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Commissioner of Income-tax, Tamil Nadu-iii Vs. S.S.K.G. Arthanariswamy Chettiar - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case Nos. 623 to 625 of 1976 (Reference Nos. 497 to 499 of 1976)
Judge
Reported in(1980)19CTR(Mad)240; [1982]136ITR145(Mad)
ActsIncome Tax Act, 1961 - Sections 27, 139, 143(1), 144, 147, 148, 271(1) and 271(4A); Wealth Tax Act, 1957 - Sections 18(1)
AppellantCommissioner of Income-tax, Tamil Nadu-iii
RespondentS.S.K.G. Arthanariswamy Chettiar
Appellant AdvocateJ. Jayaraman and ;Nalini Chidambaram, Advs.
Respondent AdvocateK. Srinivasan, Adv.
Excerpt:
direct taxation - escaped assessment - sections 27, 139, 143(1), 144, 147, 148, 271 (1) and 271 (4a) of income tax act, 1961 and income tax (amendment) act, 1968 - original return of income filed before amending provisions of 1968 - revised return for same assessment year filed after amending provisions of 1968 - department levied penalty under section 271 (1) in accordance with act of 1968 for escaped assessment - whether concealment of income in revised return also creates fresh causes of action - law contemplates concealment of income in original return - punishment imposed with reference to that concealment - subsequent revised returns filed only enable department to determine real income of assessee and amount concealed - every filing of revised return not create fresh cause of.....ramaswami, j. 1. the assessee is a firm of two partners carrying on the business of purchase and sale of cloth. it was also engaged in export of art silk fabrics. it had been granted licences to import art silk as an incentive under the art silk fabrics export promotion scheme during the three relevant previous years. in their returns for assessment years 1961-62, 1962-63 and 1963-64, it had disclosed an income of rs. 13,409, rs. 36,324 and rs. 28,785, respectively, and the assessments were completed on november 23, 1961, december 18, 1962, and february 27, 1964, determining the total income as rs. 16,409, rs. 45,8466 and rs. 36,375, respectively. by its letter dated february 28, 1966, which was received by the ito on march 4, 1968, the assessee informed the ito that it was desirous of.....
Judgment:

Ramaswami, J.

1. The assessee is a firm of two partners carrying on the business of purchase and sale of cloth. It was also engaged in export of art silk fabrics. It had been granted licences to import art silk as an incentive under the Art Silk Fabrics Export Promotion Scheme during the three relevant previous years. In their returns for assessment years 1961-62, 1962-63 and 1963-64, it had disclosed an income of Rs. 13,409, Rs. 36,324 and Rs. 28,785, respectively, and the assessments were completed on November 23, 1961, December 18, 1962, and February 27, 1964, determining the total income as Rs. 16,409, Rs. 45,8466 and Rs. 36,375, respectively. By its letter dated February 28, 1966, which was received by the ITO on March 4, 1968, the assessee informed the ITO that it was desirous of filing revised returns for the above-mentioned three assessment years offering the income that had escaped assessment for taxation and requesting that it may be permitted to file such returns before March 15, 1966. In the meantime, the ITO himself issued notices under s. 148 of the I.T. Act, 1961, on March 2, 1966, seeking to reopen the assessments for the above-mentioned assessment yeas on the ground that it had been found that there were hundi credits in the books of the assessee in the names of black-listed bankers. These notices were served on the assessee on March 7, 1966. The assessee did not file the returns in response to such notices within the time mentioned therein. Neither the department nor the assessee were able to enlighten as to what happened thereafter till the end of 1969. On January 16, 1970, the assessee applied to the Commissioner of Income-tax informing him that they were filing revised returns and praying for the acceptance of the revised returns and for a waiver of the penalty under s. 271(1)(c) of the Act. But, in fact, the revised returns were filed on February 5, 1970, disclosing incomes of Rs. 31,302, Rs. 57,493 and Rs. 47,194, respectively, for the assessment years 1961-62, 1962-63 and 1963-64. Along with these returns it also sent a covering letter to the ITO in which it had stated that no art silk was imported by it on the strength of the import licences that had been granted to it, that on the other hand, it had sold such licences for profit, that it had made entries in its books as if art silk had been imported and utilised in the manufacture of cloth and as if such cloth had been sold, that in order to effect such entries it had also made entries in its books as if moneys were borrowed from various bankers by execution of hundis and that in reality there was no such borrowing. It was also stated that since the import licence documents had been misplaced, it was not able to gather the relevant details and file the returns in time though it had offered to do so as early as February 28, 1966, and that since it was unable to state accurately the income derived by the sale of import licences, it had estimated such income in the returns. The ITO did not accept the estimates made by the assessee in the revised returns and by orders, dated March 12, 1970, he determined the total income as Rs. 54,400, Rs. 1,15,860 and Rs. 68,120, respectively, for the assessment years 1961-62, 1962-63 and 1963-64. He also initiated action for the levy of a penalty for the alleged concealment of income. Since the minimum penalty imposable exceeded Rs. 1,000, he referred the case to the IAC. Against the revised assessment orders, the assessee preferred appeals and the AAC reduced the taxable income to Rs. 35,150, Rs. 82,610 and Rs. 60,950, respectively, and this order had become final. After the receipt of the files from the ITO, the IAC issued notices to the assessee to show cause against the levy of penalty for the alleged concealment of income for the above-mentioned assessment years. The assessee contended that since it had voluntarily offered for assessment the escaped income by its letter dated February 28, 1966, no penalty was imposable. The IAC in his orders, dated February 21, 1972, held that the assessee had not submitted the revised returns voluntarily, but it was done after notices were issued under s. 148 of the Act and even the application filed by the assessee under s. 271(4A) of the Act was dismissed by the Commissioner. he also held that at the time of the original assessment, the assessee did not disclose the income fully and truly and that, even while filing the revised returns, the assessee had not given the correct particulars regarding the premium prevailing in the market at the relevant time. The IAC then observe :

'Under the above circumstances, the concealment of income clearly admitted in the revised returns filed only after the issue of notice under section 148 has to be penalised, which was filed after April 1, 1968. Hence the amended provision of law would apply.'

2. He then levied the minimum penalty of Rs. 18,741, Rs. 36,764 and Rs. 24,575, respectively, in respect of each of the assessment years, being the amount equal to the income concealed. The assessee preferred appeals before the Tribunal. The Tribunal also held that the assessee had concealed its income in the original returns, that the contention of the assessee that the revised returns were submitted by it voluntarily could not be accepted, that the returns were submitted only in pursuance of the notices under s. 148 of the Act and that, therefore, the penalty is exigible for the concealment of income in the original returns. The Tribunal then proceeded to consider as to whether the provisions of s. 271(1)(c) of the Act as they stood prior to the amendment by the Finance Act of 1968 only were applicable or whether the provisions as they existed subsequent to the amendment, would have to be applied, and ultimately held that the provisions as they existed prior to the amendment only were applicable as the concealment was in the original returns which were filed long prior to the amendment. However, the Tribunal did not accept the contention of the assessee that only the minimum penalty of 20% of the tax sought to be evaded should be imposed and since the assessee had not co-operated with the department by giving the exact amount for which it has sold the licences, 25% of the tax sought to be evaded has to be levied as penalty. The application filed for referring a question of law having been dismissed, the Revenue invoked the jurisdiction of this court and this court directed the following two questions to be referred in respect of each of the assessment years and it has been referred.

'1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in reducing the penalty levied under section 271(1)(c) to Rs. 1,725 for the assessment year 1961-62

2. Whether the Appellate Tribunal's finding that there is concealment only in the original return is based on valid consideration and is a reasonable view to take on the facts of the case ?'

3. It may be mentioned that in the 1st question, the amount of penalty is different for the assessment years 1962-63 and 1963-64.

4. Before dealing with the submissions of the learned counsel for the revenue, it is necessary to set out certain provisions which have a bearing for answering the reference. Section 271(1)(c), prior to its amendment by the Finance Act of 1968, read as follow :

'(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 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 shall not be less than twenty per cent but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income.'

The following clause (iii) was substituted for the above by the Finance Act of 1968 with effect from April 1, 196 : '(iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished.'

5. It may be seen from the above provisions that originally the quantum of penalty was to be determined with reference to the amount of tax avoided, whereas under the substituted provision which came into effect from April 1, 1968, the quantum of penalty is to be calculated with reference to the amount of income concealed or with respect to which inaccurate particulars have been furnished. The original return in respect of each of the three assessment years in this case was long prior to April 1, 1968, but the revised returns submitted in pursuance of the notice under s. 148 were subsequent to April 1, 1968. If the penalty that could be imposed in these cases is to be determined with reference to the law that was in force on the day when the revised returns were submitted, it would be much more than what is imposable with reference to the date on which the original returns were filed. That is how the two questions that have been referred arise for consideration.

6. The learned counsel for the revenue contended that in the original return filed, the assessee had not disclosed the profits earned by it by the sale of import licences and there was, therefore, concealment of the particulars of its income. In the revised returns submitted under s. 148 also the assessee had not furnished the full and correct particulars of its income, but had furnished inaccurate particulars. Thus, it is guilty of concealing the particulars of its income in the original return as also furnishing inaccurate particulars in the revised return. In such circumstances, according to the learned counsel, the date of repetition of the offence may be taken as the date with reference to which the law applicable for imposing the penalty had to be determined, and that, therefore, the provisions of s. 27(1)(c)(iii), as substituted by the Finance Act of 1968, shall have to be applied for determining the quantum of penalty and not the provision as it existed at the time when the original return was filed.

7. Under s. 139 every person is bound to furnish a return of his real, correct total income. If the return is accepted by the ITO, an assessment order is made under s. 143(1) on the basis of such return. Section 144 deals with cases in which the ITO shall make the assessment to the best of his judgment. Under s. 147(a) if the ITO has reason to believe that by reason of the omission or failure on the part of the assessee to make a return under s. 139 for any assessment year, or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for the year, he may, subject to the provisions of ss. 148 to 153, assess or reassess such income for the assessment year concerned. Under s. 148, before making the assessment, reassessment or re-computation under s. 147, the ITO shall serve on the assessee a notice and the provisions of the Act shall, so far as may be, apply accordingly as if the notice were a notice issued under sub-s. (2) of s. 139. Under s. 271(1)(c), if the ITO is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, he may impose a penalty as provided under that section. Under the provision that existed prior to April 1, 1968, the penalty in cases of concealment of income or furnishing of inaccurate particulars shall not be less than 20 per cent but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if 'the income as returned by such person had been accepted as the correct income'. Even under the provisions which came into force on April 1, 1968, the penalty depended on the amount of income in respect of which particulars have been concealed or inaccurate particulars have been 'furnished'. Thus, it is the concealment or furnishing of inaccurate particulars in the return filed by the assessee that attracts the penal provision. If in the original return there was a concealment and this was detected by the ITO in the course of the assessment proceedings, it will attract the penal provisions whether the amount concealed was determined with reference to any records or evidence produced or whether it was decided by best of judgment. The quantification of the penalty would have depended on the tax which would have been avoided if the income as returned by the assessee had been accepted as the correct income and the return was prior to April 1, 1968, but if the return was subsequent to that date, it would depend on the amount of income concealed in the return furnished by the assessee. Section 147 could be invoked by an ITO if he has reason to believe that income chargeable to tax has escaped assessment for that year. He could invoke the provision where the original assessment was made under s. 143(1) accepting the return submitted by the assessee, or where he had made the assessment on best of judgment or even in cases where he had found certain concealment or inaccurate furnishing of particulars of income and in respect of which penalty also had been levied under s. 271(1)(c). Where the ITO invokes the provision under s. 147(a) and issues notice under s. 148, the assessee may submit a revised return which may be the same as what was filed in the original return or though there was concealment, he may make a partial disclosure of the same in the revised return. If the ITO was satisfied that there was concealment in cases where the assessee files the same return as he had originally done, or the revised return had not disclosed the full concealed income, a reassessment order is made rejecting the revised return and determining the total income either on best judgment basis or on the basis of materials available. If the ITO is satisfied that there was a full disclosure of the real income in the revised return, he makes an assessment order on the basis of the revised return. Section 147 does not place any limit on the number of times an ITO may invoke his power in respect of a particular assessment order. It has been held in a number of cases arising under s. 34 of the old Act corresponding to s. 147 that within the time-limits specified, there is no restriction as to re-open the assessment by way of reassessment where it is found that any income of the assessee has, for one reason or another, escaped assessment-vide K. E. M. Mohammad Ibrahim Maracair v. CIT : [1964]52ITR890(Mad) and Gurdayal Berlia v. CIT : [1966]62ITR494(Cal) . But whatever may be the number of times s. 147 is invoked what is relevant for a reassessment is a finding that in the original return the assessee had concealed his income or furnished inaccurate particulars of his income. In other words, since the assessee had to disclose his real, total income in the original return filed under s. 139, if he had failed to dos so but concealed or furnished inaccurate particulars in that return, the offence becomes complete. The fact that for a number of times he persisted in such concealment while submitting his revised returns in pursuance of the notices issued under s. 148, or that the ITO was not able to detect the whole or part of the amount concealed in the original proceedings or in the reassessment proceedings, but had to invoke the provisions of s. 147, does not and cannot alter the situation that the concealment was in the original return. This is also clear from the fact that the penalty is leviable only with reference to the amount of income concealed in the original return as found in the reassessment proceedings. In N. A. Malbary and Bros. v. CIT : [1964]51ITR295(SC) , the Supreme Court had occasion to consider the scope of s. 28(1)(c) and 28(3) of the India I.T. Act, 1922, corresponding to s. 271(1)(c). The facts in that case, shortly stated, are as follow : For the assessment year 1951-52, in respect of which the accounting year was the calendar year 1950, the assessee submitted its return. The assessee was carrying on business at Surat, but had a branch at Bangkok to which it had exported cloth from India. The branch had also made purchase locally and sold them. In the return furnished, the Bangkok branch business was not shown. The ITO issued a notice under s. 22(4) of the old Act to produce the profit and loss account and balance-sheet with the relevant books. But the assessee excused. Thereupon the ITO made an estimate of the income of the Bangkok branch and determined the net profits as Rs. 37,500. This assessment order was made on January 31, 1952. On the same day he issued a notice under s. 28(3) requiring the assessee to show cause why penalty under s. 28(1)(c) for concealment of the particulars of income of 1950 should not be levied. After hearing the assessee the ITO imposed a penalty of Rs. 20,000 on the ground that the explanation of the assessee was not acceptable. In the course of the assessment proceedings for the year 1952-53, the assessee produced the Bangkok account books. On the ground that certain income of the assessment year 1951-52 had escaped assessment, the ITO initiated proceedings under s. 34 and gave notice to the assessee to submit a return. The assessee then submitted a return admitting a sum of Rs. 1,25,520 as the profit of the Bangkok branch which was found to be correct, and accepting the revised return, the ITO completed the reassessment proceedings but issued a notice under s. 28(3) requiring the assessee to show cause why penalty should not be levied for concealing the particulars of income of 1950. Pursuant to this notice, the ITO by an order imposed a penalty of Rs. 68,501. So there were two orders of penalty. The assessee appealed to the AAC against both the orders, but the appeals were rejected. The assessee then appealed to the Income-tax Appellate Tribunal. The Tribunal held that it was not possible for the department to split up one offence into two proceedings and quashed the first order imposing penalty of Rs. 20,000 and sustained the levy of Rs. 68,501. On a reference, the High Court agreed with the contention of the assessee that two penalties could not be levied in respect of identical facts; but at the same time, did not accept the contention of the assessee that the second order of penalty was illegal and sustained the order of the Tribunal. It was contended before the Supreme Court that there was only one concealment, in respect of which an order of penalty of Rs. 20,000 had already been made, and that the ITO had no jurisdiction to make a second order of penalty while the first order stood, and for that reason the second order must be treated as nullity. Rejecting this contention, the Supreme Court held (p. 298 :

'It may be that in respect of the same concealment two orders of penalty would not stand but it is not a question of jurisdiction. The penalty under the section has to be correlated to the amount of the tax which would have been evaded if the assessee had got away with concealment. In this case having assessed the income by an estimate, the Income-tax Officer levied a penalty on the basis of that estimate. Later, when he ascertained the true facts and realised that a much higher penalty could have been imposed, he was entitled to recall the earlier order and pass another order imposing the higher penalty. If he had omitted to recall the earlier order that would not make the second order invalid. he had full jurisdiction to make the second order and he would not lose that jurisdiction because he had omitted to recall the earlier order, though it may be that the two orders could not be enforced simultaneously or stand together. However, in the present case, the earlier order having been cancelled and no objection to the cancellation having been taken, we have only one order and that for the reasons earlier stated is, in our view, a legal order :'

8. It may be seen from the passage extracted above that though originally the concealment was estimated at Rs. 37,500 when on ascertainment of the true facts it was found that the real concealment was Rs. 1,25,520 the ITO gets jurisdiction to impose penalty with reference to the difference of the amount ultimately found and that which was disclosed in the original return of the assessee and thus enhance the penalty with reference to the real amount concealed. By reason of their Lordships' holding that there could be no two orders and the ITO can only raise the penalty as and when a further concealment was detected, it should be taken that the ratio of that judgment is that though there may be a re-calculation of the penalty, there is only one concealment which was in the original return filed. Thus, whether the quantum of penalty is to be determined on the basis of the tax avoided or on the amount of income concealed, the basis of determination is the difference between the amount determined on the basis of the tax avoided or on the amount of income concealed, the basis of determination is the difference between the amount determined in the reassessment proceedings and that which was furnished in the original return. Thus, the offence of concealment is complete and final when the assessee had not disclosed the real income in his original return. The filing of revised returns not disclosing the real income or furnishing incorrect particulars, therefore, could not be taken as fresh offences or a repetition of the same offence, giving rise to a fresh cause of action though it may be considered as a continuing offence till the entire real income is disclosed. Any other construction will also make the provisions arbitrary and unworkable as may be seen from the following illustrations. Suppose an assessee had concealed an income of Rs. 1,50,000 in the return submitted by him under s. 139 and the ITO, though he rejected the accounts, estimated the concealment only at Rs. 20,000. Subsequently, the ITO initiates reassessment proceedings and issues notice under s. 148 and in the revised return the assessee admits concealment of Rs. 40,000 but the ITO does not accept this return also and determines the income escaped as Rs. 60,000. Again the ITO invokes s. 147 and a further revised return is filed by the assessee admitting Rs. 1,50,000 which is the real income and that is accepted by the ITO. Then in the original proceedings on the basis of best judgment assessment, a penalty with reference to Rs. 20,000 of income which had escaped could be levied. When the reassessment proceeding was taken for the first time since the ITO had determined the escaped income as Rs. 60,000, on the ratio of the judgment of the Supreme Court in Malbary's case : [1964]51ITR295(SC) , the first order of penalty will have to be recalled and another order passed imposing a higher penalty on the basis that the income that was concealed was Rs. 60,000 and not Rs. 20,000. If it is considered that the assessee had committed another offence in filing the revised return disclosing only Rs. 40,000 as against Rs. 60,000 determined, the penalty could be levied on the basis of the income of Rs. 20,000 concealed in the revised return. That will be a second order of penalty. Though it will be in terms a third order, since the original order has been recalled, this will be the second order. When for the second time the assessee submits a revised return admitting the entirely of Rs. 1,50,000, which was originally concealed, then the penalty order on the basis that the escaped income was Rs. 60,000 in the revised assessment proceedings has again to be recalled and the penalty will have to be based on the concealment of Rs. 1,50,000 on the basis of the Supreme Court judgment in Malbary's case : [1964]51ITR295(SC) . But the second penalty order relating to the concealment of Rs. 20,000 in the revised return will again have to be modified with reference to the same Supreme Court judgment on the basis of the second revised return admitting Rs. 1,50,000. There will be thus two final orders, one imposing a penalty on the basis of escaped income of Rs. 1,50,000 and another order on the basis of escaped income of Rs. 1,20,000 in respect of the first revised return and the law applicable will also have to be different as it has to be with reference to the date on which the offence was committed. The number of orders also will go on increasing with reference to the number of times the ITO invokes the jurisdiction under s. 147. Sometimes it may be possible for the ITO to abuse his powers also by invoking the provisions of s. 147 and imposing penalty more than once, though the assessee had committed only one concealment in the illustration with reference to the sum of Rs. 1,50,000. It will also be, in our opinion, against the ratio of the judgment of the Supreme Court in Malbary's case. Thus, we are of opinion that the provisions contained in the I.T. Act, 1961, contemplate a concealment in the original return filed under s. 139 alone, and the punishment is to be imposed with reference to that concealment. The subsequent revised returns filed only enable the ITO to determine the real income of the assessee and the amount concealed. Every filing of a revised return will not create a fresh cause of action or a fresh concealment.

9. We may now notice some of the decided cases on this question. In CWT v. M. V. Rajamma : [1979]120ITR132(Mad) , the facts were thes : With reference to the assessment year 1964-65, the assessee filed a return under the W.T. Act on November 9, 1964. The assessment was completed by giving a deduction of debts of Rs. 30,655, being the amount claimed to be due to two persons. In the course of the income-tax proceedings, deduction of these debts was disallowed. Consequent on this, the WTO took reassessment proceedings. The assessee filed a fresh return March 3, 1970, and in this return also, she claimed the deduction of debts of Rs. 30,655 but ultimately the WTO added back this amount to the net wealth. Penalty proceedings were thereafter initiated and a penalty of Rs. 30,655 equal to the wealth concealed, was levied under s. 18(1)(c) of the W.T. Act, on the ground that the law applicable was the law that prevailed on March 3, 1970, when the fresh return was filed and not the law that prevailed on November 9, 1964, when the original return was filed. The Tribunal held that though penalty could be levied, it could be levied only in accordance with the provisions as they were in force at the time when the original return under the W.T. Act was submitted. On a reference to this court, it was held that even though the same concealment existed in the return filed in the reassessment proceedings, no fresh cause of action arose for the levy of penalty when the second return was filed as it was only a continuation of what had happened earlier, and that the repetition of the same mistake does not give rise to a fresh cause of action. Accordingly, it was held that the penalty will have to be calculated in accordance with the law as it existed when the original return for wealth-tax was filed.

10. A Full Bench of the High Court of Punjab and Haryana in the decision in CIT v. Ram Singh Harmohan Singh considered this question again. The majority held that, for a particular year, an assessee can commit the offence only once when he furnishes incorrect particulars of his income, and that he does, by filing the original return. Even if he is asked to file a number of returns for that very year and he sticks to his original position, he will not be committing the offence again and again. The offence being concealment of income, persistence in such concealment cannot be taken a fresh offence committed every time a return is filed not disclosing the real income.

11. The Allahabad High Court also took the same view and we may extract the following passage which dealt with an identical question in Ram Achal Ram Sewak's case [1977] 106 ITR. 15 :

'The question that arises is as to whether in a case where an assessee has concealed the particulars of his income or furnished inaccurate particulars of such income in the original return, and as such he becomes liable to penalty, a second penalty can be imposed for concealment or inaccurate furnishing of particulars of income when he files a return in pursuance of a notice under section 148. The repercussions of the acceptance of the argument raised by counsel for the department may be examined with reference to particular cases. To begin with, we shall take a case where an assessee has concealed the particulars of his income or furnished inaccurate particulars of such income in his original return as also in the return filed in pursuance of a notice under section 148. If the argument of the department is accepted, the assessee would become liable to two penalties, one in respect of the original return, and the other in respect of the second, when he filed a return in pursuance of a notice under section 148, and the maximum penalty that the Income-tax officer can impose could be twice the amount of the income concealed on each occasion, with the result that the total penalty for the concealment would be four times the amount of income concealed. We do not feel that such a consequence was intended by the legislature. This apart, where an assessee has concealed the particulars of his income or furnished inaccurate particulars of such income once, it cannot be said that if he repeats the same act again, there is a fresh concealment or furnishing of inaccurate particulars of the same income. There are other difficulties in accepting this contention. Suppose an assessee has in the original return which was filed before April, 1964 concealed or furnished inaccurate particulars in respect of an income of Rs. 50,000 while in the return filed in pursuance of a notice under section 148, there is no concealment or the concealment is only Rs. 25,000. If the relevant return for the purposes of fixing the penalty is filed in pursuance of the proceedings under section 148, no penalty can be imposed in the first case while, in the second case, the penalty would be reduced as the concealment in the second return is less than that in the original return. The legislature, it seems to us, did not intend to allow such an assessee to go scot-free in the first case or subject him to a lesser penalty in the other case.'

12. In the foregoing circumstances, neither the provisions of the Act nor the decided cases authorises the imposition of penalties with reference to each of the returns for the same assessment year, or more than once for the same offence. But it is possible to recall an earlier order of penalty and pass another order imposing higher penalty, if on the later occasion the true facts ascertained show a higher amount of concealment.

13. It is now well settled by the decision of the Supreme Court in Brij Mohan v. CIT : [1979]120ITR1(SC) that the penalty imposable on account of the commission of a wrongful act was to be in accordance with the law operating on the date on which the wrongful act was committed. Since the concealment in this case with reference to which the penalty could be imposed is the concealment of the income in the return originally filed by the assessee, which was prior to April 1, 1968, the law that was applicable prior to April 1,1968, alone could be applied and that was finding of the Tribunal.

14. The learned counsel for the assessee argued that the second question referred also does not arise for consideration out of the order of the Tribunal. It was on the ground that the department never argued before the Tribunal that there was any concealment in the revised return filed by the assessee. What was argued was only that though the concealment was in the original return, in view of the initiation of penalty proceedings under s. 148 and there was also concealment in the revised return, the law as on the date of the revised return will have to be applied. Though this argument is plausible, we do not think that this could be accepted. As seen from the IAC's order imposing the penalty, there were two findings, one is that at the time of the original assessment, the assessee did not disclose the income fully and truly and the second is that even while filing the revised return, the assessee had not given correct particulars regarding the profits derived by the sale of import licences. It is with reference to these findings it was argued before the Tribunal that the date on which the revised return was filed, viz., June 5, 1970, that was relevant for the purpose of imposing the penalty. But the Tribunal held that the penalty is leviable for the concealment of the income made by the assessee in the original return only as per the provisions of s. 271(1)(c) as it stood prior to the amendment by the Finance Act of 1968. In those circumstances, we cannot accept the contention of the learned counsel that the question referred does not arise out of the order of the Tribunal. There could be no doubt that if the offence of concealment was committed in the original return, the reduction of the penalty by the Tribunal was in order.

15. For the foregoing reasons, we answer the references in the affirmative and against the revenue. The assessee will be entitled to his costs (counsel fee Rs. 500 one set).


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