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TMI Blog1977 (9) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... 1973, the assessee was also examined. The ITO had received information from the Post Master General, Shillong, and other Central Govt. Offices that the assessee had been paid a sum of Rs. 25,693 as fees by the Central Govt. employees. The ITO took this information into account and determined the total income of the assessee at Rs. 35,271 including the income from profession determined at Rs. 29,293. While this was confirmed on appeal by the AAC, the professional income was reduced to Rs. 26,500 by the CIT on a revision filed by the assessee. 3. The ITO had initiated proceedings for the imposition of penalty and called upon the assessee to show-cause why penalty should not be imposed. The assessee filed a written explanation dt. 5th Dec., 1975, in which he claimed that the original return was filed on estimate without going through the records of his professional income and that the revised return was field before his deposition was taken on 23rd Oct., 1972 voluntarily and there was, therefore, no concealment in respect of which the penalty could be imposed. The ITO was of the opinion that the assessee had admitted his original return was not correct in his deposition and that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee which superseded the original return and, therefore, no penalty could be imposed in respect of any mistake occurring in the original return which had been rectified by the assessee in accordance with law. Reliance was placed on the decision of the Gauhati High Court in the case of F.C. Agarwal (1976 CTR (Gau) 82 : 102 ITR 408 (Gau) and it was submitted that since the assessee had given a proper basis for the revised return, the errors in the original return must be considered to be bona fide mistakes not attracting any penalty as explained in that decision. It was thus submitted that the penalty imposed should be cancelled. In the alternative, it was submitted that since the professional income had been reduced to Rs. 26,500 by the CIT the quantum of penalty imposable should be reduced to the minimum computed on the difference between the finally determined income and the income shown in the revised return. 6. On the other hand, it was contended on behalf of the Revenue that in the light of the decision of the Gauhati High Court in the case of F.C. Agarwal the penalty imposed should be confirmed. A letter dt. 2nd June, 1977 written by the ITO, B-Ward, Shillong, to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any time before the assessment is made. The effect of the assessee having filed a revised return can be conveniently considered with respect to the two limbs of s. 271(1)(c), namely, concealment of income and the furnishing of inaccurate particulars. With regard to concealment of income, it is obvious that there can be concealment only as long as the particulars are withheld and once the particulars are revealed by the filing of a revised return before detecting by the authorities concerned there is no concealment of any fact which could attract the imposition of penalty. But where the concealment is detected by the authorities, that offence cannot be cured by the filing of a revised return. The Nagpur High Court in the case of Badridas Ramrai Shop, Akola (7 ITR 613 (Nag)) has explained this as follows: "In our opinion s. 22(3) (of the 1922 Act which corresponds to s. 139(5) of 1961 Act) is designed to enable to person who had 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 fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was only when the assessee was later examined on 15th March, 1973 that the information fathered was actually put to the assessee. In this connection the constructive knowledge of concealment claimed by the ITO is of no avail in considering the voluntary nature of the revised return as it cannot rob the voluntary character of the revised return unless it could be shown that the assessee was aware of the discovery by the ITO on the basis of such constructive knowledge. There is no evidence to support such an inference in this case. In the circumstances, we are not satisfied that there was any real discovery of concealment as such before the revised return was filed. Therefore, it is found that the revised return was filed voluntarily before concealment was detected and in the light of the principles cited above, the filing of the revised return put an end to the concealment, if any, before it was discovered. Since the ITO was not allowed to proceed on the basis of the original return, any attempted concealment was given up by the assessee voluntarily, thus avoiding the attraction of the penalty provisions. 9. The second limb of the offences contained in s. 271(1)(c) is that of fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITO on 16th Nov., 1972 as well as his written explanation to the show-cause notices give a complete explanation and the reasons why his statement in the original return was inaccurate and how he filed the revised return on the basis of particulars available with him. The Revenue has not been able to point out any material to disprove the explanation given by the assessee so as to reject it as unsatisfactory or as not a bonafide explanation for correcting the inaccurate statement in the original return. Therefore, unlike the case of F.C. Agrawal (120 ITR 408) decided by the Gauhati High Court in the present case there is a satisfactory explanation of the assessee for the correction of the inaccuracies in the original return by the filing of a revised return supported by adequate materials. We do not, therefore, find any contumacious conduct in the failure of the assessee to give the accurate particulars of his income in the original return and we find that the revised return duly filed under s. 139(5) of the Act effectively replaced the original return filed by the assessee. In the circumstances, the assessee is not liable to be penalised for any inaccurate statements in the ori ..... X X X X Extracts X X X X X X X X Extracts X X X X
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