1931 (12) TMI 12 - HC - Income Tax

Summary

Issues:
1. Interpretation of Section 22(3) of the Income Tax Act regarding revised return submission.
2. Assessment of penalty under Section 28 for deliberate omission of income in the return.

Analysis:
1. The case involved a question referred by the Commissioner of Income Tax regarding whether a return submitted on 7th January, 1929, should be treated as a revised return under Section 22(3) of the Income Tax Act. The assessee initially submitted an incorrect return, omitting a significant amount. The Income Tax Officer discovered this deliberate omission, prompting the assessee to submit a revised return under Section 22(3) before the assessment was made. The Income Tax authorities assessed the income tax based on the revised return but imposed a penalty under Section 28 for concealing income.

2. The court analyzed the provisions of Section 22(3) and Section 28 in detail. Section 22(3) allows for the submission of a revised return if an omission or wrong statement is discovered before the assessment is made. However, in this case, the deliberate nature of the initial incorrect return indicated that the assessee knew it was false when submitted. The court emphasized that the provision does not absolve deliberate dishonesty. The court rejected the argument that the revised return corrected the previous inaccurate one, as the assessee did not make a bona fide discovery but knew of the inaccuracy from the beginning. Therefore, the Income Tax authorities were justified in imposing the penalty under Section 28 for concealing income.

3. The court concluded that while the later return could be treated as a revised return for assessability purposes under Section 22(3), the authorities were within their rights to consider the previous incorrect return and impose a penalty under Section 28. The judgment upheld the imposition of the penalty on the assessee for deliberately omitting income in the initial return. The court awarded costs to the Commissioner, emphasizing that dishonesty should not be rewarded under the Income Tax Act.

Judges' Opinions:
1. Justice Ramesam and Justice Cornish concurred with the Chief Justice's analysis and decision, indicating unanimous agreement on the interpretation of the provisions and the imposition of the penalty.