1. This reference raises a very short question. It is as follow :
'Whether in view of the assessee having filed a revised return disclosing the item of Rs. 11,361 which it had deliberately concealed at the time of filing the first return and in view of the assessment having been made under the proviso to section 13 of the Indian Income-tax Act, the assessee is not liable to be penalised under the provisions of section 28(1)(c) of the Indian Income-tax Ac ?'
2. The short facts are that the assessee made a return of income-tax on the 13th of September, 1951, in respect of the assessment year 1951-52, the previous accounting year being the year ending with Diwali 1950. There was an appointment given by the Income-tax Officer on the 25th of January, 1952, to the assessee, and a partner of the assessee firm attended before the Income-tax Officer. The assessee had shops at Warora, Wun, Bhadrawati and Narsinda and it was found that in the wholesale shop at Warora on disclosed sales of Rs. 40,770 the assessee showed a gross loss of Rs. 3,444. The assessee's explanation of this loss did not satisfy the Income-tax Officer and he suspected that the closing stock of the assessee as shown was not correct. He, therefore, called upon the partner who appeared before him to prove the closing stock from registers which have to be maintained under the Central Excise Rules. He adjourned the matter to the 28th of January, 1952. On the 28th of January, 1952, the assessee filed a revised return under section 22, sub-section (3), declaring an income of Rs. 22,653 whilst by his return he had declared an income of Rs. 11,292; and he claimed that he had filed the first return through oversight as he had lost sight of a debit entry of Rs. 13,265 for purchase of 59 bundles of chewing tobacco at Amod. The Income-tax Officer assessed the assessee applying the proviso to section 13 and also imposed a penalty on him holding that by his first return he had concealed the particulars of his income and deliberately furnished inaccurate particulars thereof. The assessee's contention was that the mistake made by him was by oversight and, therefore, bona fide and was not deliberate. He appealed unsuccessfully to the Appellate Assistant Commissioner and the Tribunal in turn and that is why the question has now been referred to us at his instance.
3. 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. If the omission is deliberate, then in respect of the original return the provisions of section 28(1)(c) apply, because that sub-section provides that the Income-tax Officer, if he is satisfied that the assessee 'has concealed the particulars of his income or deliberately furnished inaccurate particulars of his income' he may be subjected to a penalty. Therefore, where the concealment is not an accidental omission, but is a deliberate concealment, the penalty is attracted notwithstanding the fact that the return has been subsequently corrected. The question as to whether the omission is deliberate or bona fide is a question for the Income-tax authorities to determine, it being a pure question of fact, and it cannot arise for determination by us unless there was a reference on a question as to whether there was any evidence on which the Income-tax authorities could have come to such a conclusion. No such question has been referred to us, and indeed the question referred to us in terms states that there was deliberate concealment, which was the finding of the Income-tax Officer confirmed by the Appellate Assistant Commissioner and the Tribunal.
4. The Mr. Pandit argues that if a penalty is attracted notwithstanding the fact that a revised return is filed, then it is futile for the assessee to file a revised return. It may be that it is futile for a dishonest assessee to file a revised return; but ordinarily even a dishonest assessee may benefit by filing a revised return, to the extent to which the assessee has benefited in this case, namely, that the taxing authorities may not impose the maximum penalty on him having regard to the fact that he himself corrected his own statement. In any event, the question as to whether a penalty can be imposed in respect of a concealment in the original return cannot be determined by considering whether there is any inducement for an assessee to file a revised return. Every assessee is expected to file a correct return, and if he does not do so, it is his duty to correct it the moment he discovers any omission, whether there is an inducement to correct it or not.
5. Then Mr. Pandit has argued that in point of fact the Income-tax Officer invoked the proviso to section 13 and the assessee was taxed under section 13; and the omission that he had made in the first return did not affect his total sales on the basis of which the Income-tax Officer computed his income fixing a ratio of profits on the basis of the total income.
6. But the question that arises for determination under section 28(1)(c) is not whether the concealment brought about the result that some portion of the income escaped assessment. That the income did not escape assessment and was brought to tax under the proviso to section 13 appears to us to have nothing whatever to do with the question as to whether the return as furnished had concealed the particulars of the income or deliberately furnished inaccurate particulars of such income.
7. Lastly, Mr. Pandit contended that the figure of income arrived at by the Income-tax Officer is the same as in his revised estimate and, therefore, he should not have been subjected to a penalty. This again is an argument which does not appear to us to have any bearing on the question whether the provisions of section 28(1)(c) are attracted. The actual result of the assessment has nothing whatever to do with an attempt made by the assessee to conceal the particulars of his income by his first return by which he deliberately furnished, as found by the Income-tax authorities, inaccurate particulars of his real income.
8. In our opinion, therefore, the assessee was rightly subjected to a penalty and the answer to the question referred to us i : 'The assessee is liable to a penalty.'
9. There is a notice of motion taken out by the assessee for amending the question. We think the correct question has been raised on the reference before us and the notice of motion will, therefore, be dismissed with costs.
10. The assessee to pay the costs of the reference.
Reference answered accordingly.