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TMI Blog1976 (4) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... as filed and the total income, computed by the Income-tax Officer was Rs. 1,62,257. On appeal, the order of the Income-tax Officer was confirmed, but the Tribunal set aside the assessment order and directed the Income-tax Officer to make a fresh assessment after giving the assessee an opportunity of producing necessary evidence to prove the contention regarding the genuineness of certain loans. In pursuance of this order, the Income-tax Officer made a fresh assessment on November 21, 1968, determining the total income at Rs. 1,17,779. This was reduced in appeal to Rs. 1,13,277 by the Appellate Assistant Commissioner. The income ultimately determined included an amount of Rs. 59,054 on account of unexplained portion of the investment in the Shanker Bidi Factory. The total investment by the assessee in this factory was determined at Rs. 2,76,763, but the income-tax authorities were ultimately satisfied about the investment to the extent of Rs. 2,17,709. The balance, i.e., Rs. 59,054, was treated as the assessee's income from undisclosed sources. Thereafter, proceedings under section 271(1)(c) were taken and as, apparently, a sum of more than Rs. 1,000 was leviable as penalty, the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such income, he may direct that such person shall pay by way of penalty,--... (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished." Clause (iii) which fixes the quantum of penalty was amended by the Finance Act, 1968, with effect from 1st April, 1968, but we are not concerned with the amendment in the present case as the penalty relates to an earlier year, and the Inspecting Assistant Commissioner has imposed penalty with reference to tax which would have been avoided if income as returned by the assessee had been accepted as correct. Counsel for the assessee contended that inasmuch as the assessee had filed a revised return before the assessment order came to be passed, it was that return alone which could have been considered by the Income-tax Officer, and the income-tax authorities fell into an error in considering the first return. The value to be attached to a revised return has been considered in a number of cases and we will now refer to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Supreme Court in S. Raman Chettiar [1965] 55 ITR 630 (SC) it began to be contended on behalf of the assessee that inasmuch as a revised return is also a return under section 22 of the Act, in cases where a revised return has been filed giving correct particulars, no penalty was exigible under section 28 of the old Income-tax Act. The Madras High Court considered this contention in the case of Commissioner of Income-tax v. Ramdas Pharmacy [1970] 77 ITR 276 (Mad). In this case a return was filed disclosing a net profit of Rs. 54,107. The Income-tax Officer found that the gross profit disclosed by the assessee was too low. He scrutinised the account books and discovered certain discrepancies between the assessee's books and the books of Messrs. Amrit Laboratories Ltd. from whom the assessee had purchased goods of the value of rupees four lakhs. He also discovered huge deposits amounting to Rs. 2,79,112 in the bank accounts of some of the partners of the firm. The assessee was called upon to explain these discrepancies. An explanation was given for these discrepancies but was not accepted and he added an amount of Rs. 84,306 to the income of Rs. 54,107 originally retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all, while considering the liability of the assessee under section 28(1)(c) of the Act. As expressed by this court in Sivagaminatha Moopanar Sons v. Commissioner of Income-tax [1964] 52 ITR 591 (Mad) it is not possible to construe the original return alone in isolation without reference to the assessee's conduct subsequent to the filing of the original return. We are of the view that all the facts and circumstances commencing with the filing of the original return and ending with the assessment may be taken as relevant for considering the assessee's liability for penalty under section 28(1)(c)." In D. V. Patel Co. v. Commissioner of Income-tax [1975] 100 ITR 524 (Guj) the assessee filed returns showing an income of Rs. 23,957. He thereafter filed a revised return showing an income of Rs. 44,800. The Income-tax Officer passed an assessment order after the revised return had been filed computing the income at Rs. 72,610. Thereafter, proceedings under section 271(1)(c) of the Income-tax Act were taken on the ground that the amount as originally returned fell short of 80% of the assessed income. On appeal to the Appellate Assistant Commissioner, an amount of Rs. 23,610 was de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be adjudged with reference to the revised return. The provision for filing a revised return was, under the old Act, section 22, sub-section (3), which runs as under: "22. (3) If any person has not furnished a return within the time allowed by or under sub-section (1) or sub-section (2), or having furnished a return under either of those sub-sections, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made." In the new Act, the provision is section 139(5), which runs as under: "139. (5) If any person having furnished a return under sub-section (1) or sub-section (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made." It will be seen that so far as revised returns are concerned, the provisions under the old Act and the new Act are in pari materia. Now, after the decision of the Supreme Courtin Commissioner of Income-tax v. S. Raman Chettiar [1965] 55 ITR 630 (SC), there cannot be any doubt that the revised return is also a return under section 22 of the Indian Income-tax Act. Since the languag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even at the pointing out of the Income-tax Officer provided that the assessee was unaware of the omission or the wrong statement at the time of the filing of the original return. It was contended that where the omission or wrong statement is pointed out by the Income-tax Officer and a revised return filed thereafter, no advantage can be taken of the revised return by the assessee. We are not impressed by this argument. All that section 139(5) postulates is that the assessee must discover the omission or wrong statement in the first return. It does not state the sources on the basis of which the discovery is made by the assessee. This being so, we cannot read the limitation suggested on behalf of the department that discovery of the omission or wrong statement must be on account of information received from sources other than the Income-tax Officer. Cases may arise where depreciation, development rebate and exemptions are claimed in excess of what is permissible under the Act, on a bona fide interpretation of a complex provision of the Act, and if in such cases the Income-tax Officer points out the provision and the correct interpretation to be put thereon, and in case where the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rate of penalty payable does not arise, because there has been no concealment of the particulars of income or deliberate furnishing of inaccurate particulars, the case would not fall under section 271(1)(c) and as such the question of applying the provisions of section 271(1)(iii) will not arise. Now, let us examine the position by reference to the Explanation added to section 271. Now, a revised return validly filed under section 139(5), which supplants the original return, has got to be taken into consideration for the purposes of ascertaining whether failure to return the correct income arose from any fraud or wilful neglect on the part of the assessee. In such cases, the question whether the assessed income is more than 80% of the returned income, has got to be adjudged with reference to the revised return and the question of fraud or gross or wilful neglect has also got to be adjudged with reference to that return, and not the earlier return. To hold otherwise would be rendering the provisions of section 139(5) redundant, for we cannot hold at one stage that a revised return is as good as any other return under section 139, and for purposes of penalty take the view that a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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