R.N. Misra, J.
1. On an application by the revenue under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), this court called upon the Tribunal to state a case and refer the following question lor the opinion of the court :
'Whether the Tribunal was justified in working out the quantum of penalty on the basis of the revised return which was filed only after the Income-tax Officer had been able to lay his fingers on extra income recorded in duplicate sale bills?'
2. The Tribunal has accordingly stated the case.
3. The year of assessment is 1960-61, corresponding to the accounting period ending with March 31, 1960. The assessee was working as the sole distributor of cloth and yarn munufactured by Messrs. Orissa Textile Mills Ltd., in respect of most of the districts of the State of Orissa. For the assessment year the assessee filed a return on November 17, 1960, disclosing total income of Rs. 80,738. While examining the books of account, the Income-tax Officer noticed discrepancies in the sale bills. The assessee thereupon filed a revised return showing income of Rs. 2,33,128. The Income-tax Officer, on further scrutiny of accounts, included a sum of Rs. 4,98,400 as income from other sources. A proceeding under Section 271(1)(c) of the Act was initiated and the Inspecting Assistant Commissioner ultimately levied a penalty of Rs. 3,45,387.
4. In appeal before the Tribunal, the assessee contended that the Inspecting Assistant Commissioner had not given any reason in support of the levy of penalty but he only reproduced the facts stated in the assessment order. It was next argued that the levy of penalty was based on the revised return and since the assessee had disclosed the sources of income and extent thereof there could be no concealment and furnishing of inaccurate particulars warranting levy of penalty. It was further contended that as soon as the revised return was filed, the original return no more existed and, therefore, penalty could not be calculated on the basis of the original return. The Tribunal did not accept the assessee's contention that it was not a case where penalty was leviable. For coming to the said conclusion, the Tribunalstated :
'.....It is not a case where the assessee itself has discovered the omission of income but on being confronted with the discovery the assessee finding no other alternative, surrendered a higher amount of income for assessment in the revised return. Such an action of the assessee clearly indicated that it had no good intention to offer for assessment its earned income, and, therefore, we hold as a fact that the assessee consciously and with an ulterior motive made a futile attempt to conceal a portion of its income and thus became liable for punishment.....'
5. Having come to this conclusion, the Tribunal further stated :
'.....However, since the assessee has disclosed a higher income in the revised return, for the purpose of computation of the quantum of penalty, the total income disclosed in the revised return will be the basis. We have sustained an addition of Rs. 54,377 which would go to show that the revised return did not contain the full disclosure of the assessee's income. On this score also penalty is exigible. In view of the fact that the assessee repented for its contumacious act as well as without giving avoidable difficulties to the Income-tax Officer came forward with a higher amount of income, a lenient view should be taken while imposing penalty. We consider that minimum penalty of 20% will meet the ends of justice in this case.....'
6. The direction of the Tribunal that minimum penalty of 20% should beimposed is not disputed by the revenue. But what is contended is thatthe amount on which penalty is to be worked out at 20% should be thedifference between the assessed amount and the amount originallyreturned.
7. The Tribunal as a fact has found :
'.....It is significant to note that the revised return was filed afterthe Income-tax Officer proceeded to examine the books of account of the assessee and was able to lay his fingers on the extra income recorded in the duplicate sale bills. It is not a case where the assessee itself has discovered the omission of income but on being confronted with the discovery, the assessee finding no other alternative, surrendered a higher amount of income for assessment in the revised return.....'
8. In the face of such a finding, the observation of the Tribunal:
'.....However, since the assessee has disclosed a higher income in therevised return, for the purpose of computation of the quantum of penalty, the total income disclosed in the revised return will be the basis.....'
is without any force. In fact, the Tribunal itself has pointed out that the revised return was not a full disclosure because it sustained an addition of Rs. 54,377 in the quantum appeal.
9. In the case of D. V. Patel & Co. v. Commissioner of Income-tax : 100ITR524(Guj) , a Bench of the Gujarat High Court examined a similar question. The learned judges rightly pointed out (page 530):
'The Tribunal had, therefore, no occasion to find out and to address itself to the important question, whether this revised return was made by the assessec of his volition before concealment was detected in the course of the assessment proceedings.'
10. Where the revised return is the outcome of voluntary action on the part of the assessee before any part of the suppression is detected, it may be possible to contend that there has been a bona fide mistake and the materials on record and the conduct of the assessee together may justify a conclusion of fact that the burden which lay on the assessee in view of the Explanation attached to Section 271(1)(c) of the Act stood discharged. The clear finding here being, as extracted above, there is no scope for the conclusion which the Tribunal has reached, In the facts and circumstances of the case, therefore, penalty of 20% has to be worked out on the total assessed figure minus the amount originally returned.
11. Our answer to the question, therefore, is as follows :
The Tribunal was not justified in directing the working out of the quantum of penalty on the basis of the revised return in the facts and circumstances of the case.
12. We make no order as to costs.
13. I agree.