ADDITIONAL COMMISSIONER OF INCOME TAX Vs. MANILAL TRIBHUVANDAS

JUDGEMENT

(1.) BY this reference under S. 256(1) of the INCOME TAX ACT, 1961 (hereinafter referred to as "the Act"), the Tribunal, Indore Bench, Indore (hereinafter referred to as "the Tribunal") has referred the following question of law for the opinion of this Court:

(2.) THE facts giving rise to this reference as set out in the statement of the case are as follows: The assessee is a registered firm and the assessment year involved is 1965 -66. The return for this year which was filed on December 31, 1965, was purported to have been signed by Tribhuvandas even though he died much earlier. Another return was submitted on January 23, 1969, disclosing a total income of Rs. 14,634. This return was duly signed by one Ambalal, another partner of the assessee -firm. The ITO, on the basis of the seized books of accounts and vouchers which disclosed different figures of sales, computed the total sales of the assessee at Rs. 15,00,000 and adopted a net profit rate of 5per cent thereon. After completion of the assessment, the ITO initiated penalty proceedings against the assessee and referred the same to the IAC (hereinafter referred to "as the IAC"). The IAC held that the assessee was guilty of concealment of income and imposed a penalty of Rs. 60,500. The assessee preferred an appeal against the order of the IAC to the Tribunal. The Tribunal, on the evidence on record, came to the conclusion that by maintaining duplicate sets of accounts and also by tampering with the purchase vouchers, the assessee had furnished inaccurate particulars of his income and it was clearly guilty of supporessio veri and suggestio falsi. The Tribunal, therefore, held that the assessee was guilty of concealment under S. 271(1)(c) of the Act. As regards the quantum of penalty, the Tribunal, following its view, held that the amendment to s. 271(1) of the Act, which came into force w.e.f. April 1, 1968, is not retrospective in its operation and the assessment year involved being 1965 -66, the law which was in force in that assessment year would be applicable. Therefore, the quantum of penalty will be with reference to the tax to be avoided in accordance with the law in force in the asst. year 1965 -66. At the instance of the Revenue, the Tribunal has referred the aforesaid question of law for the opinion of this Court.

(3.) THE above view of the law in fact was not assailed by the learned counsel for the assessee. The learned counsel for the assessee contended that the wrongful act was committed by the assessee on December 31, 1965, when the original return was filed and not on January 23, 1969, when another return was filed by the assessee. According to the learned counsel for the assessee, concealment of income takes place when there is a duty to disclose income. According to him, the return filed by the assessee on January 23, 1969, was not in accordance with any provision of law and, therefore, it cannot be said that the assessee committed a wrongful act in concealing his income in the said return. He further contended that the return filed by the assessee on December 31, 1965 was a valid return and in the presence of that return the return filed on January 23, 1969, cannot be said to be a return at all and, therefore, cannot be made the basis for levy of penalty. The learned counsel for the Revenue contended that as the return filed on December 31, 1965, was purported to have been signed by Tribhuvandas, who died long back and was not alive when the said return was filed, it was not a return in accordance with law and was non est and, therefore, the only valid return in existence was the return filed on January 23, 1969, and the penalty proceeding and the assessment proceedings also did proceed on the basis of that return and, therefore, the penalty was imposable on the basis of the wrongful act committed by the assessee in concealing its income in the return dated January 23, 1969, and the amended provisions of S. 271(1)(c) of the Act were attracted. However, we find that in the view the Tribunal took that the penalty is imposable in accordance with the law applicable in the year of assessment, the Tribunal did not record a finding on the question as to when the wrongful act was committed by the assessee and, therefore, we are not in a position to determine that question and consider the rival contentions advanced by the learned counsel for the parties. This question will have to be decided by the Tribunal in order to give effect to the opinion which we are expressing in this reference.