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Commissioner of Income-tax Vs. Ramdas Pharmacy - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case Nos. 80 of 1966 and 189 of 1967 (Reference Nos. 27 of 1966 and 71 of 1967)
Judge
Reported in[1970]77ITR276(Mad)
ActsIncome Tax Act, 1922 - Sections 22(3) and 28(1)
AppellantCommissioner of Income-tax
RespondentRamdas Pharmacy
Appellant AdvocateV. Balasubrahmanyan and ;J. Jayaraman, Advs.
Respondent AdvocateK. Srinivasana and ;K.C. Rajappa, Advs.
Cases ReferredSivagaminatha Moopanar & Sons v. Commissioner of Income
Excerpt:
(i) direct taxation - concealment of income - sections 22 (3) and 28 (1) of income tax act, 1922 - assessee was unregistered firm - proceedings initiated under section 28 (1) (c) for alleged concealment of income and furnishing of false particulars - meanwhile firm was dissolved - assessee contended that no penalty was leviable on dissolved firm and there was no concealment of income as assessee filed revised return - income-tax officer levied penalty - appeal - penalty levied under section 28 (1) (c) not justified as no deliberate concealment on part of assessee - addition of income on basis of estimate of gross profit does not amount to deliberate concealment of income. (ii) penalty - whether appellate tribunal has power to determine quantum of penalty when cancelling penalty order.....ramanujam, j. 1. the assessee in both the cases is the same. the assessee is an unregistered firm carrying on business in drugs and chemicalsincluding tinctures and essences. for the assessment year 1952-53 the assessee-firm filed a return of income on september 11, 1952, disclosing a net profit of ks. 54,107. the income-tax officer felt that the gross profit disclosed by the assessee worked out to 8% which was considered to be too low when compared with the gross profit of 15% arrived at in the earlier years. he, therefore, scrutinised the account books of the assessee and discovered certain discrepancies between the assessee's books and the books of messrs. amrit laboratories ltd. from whom the assessee had purchased goods of the value of rs. 4,00,000 odd. he also discovered huge.....
Judgment:

Ramanujam, J.

1. The assessee in both the cases is the same. The assessee is an unregistered firm carrying on business in drugs and chemicalsincluding tinctures and essences. For the assessment year 1952-53 the assessee-firm filed a return of income on September 11, 1952, disclosing a net profit of Ks. 54,107. The Income-tax Officer felt that the gross profit disclosed by the assessee worked out to 8% which was considered to be too low when compared with the gross profit of 15% arrived at in the earlier years. He, therefore, scrutinised the account books of the assessee and discovered certain discrepancies between the assessee's books and the books of Messrs. Amrit Laboratories Ltd. from whom the assessee had purchased goods of the value of Rs. 4,00,000 odd. He also discovered huge deposits amounting to Rs. 2,79,112 in the bank accounts of some of the partners of the firm. When called upon to explain these discrepancies and the deposits, the partner representing the assessee-firm explained that there were some differences between the partners, that partners 4 and 5 were carrying on business in the same line in contravention of the partnership, that in order to offset extra profits, the remaining partners had prepared bills showing lesser sale price than the actual sale price and deposited the extra sale proceeds in the names of its three partners and that remittances to Messrs. Amrit Laboratories Ltd, were made with the extra cash but the entries were postponed to dates when the cash balance as per the cash book maintained were sufficient to accommodate the remittances already made. It was further explained that all the bank deposits in the names of some of the partners except to the extent of Rs. 28,618 have been accounted for in the firm's accounts and that the said sum of Rs. 28,618 alone represented the sale proceeds that were not disclosed in the books but shared by partners 1 to 3 without the knowledge of the other two partners. The assessee-firm sent a letter dated May 16, 1953, stating that the profit actually made by the firm during the relevant year amounted to Rs. 82,725 and on June 6, 1953, the assessee-firm actually filed a revised return disclosing the said income of Rs. 82,725. The Income-tax Officer, however, did not accept either the explanation of the partner representing the firm or the revised return filed by the firm. He took the view that the difference Between sale price as per bills issued and the sale price actually recovered could not be ascertained with any accuracy and he, therefore, estimated the total sales at Rs. 13,50,000 by adding Rs. 2,90,000 as suppressed sales to Rs. 10,40,932, the sale price actually disclosed, and worked out the gross profit thereon at 15%, which resulted in an addition of Rs. 84,306 to the income of Rs. 54,107 originally returned by the firm.

2. The Income-tax Officer also initiated proceedings against the firm under Section 28(1)(c) of the Income-tax Act, 1922, for alleged concealment of income and furnishing of false particulars. Meanwhile, the firm was dissolved on September 9, 1952, and as such the notice under Section 28(3) was served only on some of the partners of the erstwhile firm. Thepartners contended that no penalty was leviable on a dissolved firm and that there was no concealment of income by it, inasmuch as the firm had filed a revised return disclosing its entire income. The Income-tax Officer negatived these contentions and held that even a dissolved firm was liable to pay penalty and that there was in fact concealment of income by the assesssee-firm. He levied a penalty of Rs. 60,000 under Section 28(1)(c) of the Income-tax Act by his order dated October 10, 1961.

3. The assessee-firm preferred appeals both against the assessment order dated June 17, 1953, and also the penalty order dated October 10, 1961. So far as the appeal against the assessment order was concerned, the Appellate Assistant Commissioner held by his order dated March 20, 1954, that the assessee's books were unreliable and that an estimated income on the basis of 15% gross profit was justified. But with regard to the turnover he was of the view that the addition of Rs. 2,90,000 being the deposits in the two banks as wholly suppressed sales did not seem to be either logical or fair, that if the entire sum of Rs. 2,90,000 is taken as suppressed sale proceeds then it would work out a gross profit of nearly 27%, which was obviously high and absurd, and that having regard to the rate of gross profits shown by the assessee for the previous years at 11% as against 15% adopted on comparable business, it was not possible to take the entire sum of Rs. 2,90,000 as the sale proceeds unless there is any comparable case showing such a high rate of gross profit at 27%. He also noted that the Income-tax Officer has himself accepted the assessee's explanation that the deposits in the banks had already been credited to the sales account except a portion of the sale proceeds which have been admittedly divided between the three partners without showing it in the bills and without the knowledge of the other two partners, and that was why he did not add the entire deposit to the gross profit, but added only a sum of Rs. 84,305. The Appellate Assistant Commissioner, therefore, took the view that the addition of Rs. 2,90,000, being the deposits with the two banks, as wholly suppressed sales, did not seem to be either logical or fair in view of the acceptance by the Income-tax Officer of the appellant's explanation that the deposits in the banks had already been credited to the sales account except a portion of the sales amounting to Rs. 28,618 which had been admittedly divided between the three partners without showing them in the bills and, therefore, added a sum of Rs. 85,000 both to the turnover and the gross profit. He, therefore, fixed the turnover at Rs. 11,26,000 and the excess amount added as excess gross profit namely, Rs. 33,194, was ordered to be deleted.

4. As regards the appeal against the penalty order, the Appellate Assistant Commissioner, by his order dated March 30, 1963, held that thelevy of penalty on a dissolved firm was quite valid and that penalty was leviable, on the firm notwithstanding the filing of the revised return. He, therefore, confirmed the order of penalty of Rs. 60,000 made by the Income-tax Officer.

5. The assessee filed appeals to the Income-tax Appellate Tribunal both against the assessment order and the penalty order. The Tribunal, by an order dated October 11,1964, dismissed the appeal holding that the estimate made by the departmental officers was justified and that the gross profit rate of 15% adopted by the departmental officers could not be interfered with. In the appeal filed against the penalty order, the Tribunal by its order dated October 31, 1964, held against the contention of the assessee that penalty under Section 28 could not be imposed on a dissolved firm, relying on a decision of the Supreme Court in C.A. Abraham v. Income-tax Officer, : [1961]41ITR425(SC) .. Then the Tribunal considered the assessee's other contentions on merits, which are set out below:

(1) The penalty order was vitiated by reason of the non-service of the notice under Section 28 3) on all the partners of the dissolved firm ;

(2) There was no concealment of income in view of the revised return filed by the firm so as to attract the provisions of Section 28(1)(c) of the Act; and that

(3) the penalty levied is excessive.

6. As regards the first contention, the Tribunal negatived the same holding that the penalty order is not vitiated for want of notice on the partner, Jagannathan, and that service of notice on some of the partners was sufficient compliance with the requirements of Section 28(3) of the Act.

7. As regards the second contention that there was no concealment of income so as to attract Section 28(1)(c), the Tribunal took note of the facts that the departmental officers had accepted the assessee's case that all the deposits in the banks had already been credited in the sales account except the sum of Rs. 28,618 which had been divided between the three partners without showing it in the bills, and without the knowledge of the other two partners and that the said amount of Rs. 28,618 which was kept off from the sales account had been shown in the revised return. The Tribunal was of the view that the conduct of the assessee in filing a revised return bringing in the entire excess sale proceeds divided between three partners without bringing it into the sales account should be taken into consideration in applying the provisions of Section 28(1)(c) of the Act, that the Income-tax Officer had ignored the revised return while passing the penalty order, that Section 22(3) having given to the assessee a right to file a revised return at any time before the assessment is completed, and the assessee having come forward with true disclosure of his income in his revised returnbefore the assessment is completed, it would be unreasonable and unfair to levy penalty upon the firm for not making a true disclosure in the original return. According to the Tribunal, the said Section 22(3) gave locus poenitentiae to the assessee and the revised return has taken the place of the original return and it is the revised return that formed the basis of the assessment in the case. Ultimately, the Tribunal held that the Income-tax Officer was not justified in ignoring the revised return for the purpose of determining whether there was concealment of income by the assessee and that if the revised return filed by the assessee wherein the assessee had come forward with the true disclosure of the entire sale proceeds that were shared by the three partners without the knowledge of the other two partners and without bringing them into account is taken into account, there was no room for the application of Section 28(1)(c) in this case. The Tribunal referred to the assessment order as also the appellate order of the departmental officers and expressed that the suppressed sale proceeds amounted to Rs. 28,618 only, as all the other bank deposits had been credited to the sales account, that even the sum of Rs. 28,618, which was suppressed from the original return, was disclosed in the revised return and that the addition made to the income of the assessee by the Appellate Assistant Commissioner arose only upon the estimate of the gross profit. In its view, merely because the departmental officers made an addition on the basis of an estimate of the gross profit, it cannot be taken as a concealment of income by the assessee, and something more has to be proved to attract Section 28(1 )(c) of the Act. In that view the Tribunal cancelled the order of penalty.

8. As regards the third question dealing with the quantum of penalty, the Tribunal expressed the view that, if a penalty is in law leviable, in the circumstances of the case, the penalty of Rs. 60,000 levied in this case was quite excessive and that 20% of the tax sought to be evaded will meet the ends of justice. In that view it fixed a penalty of Rs. 12,000 as fair and reasonable.

9. The revenue proposed a reference to this court of three questions of law as arising out of the Tribunal's order. The assessee, while filing his objections to the proposal, wanted one more question to be referred in case the Tribunal decided to make a reference. The Tribunal ultimately referred the following two questions of law to this court as arising out of its order dated October 31, 1964:

'(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that service of notice on some of the partners was sufficient compliance with the requirements of law ?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that in view of the revised return filed by the assessee, there was no concealment of income by the assessee?'

10. Of these two questions, the first question was referred at the instance of the assessee and the second at the instance of the revenue. While the reference in respect of the above two questions was pending in T.C. No. 80 of 1966, the revenue wanted the following further question of law to be referred to this court as arising out of the same order of the Tribunal dated March 31, 1954, and that question is comprised in T.C. No. 189 of 1967.

'Whether, on the facts and circumstances of the case, the Appellate Tribunal has power to determine the quantum of penalty when cancelling the order of penalty itself as invalid ?'

11. As regards the first question raised in T.C. No. 80 of 1966 as to the scope of Section 28(3), it was contended by the learned counsel for the revenue, that the Tribunal had no jurisdiction to refer the said question at the instance of the assessee, when the assessee had not sought any reference under Section 66(1) of the Income-tax Act, and that it is not open to the assessee in reply to the application filed by the revenue asking for a reference, to seek a reference on a question of law of its choice. It is urged that the High Court's jurisdiction under Section 66(2) is conditional on an application under Section 66(1) and the absence of such an application would be a complete bar to entertain a reference on a question of law at the instance of the assessee. Reliance is placed on a decision of this court in Commissioner of Income-tax v. Rathnam Nadar, [1969] 71 I.T.R. 433, 438 (Mad.)., where this court held, in similar circumstances, that:

'Where either the Commissioner or the assessee has made an application under Section 66(1) of the Indian Income-tax Act, 1922, for a reference to the High Court, it is not open to the other party in reply to the application filed by the opposite party to ask for reference of a question which it wants to be referred. The only way by which a party can ask for a reference of any question to the High Court is by filing an application under Section 66(1) and, if that is refused, to apply to the High Court under Section 66(2). As the jurisdiction given to the High Court under Section 66(2) is conditional on an application under Section 66(1) being refused by the Tribunal, the total absence of an application under Section 66(1) would be a complete bar to an application under Section 66(2). The scope of Section 66 should not be decided by a reference to the rules made under the Act by the Tribunal. The right of the Appellate Tribunal to regulate its own procedure cannot confer on it the power to frame a rule conferring a substantive right not contemplated by or conferred by Section 66. ...

Under Section 66 of the Act, either the assessee or the Commissioner may, by application in the prescribed form, require the Tribunal to refer any question of law arising out of an order under Section 33(4) and the Appellate Tribunal shall draw up a statement of the case and refer it to the High Court. But, if on any application being made under Sub-section (1) of Section 66, the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may apply to the High Court, and the High Court may, if it is not satisfied with the correctness of the decision of the Tribunal, require it to state a case and refer it and, on such requisition, the Appellate Tribunal shall state the case and refer it accordingly.'

12. With respect, we agree with the decision of this court in the above case and we hold, following the above decision, that the reference so far as it relates to the above question is incompetent and cannot be answered by this court.

13. As regards the second question as to whether the Tribunal was right in holding that there was no concealment of income by the assessee in view of the revised return filed by the firm before the assessment was completed, it was contended by the revenue that the filing of a revised return by the assessee or the acceptance of the revised return by the Income-tax Officer will not relieve the assessee of the liability under Section 28(1)(c) of the Act. It was urged that the provisions of the Act cast a duty on the assessee to act in good faith and to disclose the correct income and that in view of the full faith and trust that is placed on the assessee by the statute, Section 2 8(1)(c) penalises such assessees who chose to conceal income in the return submitted by them. It is pointed out that, if the return submitted by the assessee is accepted, it would result in concealment of the true income, and that the assessee is liable to suffer penalty under Section 28(1)(c), whether such a return is an original return or a revised return. The revenue referred to the relevant provisions of Sub-sections (1) to (4) of Section 22 and Sub-sections (1) to (4) of Section 23 and Section 27 of the Income-tax Act as indicating that the revenue expects the assessees to disclose their true income in the returns submitted by them as the authorities are empowered to accept the return and complete the assessment relying on the assessee's good faith, even without any enquiry if they are satisfied with the return, and such faith and trust placed on the assessee by the said provisions of the Act cannot be defeated by the assessee filing an untrue return. The policy underlying the Act in relation to the returns contemplated under the Act is said to be to treat the returns as true and correct and to accept the, same by the authorities concerned. Section 28(1)(c) is intended to penalise those assessees who commit breach of that faith and trust by furnishing deliberately inadequate particulars of such income with a view to conceal the trueincome. According to the revenue, even though Section 22(3) enables the assessee to file a revised return if he discovers any omission or wrong statement in the original return filed at any time before the assessment is made, it should be done voluntarily and not as a result of an enquiry by the Income-tax Officer. Section 22(3) is as follows :

'If any person has not furnished a return within the time allowed by or under Sub-section (1) or Sub-section (2), or having furnished a return under either of those Sub-sections, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made.'

14. It is pointed out by the revenue that the words 'discovers any omission or wrong statement therein', seem to suggest that the discovery of the omission or wrong statement should be by the assessee himself and that as such for any revised return to come under Section 22(3) should be voluntary and not as a result of a discovery of the omission or wrong statement being made by the departmental officers. It was also urged that the verification by the assessee as to the truth of the return submitted is sufficient to bring the assessee within the mischief of Section 28(3), if it is found that such verification has been made with a view to induce the Income-tax Officer to accept the return as a true one, and reference was made to Rule 19, item 4 of Part IV in Form A and the form of verification at the end of Form A, in support of the above submission. It is further submitted that the Tribunal was in error in thinking that, in view of the revised return filed by the assessee, there is no blame on the assessee for non-disclosure of the correct amount of income in the original return filed by him, and that in any event filing of the revised return would be an extenuating circumstance to levy a nominal penalty.

15. As against this, the learned counsel for the assessee contends that Section 28(1 )(c) does not penalise any attempt at concealment as Section 22(3) gives the assessee a locus poenitentiae, that if a revised return is filed disclosing the true income before the completion of the assessment, it has the effect of expatiating the contumacious conduct, if any, on the part of the assessee in filing the original return. According to the learned counsel the law gives the assessee locus poenitentiae to change his mind before the assessment is completed and to file a revised return giving the true income and the revised return contemplated by Section 22(3) may be filed as a result of the discovery of the omission or wrong statement having been made either by the assessee himself or by an outside agency, and Section 22(3) does not contemplate that the revised return should only be voluntary and not as a result of any enquiry by the authorities. The learned counsel goes to the extent of contending that, even if there was a base motive in filing the first return, once a revised return is filed, the blame which is normally attachedto the assessee with reference to the first return is completely wiped out, that, the actual avoidance of tax being the basis of the penalty levied under Section 28(1)(c), once the assessee files a revised return the earlier return is automatically superseded, and that the penalty cannot be levied under Section 28(3) in respect of the original return as there is no escapement of income with reference to that return which has been superseded by the revised return. Having considered the respective contentions of the parties as regards the scope of Section 22(3) and Section 28(1)(c), in the light of the decisions cited, before us, we consider that the matter is no longer res integra.

16. In Commissioner of Income-tax v. Badridas Ramrai Shop, , 621 (Nag.)., the Nagpur High Court expressed the view that:

'Section 22(3) is designed to enable a person who has made a return which he subsequently discovers contains an omission or a wrong statement to correct that wrong statement at any time before the assessment is made. It does not apply to the case of a person who has made a false return knowing it to be a false return, and whose false return is discovered by the Income-tax Officer; were it otherwise, one would be left with an infinite progression of returns scrutinised, found false, returns altered, found false, and so on.'

17. In Commissioner of Income-tax v. Angara Satyam, Commissioner of Income-tax, : [1956]30ITR565(Mad) (Mad.). takes theview that where the omission of certain items of income from the assessee's return was discovered by the Income-tax Officer before assessment, and, on being questioned, the assessee admitted the omissions and consented to the inclusion of omitted items of income also in the assessment, it would not take the case out of the purview of Section 28(1)(c) of the Income-tax Act, merely because the concealment did not consequently continue right up to the assessment. In Vadilal Ichhachand v. Commissioner of Income-tax, : [1957]32ITR569(Bom) (Bora.). the Bombay High Court has taken the view that the words 'as returned' in Section 28(1)(c) will mean the return in respect of which the penalty is imposed, that the return which, if accepted, would have resulted in avoidance of tax, and which was not accepted by the Income-tax Officer, should be the return for the purpose of penalty under Section 28(1)(c), and that the penalty had to be calculated on the basis of the original return and not on the revised return. In that case the Tribunal had taken the view that the assessee was not liable to penalty taking into account the revised return filed by the assessee and this view was reversed by the Bombay High Court. In Dayabhai Girdharbhai v. Commissioner of Income-tax, : [1957]32ITR677(Bom) (Bom.). the Bombay High Court again reiterated the view that where the omission to include an item of income in the original return was deliberate, the result of such deliberate omission cannot be got rid of by merely filing a revised return and the penalty under Section 28(1)(c) with reference to the deliberate omission in respect of the original return would be attracted notwithstanding the fact that a revised return has been filed correcting the omission. They further expressed the view that the actual result of the assessment has nothing whatever to do with an attempt made by the assessee to conceal particulars of his income in his first return in which he deliberately furnished inaccurate particulars of his income and that the fact that the income has not escaped assessment as a result-of the concealment made in the original return is of no consequence for imposing penalty under Section 28(1)(c).

18. In Sivagaminatha Moopanar and Sons v. Commissioner of Income-tax, : [1964]52ITR591(Mad) (Mad.)., this court dealt with a case more or less similar to the present case. There the assessee carried on business in cloth and yarn at Madurai. Part of the business of the assessee was to export handloom products to Ceylon. For the assessment year 1945-46, the assessee submitted its return and the return was based on entries in the account books. Later, the assessee himself submitted particulars of invoice price of the goods sent abroad to the Income-tax Officer. The Income-tax Officer found some disparity between the invoice price, and the price as entered in the account books as shown in the return of the assessee. The assessee explained that the invoiceprice was inflated and did not represent the correct price, but this explanation was not accepted by the Income-tax Officer. On the initiation of penalty proceedings under Section 28(1)(c), the assessee questioned the validity of the penalty proceedings. It was contended for the assessee that all the particulars of invoice prices having been given by the assessee himself before the assessment, the assessee's conduct cannot be construed as contumacious attracting the penalty under Section 28(1)(c). After referring to the earlier decisions on the point the court expressed that, if an assessee made a false return knowing it to be false, the fact, that he subsequently disclosed the true particulars of income, cannot prevent the application of that section which is intended to punish fraud or contumacy on the part of the assessee, and that indeed in such a case it would not be even open to the assessee to submit a revised return. The court further expressed that where the disclosure was under circumstances which make it not a voluntary act of the assessee, there would be justification for the finding that there was a concealment because there was an intention to conceal and actual concealment at the beginning, the attempt having been frustrated by other causes, and that it cannot, therefore, be held that wherever particulars are given before the actual assessment, there will be no concealment. Of course, the court did not agree with the contention of the revenue in that case that the question whether there had been a concealment of particulars of income or a deliberate furnishing of inaccurate particulars thereof should be considered with reference to what the assessee said on the date of the submission of the return and that what he did subsequently would not be relevant as, in its view, the said contention overlooked the specific provision in Section 22(3) enabling the assessee to file a revised return in cases of genuine mistake or accidental omission, etc. The test, according to the learned judges in that case, for imposition of penalty on the basis of the original return, was to find out whether the assessee consciously and deliberately submitted a false return and, for that purpose, the assessee's subsequent conduct might be relevant.

19. As against the consistent opinion expressed in the above decisions that the blameworthiness attached to the assessee with reference to the original return cannot be avoided by filing a fresh return after concealment was detected by the Income-tax Officer, the learned counsel for the assessee refers to the decision in Mansukhlal and Brothers v. Commissioner of Income-tax, : [1969]73ITR546(SC) . wherein the words 'income as returned' in Section 28(1)(c) was held to mean income as disclosed or shown in the return filed under Section 22, and the word 'avoided' in that section was held to have been used in the sense of escapement but not evasion. The learned counsel relies on this decision in support of his contention that penalty is leviable under section28(1)(c) only if escapement has in fact taken place or the tax has been avoided as a result of the filing of the false return and the acceptance thereof by the income-tax authorities, and that in this case as the original return has been replaced by a fresh return and had not been acted upon by the Income-tax Officer, the penalty proceedings under Section 28(1)(c) cannot be invoked with reference to the emission or concealment in the original return. We are of the view that the above contention of the assessee does not get support from the above, decision of the Supreme Court in Mansukhlal and Brothers v. Commissioner of Income-tax *. In that case the learned judges were concerned with the question whether the penalty was leviable 1 1/2 times of the tax payable on the income actually concealed or 1$ times on the difference of the tax on total income as finally assessed and the tax on the income returned irrespective of the amount of concealment, and the court held that, once the penal provisions are attracted under Section 28(1)(c), the quantum of penalty cannot be restricted to 1 1/2 times the tax on the income concealed, but it should be 1 1/2 times the tax on the income as finally found to have escaped assessment. That decision has no application to the case on hand. The learned counsel for the assessee then relied on the decision in Commissioner of Income-tax v. Raman Chettiar, : [1965]55ITR630(SC) . in support of his contention that once a revised return is filed, either voluntary or otherwise, the contumacious conduct on the part of the assessee in filing the original return cannot be used for invoking the penalty under Section 28(1)(c) and that the return contemplated under Section 22(3) does not depend upon the fact whether the revised return was voluntary or otherwise. He referred to the passage at page 634 of the reports where the Supreme Court has expressed: 'We are unable to appreciate that every return made under Section 22(3) must be a voluntary return, in the sense that it must be suo motu. If a return is made in pursuance to a general notice under Section 22(1), or a special notice under Section 22(2), it is a return made voluntarily but not suo motu. It is a return made in response to a public notice or a special notice. If no return is made in response to the notices under Section 22(1) and Section 22(2), the Act attaches certain penalties. In our view, it is not correct first to describe a return made under Section 22(3) in response to a notice under Section 22(1) or Section 22(2) as voluntary, and then say that a return made in response to a notice under Section 34 is not voluntary just because it warns the assessee that some income has escaped assessment. In our opinion, both types of returns are under Section 22(3) of the Act. In the first type of cases it is directly under Section 22(3). In the case of a notice under Section 34, it is deemed to be a notice under Section 22(2) and the return deemed to be a return under Section 22(3).'

20. But the above observations were made by the Supreme Court in a different context and not with reference to the assessee's liability under Section 28(1)(c). We are not in a position to accept the view of the learned counsel for the assessee that the decision of the Supreme Court in Commissioner of Income-tax v. Raman Chettiar had changed the entire legal position enunciated in the decisions set out above that the revised return should be voluntary to avoid penalty under Section 28(1)(c) and that the filing of a revised return under Section 22(3) will not expatiate the contumacious conduct, if any, on the part of the assessee in not having disclosed a true income in the original return. We are, at the same time, not willing to accept the contention put forward on behalf of the revenue that the filing of the second return is of no consequence at all, while considering the liability of the assessee under Section 28(1)(c) of the Act. As expressed by this court in Sivagaminatha Moopanar & Sons v. Commissioner of Income-tax, it is not possible to construe the original return alone in isolation without reference to the assessee's conduct subsequent to the filing of the original return. We are of the view that all the facts and circumstances commencing with the filing of the original return and ending with the assessment may be taken as relevant for considering the assessee's liability for penalty under Section 28(1)(c).

21. The facts and circumstances of this case as pointed out by the Tribunalare that the assessee had brought into account all the sale transactions, andthe original return prepared in accordance with the assessee's accountswere filed before the Income-tax Officer under Section 22(2) of the Act. It istrue that the entire sale proceeds in respect of sales disclosed had not beenbrought into the books of the assessee for the reason that part of the saleproceeds had been divided between the three partners without the knowledge of the other two partners and credited in their individual names.The attempt of three of the partners of the firm was to secrete a part ofthe sale proceeds for their own benefit without the knowledge of the othertwo partners. When the Income-tax Officer, on a preliminary investigationon the assessee's return, sought an explanation as to the amounts standingto the credit of the three individual partners, the assessee-firm cameforward with a true disclosure of the excess amount of Rs. 28,618, beingthe sale proceeds that was kept off from the sales account and dividedbetween the partners and deposited in their individual accounts. Thecircumstances under which the extra sale proceeds was secreted by threeof the partners and the disclosure of the correct amount taken away by thethree partners out of the sale proceeds by the assessee-firm representing allthe partners has to be taken into account for finding out whether therehas been a deliberate concealment of the true particulars of the income ofthe assessee-firm. In the assessment proceedings, the Appellate Assistant Commissioner did not agree with the finding of the Income-tax Officer that the revised return did not bring in the entire sale proceeds but held that the deposits in the banks amounting to Rs. 2 90,000 treated as suppressed sales by the Income-tax Officer had already been credited in the sales account, except the portion of Rs. 28,618 which had been divided between the three partners without showing it in bills and which had been subsequently shown in the revised return. The Appellate Assistant Commissioner, however, computed the gross-profit at the rate of 15% as against a lesser percentage of gross profit shown by the assessee. In the penalty proceedings this finding of the Appellate Assistant Commissioner was not noticed at all either by the Income-tax Officer or by the Appellate Assistant Commissioner. It is only the Tribunal in its order dated October 31, 1964, arising out of the penalty proceeding referred to the findings of the Appellate Assistant Commissioner in the assessment proceedings that the entire bank deposits had been accounted for, and was inclined to accept the explanation offered by the assessee for the omission or non-disclosure of the sum of Rs. 28,618 in the original return. The Tribunal took the view that, as 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 conceal the income cannot be inferred. For the reasons aforesaid, we have to answer the second question in T.C. No, 80 of 1966 in favour of the assessee and against the revenue.

22. As regards the only question involved in T.C. No. 189 of 1967 as to the power of the Appellate Tribunal to determine the quantum of penalty when cancelling the penalty order passed by the departmental authorities, it is contended on behalf of the revenue that the Tribunal has no jurisdiction to determine the quantum of penalty in a case where the Tribunalsets aside the penalty order itself, and that such a finding of the Tribunal as to the quantum of penalty would be unnecessary in view of the cancellation of the penalty order itself. It is urged that it would be necessary only when the High Court, exercising jurisdiction under Section 66(1), sets aside the order of the Tribunal regarding the cancellation of the penalty ; so long as that has not happened, the order of the Tribunal as regards the quantum of penalty will be without jurisdiction. We are unable to accept the position contended for by the revenue. The Tribunal, being the final fact-finding authority, has to consider and decide all the issues that are brought before it. It cannot decide only one issue arising out of the many issues and decline to go into the other issues raised before it on the ground that the further issues will not arise in view of the finding on the issue decided by it. If the Tribunal declines to consider and decide the other issues it will only protract and delay the proceedings, for the assessee has to get the decision of the Tribunal on the initial point set aside by approaching the High Court and thereafter again go before the Tribunal for a decision on the other issues left undecided by it earlier. This will amount to multiplication of the proceedings under the Act. It has been more than once expressed by this court that the subordinate courts and the tribunals should avoid disposing of the matters on preliminary issues alone, without deciding all the issues raised before them and that they should as far as possible give their views on all the points raised before them so that the higher courts will have the benefit of their decision on other points also if the necessity arises. On the facts of this case, the Tribunal cannot be said to have acted without jurisdiction in expressing its views on the quantum of penalty while cancelling the penalty order itself and such an order passed by the Tribunal is not in any way invalid. Therefore, we see no point in the contention raised by the revenue in this regard. Hence, the Only question raised in T.C. No. 189 of 1967 is answered against the revenue and in favour of the assessee. The assessee will be entitled to his costs in T.C. No. 80 of 1966 alone. Counsel's fee Rs. 250.


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