P C JOSEPH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Cochin Bench, has referred the following question for the opinion of this court under Section 256(1) of the Income-tax Act, 1961 ("the Act") :

(2.) THE factual position, as set out in the statement of the case, is as follows : THE assessee is a partnership firm carrying on business in foodgrains, provisions, etc. For the assessment years 1970-71 to 1973-74, original assessment was completed on February 16, 1971, September 14, 1972, February 28, 1973 and March 22, 1976. On August 14, 1975, a search was conducted in the business premises of the assessee and the residential premises of the managing partner, Shri P. C. Joseph. On scrutiny of the books of account together with the seized documents for the previous year ending on July 31, 1973, relevant to the assessment year 1974-75, the Assessing Officer noticed that the assessee had made credit sales for Rs. 2,91,786, but had shown them as cash sales in the books of account. After deducting a sum of Rs. 7,168 representing cash balance, from the amount realisable, the Assessing Officer observed that an amount of Rs. 2,84,618 was shown as the amount of credit sales introduced in the accounts in the guise of cash sales. THE assessee had already shown a sum of Rs. 40,000 as income under the head "Other sources" in its return for the assessment year 1973 74. Giving credit for that amount, the Assessing Officer added the balance amount of Rs. 2,44,618 as the assessee's income for the assessment year 1974-75. In appeal, the first appellate authority reduced the addition to Rs. 40,000 holding that the balance related to the assessment years 1970-71 to 1973-74. In further appeal by the Revenue, the Tribunal increased the addition to Rs. 60,000. But it took note of the fact that both parties to the appeal had agreed that the gross total amount of Rs. 2,91,786 represented the earning of about five years. In conformity with such finding, the Assessing Officer assessed the balance amount of Rs. 1,84,618, i.e., the difference between Rs. 2,44,618 and Rs. 60,000 in the four assessment years for and from 1970-71 to 1973-74. In the reassessment proceedings under Section 147 of the Act, in response to the notice issued under Section 148 for this purpose, the assessee filed returns for these four years offering additional income of Rs. 46,154 for each of the years. Reassessments were completed on that basis. In view of the additional income offered and reassessment made, the Assessing Officer was of the view that the said sum represented concealed income of each year and levied penalty under Section 271(1)(c) of the Act of a sum equal to the concealed income. Appeals before the Commissioner of Income-tax (Appeals) (in short "CIT(A)") and the Tribunal, who affirmed the levy did not bring any relief. THE assessee's plea before the Revenue authorities and the Tribunal was that the true income for the assessment years was not ascertained, and the addition was made on agreed basis spreading the income over four years and there was no deliberate intention in understating the income. This plea, as aforesaid, did not find acceptance by any of the authorities. It is to be noted that before the Tribunal, the assessee's contention was that there was no particular defect noticed in the accounts and that hefty addition was proposed for a different assessment year, i.e., 1974-75 and, in fact, such addition was made in that year by the Assessing Officer. On a concession made by the assessee, the amount was spread over the earlier four years. It was an agreed assessment for each assessment year and there was no concealment of income, attracting levy of penalty.

(3.) WHERE, in order to make good an omission in the originally-filed return, the assessee voluntarily furnished a revised return inclusive of the so-omitted income, a question arises whether the filing" of a revised return will not expatiate the contumacious conduct, if any, on the part of the assessee in not having disclosed a true income in the originally filed return. 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 assessing authority. WHERE the surrender of income made in the revised return was not voluntary, but was as a result of detection by the assessing authority, the filing of the revised return is of no consequence. The very word "omission" connotes an intentional act. The factual position is that the revised return was a veiled attempt to present a mitigating circumstance. Further, a return in response to a notice under Section 148 is not to be treated at par with or compared to a revised return. That being the position, the filing of the return including the agreed concealed income does not constitute a mitigating circumstance and penalty has been rightly levied.