MAHIN K Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessments relate to the years 1966 67 and 1967 68. The petitioner assessee filed returns on 21st June, 1968, declaring amounts of Rs. 3,692 and Rs. 2,723 respectively for the two years. He filed revised returns on 30th Jan., 1971, for Rs. 23,435 and Rs. 24,882, respectively, by which he declared income from contract business of Rs. 10,850 and Rs. 15,700, respectively, for the two years. For the latter year, he had also declared share of profit from the Kallatra Constructions, Rs. 5,982. After the assessments were completed, proceedings for imposition of penalty under S. 271 (1)(c) were initiated on the ground that the assessee had concealed income for both the years. The thrust of the charge was in relation to the income from contract works for the two years and the share of profit from Kallatra Constructions during the latter year. The IAC imposed penalty of Rs. 20,000 and Rs. 30,500 respectively, for the two years. On appeal by the assessee, the Tribunal held that there was no concealment of income for the year 1966 67 and cancelled the penalty in its entirety. For the asst. year 1967 68, it was held that there was concealment of income from Kallatra Constructions and, accordingly, a penalty of Rs. 6,000 was sustained as the income declared as per the revised return was only Rs. 5,982. The matter came up before this Court in reference. This Court held that the filing of the voluntary returns by itself was not sufficient to hold that there was no concealment for the purpose of S. 271(1)(c) of the IT Act, 1961. While holding so, this Court stated further that if the omission or error in the first return was honest and bona fide, the fact that the submission of the revised return was belated and after investigation had started, by itself, will not visit the assessee with penal consequences. Inter alia, it was observed in the judgment that the income concealed in relation to Kallatra Constructions should be taken to be Rs. 14,242 fixed as per assessment and not Rs. 5,982 as disclosed in the revised return. The facts of this case had to be carefully analysed and examined in the light of the principles and guidelines stated above.

(2.) THIS Court also observed that the Tribunal had not examined the assessee's explanation in relation to the charge of concealment of income.

(3.) COUNSEL for the petitioner submitted that, even on the principles and guidelines laid down by this Court in the earlier judgment, in relation to the filing of the revised return, no penalty was liable to be imposed on the petitioner for the two years in question. He points out that, even before the returns were filed in June, 1968, investigations by the Department was in progress, which had alerted the Department about the contract business, about which the assessee was also aware. He refers to the letter dt. 14th Sept., 1967, of the ITO sent to the assessee as cloth merchant seeking information regarding the solvency certificate obtained by him. He refers to the subsequent series of investigations made by the ITO and letters addressed by him of which one dt. 30th March, 1967, was addressed to the petitioner as a contractor. He, therefore, submits that this was not a case of the assessee making a revised return knowing fully well that the Department was making investigations and that such investigations will lead to something tangible against the assessee which necessitated a revised return to forestall the plea of concealment of income. On the other hand, he points out that the investigations by the Department were going on even before the original returns were filed, of which the petitioner had knowledge having regard to the letters dt. 14th Feb., and 30th March, 1967 and, therefore, the original returns and the revised returns were filed only in the circumstances set forth by the petitioner.