. It held that the Tribunal was not justified in law in upholding the penalty imposed by the IAC relating to the amount of Rs. 28,742.
3. While considering the question as to the justifiability of upholding the penalty of Rs. 28,742, this court dwelt upon the other two items, namely, Rs. 40,588 and Rs. 24,590.57 (say Rs. 24,591), and had held that the Tribunal was justified in holding that the assessee had included the items in its revised returns under Section 139(5) of the Act. The inclusion of the two amounts in the revised return under Section 139(5) of the Act was legal, valid and well justified and the provisions of Section 271(1)(c) were not attracted at all and no question of imposing penalty could arise.
4. The Revenue was aggrieved by the order of the Tribunal holding that no penalty could be levied in respect of Rs. 24,591 and filed an application for reference under Section 256(1) of the I.T. Act before the Tribunal. The Tribunal, while considering the application of the Revenue, inter alia, observed as under:
'The Tribunal also held that bona fide mistake is possible relating to this adjustment entry of Rs. 24,590.57 paise. The Tribunal has ultlimately held in para. 21 of the order that as regards, the adjustment entry relating to the amount of Rs. 24,590.57 paise, the mistake appeared to be a bona fide mistake and there appears to be no intention of the assessee for concealment and so no penalty can be levied relating to this amount of Rs. 24,590.57. Perusal of paras. 11 to 21 will clearly show that the Tribunal has given a finding of fact on the materials before it and no question of law can arise on this basis of this finding. Hence, we hold that as regards the amount of Rs. 24,591, the finding of the Tribunal is a finding of fact and no question of law arises out of the order of the Tribunal in relation to this amount.
In the circumstances, we decline to draw up a statement of the case under Section 256(1) of the Income-tax Act, 1961. The reference application is, accordingly, rejected.'
6. Now, we find that with respect to Rs. 40,588 as well as Rs. 28,742, there are conclusive findings of the Tribunal and this court, respectively, that the two items were validly included by the assessee in the revised return submitted under Section 139(5) of the Act and, therefore, Section 271(1)(c) had no application, and, in so far as these two items were concerned, the revised return was within the proper scope and ambit of Section 139(5) of the Act, and that, therefore, no question of penalty could arise. As such, for the purpose of penalty these two items had to be excluded or, in other words, these must be added to the total income as validly returned in the original return. As such, the total income deemed to be validly returned by the assessee comes to Rs. 1,35,699. As the total income assessed is Rs. 1,61,922 for the purpose of Section 271(1)(c), the Explanation to the said section is not attracted. The order of the IAC was entirely based on the Explanation to Section 271(1)(c) of the Act and the burden of proof was wrongly placed on the assessee. It held that since the assessee had failed to discharge the burden contemplated under the Explanation, the assessee was deemed to have concealed the particulars of the income or furnished inaccurate particulars. Since the Explanation in question is not applicable, it must be held that the Tribunal was justified in arriving at the conclusion that the penalty imposed was unjustified. The order imposing a penalty was vitiated by wrongly placing the burden of proof on the assessee relying on the Explanation. The burden was on the Revenue to establish that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars, vide CIT v. Anwar Ali : 76ITR696(SC) . It is for the Revenue to establish the ingredients before a penalty can be imposed. It has been laid down in Anwar Ali's case that before a penalty can be imposed the entirety of the circumstances must be taken into account and it must point to the conclusion that the assessee had consciously concealed the particulars of his income or deliberately furnished inaccurate particulars. Falsity of the explanation given by the assessee, it was observed, was insufficient without there being cogent materials or evidence from which the necessary conclusion attracting penalty could be drawn. The principles have been reiterated by the Supreme Court in CIT v. Khoday Eswarsa & Sons : 83ITR369(SC) . All these principles were considered in K.C. Trunk and Bucket Factory v. CIT .
7. The same view has been expressed in a recent decision of the Supreme Court in Anantharam Veerasinghaiah & Co. v. CIT : 123ITR457(SC) .
8. This apart, we entirely agree with the views expressed by this court in Padma Ram Bharali's case that the item could be included with impunity by the assessee in the revised return submitted by it under Section 139(5) of the Act and as such, the provisions of Section 271(1)(c) have no application in the instant case.
9. Leaving all the above aspect aside, we find that on careful scrutiny of paras. 11 to 21 of the Tribunal's finding, that 'the bona fide mistake on the part of the assessee was probable', relating to this adjustment entry of Rs. 24,590'57 is well justified. It held on an appreciation of the materials at its disposal that if was a bona fide mistake committed by the assessee and there was no intention of the assessee to conceal the amount. The conclusions were based on appreciation of materials and they are findings of facts on the materials before it. In our opinion, no question of law arises on the basis of the findings arrived at by the Tribunal and the findings are nothing but findings of facts.
10. In the result, we hold that there is no merit in the application and, therefore, the application stands dismissed. The rule issued is discharged. There will be no order as to costs.