1976 (4) TMI 20 - HC - Income Tax

Penalty for concealment based on initial return, not revised. Errors must not be deliberate.

The Tribunal held that the minimum penalty for concealment should be based on the tax that would have been avoided if the first return submitted had been ... Revised Return Issues Involved:1. Determination of minimum penalty reference.2. Validity and impact of revised returns on penalty.Summary:1. Determination of Minimum Penalty Reference:The core issue was whether the minimum penalty should be determined by reference to the tax that would have been avoided if the first return submitted had been accepted or to the tax that would have been avoided if the second revised return submitted by the assessee had been accepted. The Tribunal held that the assessee was guilty of concealment but directed the levy of minimum penalty with respect to the first return, considering the assessee's cooperation in the assessment proceedings.2. Validity and Impact of Revised Returns on Penalty:The court examined whether the filing of a revised return under section 139(5) of the Income-tax Act, 1961, could supplant the original return and affect the penalty determination. It was held that a revised return can only be filed if the omission or wrong statement in the original return was not deliberate. If the omission or wrong statement was deliberate, the revised return would not be valid under section 139(5), and the penalty would be based on the original return. The court cited various precedents, including Commissioner of Income-tax v. Angara Satyam, Vadilal Ichhachand v. Commissioner of Income-tax, and Commissioner of Income-tax v. Ramdas Pharmacy, to support this interpretation.The court concluded that in the present case, there was a clear finding of concealment by the assessee. Therefore, the revised return could not be considered valid under section 139(5), and the penalty had to be determined based on the first return. The court answered the reference by stating that the penalty should be determined by reference to the tax that would have been avoided if the first return filed by the assessee had been accepted. The department was entitled to its costs, assessed at Rs. 200.