TaxTMI 
TaxTMI 
1979 (9) TMI 61
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.... accounts of the assessee : Rs. (i) M/s. Amir Chand Moti Ram 42,000 (ii) M/s. B. Mohan Singh & Sons 20,000 (iii) Interest in the name of M/s. Amir Chand 2,075 Moti Ram The said officer issued penalty notice under s. 271(1)(c) of the Act for concealment of income and since the minimum penalty imposable exceeded a sum of Rs. 1,000, he referred the case to the IAC of Income-tax under s. 274(2) of the Act. On appeal, the AAC reduced the addition in the account of M/s. Amir Chand Moti Ram to a sum of Rs. 17,000 but maintained the addition of Rs. 20,000 in the account of M/s. B. Mohan Singh & Sons and the addition of interest amounting to Rs. 2,075 in the account of M/s. Amir Chand Moti Ram. The IAC, vide his order dated March 15, 1971, after allowing the assessee an opportunity of being heard, imposed a penalty of Rs. 38,592 on the assessee under s. 271 (1)(c) of the Act. Aggrieved by the order of the IAC, the assessee went up in appeal before the Income-tax Appellate Tribunal. The said Tribunal held that no penalty was imposable in respect of the cash credit of Rs. 17,000 in the account of M/s. Amir Chand Moti Ram as this addition had been deleted by the Appella....
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....riginal return filed contained correct particulars of income or not became alive and the finding regarding the submission of wrong particulars has to be given on the basis of such original return. In support of this submission, reliance is placed on C1T v. Gopal Krishna Singhania [1973] 89 ITR 27 (All) [FB]. On behalf of the revenue, our attention is drawn to a Division Bench judgment of this court in Smt. Kamla Vati v. CIT [1978] 111 ITR 248, in which it was held that the words " regular assessment " appearing in s. 273 of the Act did not take in its ambit reassessment contemplated under s. 147 of the Act. It is submitted that if proceedings under s. 147 are separate proceedings, any return filed pursuant to a notice under s. 148 of the Act would attract the penalty provisions contained in s. 271(1)(c) of the Act. In that case, however, the attention of the Division Bench was not drawn to Gopal Krishna's case [1973] 89 ITR 27 (All) [FB]. The matter is not free from difficulty and is likely to arise in a large number of cases and in our opinion can more properly be decided by a Full Bench. We, accordingly, direct that orders of hon'ble the Chief justice may be obtained in this r....
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....e cash credit of Rs. 17,000 in the account of M/s. Amir Chand Moti Ram, the said addition having been deleted by the Appellate Tribunal on an appeal from the order of the AAC. The penalty in respect of the addition of Rs. 20,000 pertaining to the cash credit in the account of Messrs. B. Mohan Singh and Sons was held to be leviable and was, therefore, maintained. Quantum of penalty was computed by it with reference to the penalty provisions of s. 271(1)(c)(iii) of the Act as it existed prior to April 1, 1968, for, according to it, the offence of concealment was committed when the original return of the income had been filed by the assessee and that was on April 21, 1967. In the light of the aforesaid view, the Tribunal fixed the penalty at 30 per cent. of the tax sought to be avoided on the income finally determined in the appeal. The parties are not at variance with each other in regard to the fact that on the day on which the original return was filed by the assessee, i.e., April 21, 1967, the quantum of penalty imposable followed the tax-avoided base, i.e., it had reference to the quantum of tax sought to be avoided by concealing his income and that on the day on which the ret....
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.... the return filed by the assessee that attracts the provisions of s. 271(1)(c) of the Act and not when the true income is sought to be concealed by the assessee by omitting to file a return. In this regard, the following observations of Venkataramaiah J., in Addl. CIT v. Bagalkoti & Sons [1978] 115 ITR 131, 139 (Kar), expressing the Division Bench view of the Karnataka High Court with which, with respect, I entirely concur, can be quoted with advantage : " The offence of concealment of particulars of income or furnishing of inaccurate particulars of such income is committed when a return is filed. The mere non-filing of a return may not be considered either concealment of income which is liable to tax or furnishing inaccurate particulars regarding it (vide S. Santhosa Nadar v. First Addl. Income-tax Officer [1962] 46 ITR 411 (Mad))." There is judicial consensus that such concealment of income as attracts the penal provisions of s. 271(1)(c) of the Act takes place when the return is filed by the assessee. Since the offence of concealment of income is penal in nature in that it is visited with punishment, and since in view of the provisions of art. 20(1) of the Constitution ....
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....scribed : ...... (5) If any person having furnished a return under sub-section (1) or subsection (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made." " 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139 ; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section." Perusal of the aforesaid provisions would show that an assessee is required under compulsion of law to file a return under s. 139(1) and (2) and under s. 148. He can also voluntarily file an amended return under s. 139(5). This leads to a poser whether an assessee would ever file more than one return for a given year ? Answer is in the affirmative, for, he may file one return either under s. 139(1) or when required under s. 139(2). He may voluntarily file an additional return under s. 139(5). He may also file another return when required to do so und....
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....ealment more than once, then can he be punished more than once for the same offence of concealment of income of a given year ? Would not, to such a case, the doctrine of double jeopardy be attracted ? In my opinion, although it is true that what constitutes an offence is the concealment of income of a given assessment year in a return, yet it is a misconception to think that the said offence committed repeatedly would attract only one punishment and that too the one which was provided for by the law operating on the date when the said offence was committed for the first time. The doctrine of double jeopardy is attracted only to a case where a person is sought to be punished twice over for the very offence but where that is not the case, i.e., where a certain offence for which a person is sought to be convicted and punished is an offence distinct from the first offence, then the doctrine of double jeopardy would have no applicability. Take, for example, a case of perjury. A person in a given proceeding makes a false statement in regard to a given fact. He commits the offence of perjury. If that very person in proceedings which are not the continuation of the earlier proceeding....
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....utation of quantum of penalty shall be governed by the law prevailing on the date of filing of the original return. Pointed attention was drawn by the learned counsel to the following extract from Ram Achal Ram Sewak's case [1977] 106 ITR 144 (All), which contained the reasoning of the court in support of the view which it took (p. 150) : " The question that arises is as to whether in a case where an assessee has concealed the particulars of his income or furnished inaccurate particulars of such income in the original return, and as such he becomes liable to penalty, a second penalty can be imposed for concealment or inaccurate furnishing of particulars of income when he files a return in pursuance of a notice under section 148. The repercussions of the acceptance of the argument raised by counsel for the department may be examined with reference to particular cases. To begin with, we shall take a case where an assessee has concealed the particulars of his income or furnished inaccurate particulars of such income in his original return as also in the return filed in pursuance of a notice under section 148. If the argument of the department is accepted, the assessee would become ....
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....branch. The assessee-firm was required to produce the account books which it did not produce. The ITO estimated the escaped profits of the said Bangkok branch to be Rs. 37,500 and completed the assessment and on the same day initiated proceedings for the imposition of penalty for concealment of income and imposed a penalty of Rs. 20,000. In the meantime, in the assessment proceedings for the next year the assessee produced the account books of the Bangkok branch which disclosed that the assessee had made a profit of Rs. 1,25,520 for the previous assessment year for which the assessment had been completed. The ITO issued a notice under s. 34 of the Indian I.T. Act, 1922 (which is equivalent to s. 148 of the I.T. Act, 1961), in respect of the previous assessment year and the assessee submitted a return showing the correct profits of the said previous year of Rs. 1,25,520. The ITO then issued a notice under s. 28(3) of the Indian I.T. Act, 1922 (which is equivalent to s. 271(1)(c) of the I.T. Act, 1961), and levied a second penalty of Rs. 68,501 for concealment of income in the original return. The Tribunal quashed the penalty of Rs. 20,000 pertaining to the escaped income of Rs. 3....
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....inal false return under s. 139(1) of the Act but also committed a separate and distinct offence when he filed a similar false return in pursuance of a notice under s. 148 of the Act and was, therefore, liable to be punished for each offence separately. Although the assessee committed two separate and distinct offences liable to be punished separately for both, yet the revenue authorities under the mistaken view of law proceeded to punish him only for the last offence committed as a result of filing a false return in pursuance of a notice under s. 148 of the Act. Since this later offence was committed at a time when the amended provisions of s. 271 (1)(c)(iii) of the Act attracting the " income-avoided base " penalty were in operation, the Tribunal, in my view, erred in holding that the assessee had committed only one offence of concealment when it filed the original return (which event occurred prior to the amendment of s. 271(1)(c)(iii) of the Act) and in imposing penalty the quantum whereof was computable in accordance with the unamended provisions of s. 271(1)(c)(iii) of the Act operative on the date on which the original return was filed. In the result, I answer the refer....
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.... in respect of which the particulars have been concealed or inaccurate particulars have been furnished. " The sub-clause which came into being with effect from April 1, 1976, reads as under : " (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 tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income :..." A comparative reading of sub-cl. (iii) which prevailed at three different times would show that the first and the third are tax-based whereas the second one was income-based. The difference between the first and the third is that in the first provision the minimum penalty was twenty per cent. of the tax avoided and the maximum was 1 1/2 times of the tax avoided whereas in the third the minimum is equal to the tax avoided and the maximum is twice the amount of tax avoided. So, the history of sub-cl. (iii) shows that at one stage Parliament thought of prescribing penalty on the basis of tax avoided and it was amended to make the base of penalty the income to be avoided a....
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....1964, was applied in imposing the penalty. Now, the question which arises for consideration is that, on the one hand, Parliament may keep on amending the provisions of penalty in the Act from time to time and, on the other hand, the ITO may keep on issuing notices under s. 148 of the Act from time to time against the same assessee or against different assessees. The will of Parliament to frame a law and to make it applicable from a particular date is understandable but what the courts have to see is that it is uniformly applied in a reasonable manner in such a way that it does not become capable of abuse by arbitrary or discriminatory exercise by the officers concerned. This point for consideration arises apart from the point of violation of the doctrine of double jeopardy which shall be discussed in the later part of this judgment. In the case of the assessee in hand the year of assessment is 1963-64, during which period the law of penalty contained in s. 271(1)(c) of the Act was different from what it came into being with effect from 1st April, 1968. The amendment which came into being with effect from 1st April, 1968, came up for consideration before this court in Bhan Sin....
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....e hands of the ITOs as demonstrated above to make a harsher law applicable to the persons with whom they are not happy and to apply the lenient provisions to their favourites merely by issuing a notice under s. 148 of the Act calling upon them to file another return. So, in the aforesaid view, it will be reasonable and harmonious to hold that the date of filing of the original return will govern the law for imposition of penalty. Deriving support from the above view, now I proceed on to consider the next point as to what concealment Parliament was considering while framing s. 271(1)(c) of the Act. On a literal reading of s. 271(1)(c), I find that concealing of particulars of income or furnishing of inaccurate particulars of such income is considered as an offence under this provision. For a particular year, an assessee can commit offences only once when he furnishes incorrect particulars of his income and that he does by filing the return. So, even if he is asked to file a number of returns for that very year and he sticks to his original position, to my mind, he will not be committing the offence again and again. The offence will be one which he committed for the first time whe....
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....be liable for penalty on the basis of the original return and it would be open to the ITO or the concerned assessing authority to ignore the subsequent return. To my mind, this again leaves the entire matter in a dilemma and it will be open for the various assessing authorities to abuse the penalty provisions from time to time and from case to case on their whims, either to favour the assessee or to harm him. This was never the intention of the legislation. I am not unmindful of the fact that under s. 139(5) of the Act, an assessee has been provided with an opportunity of making a clean breast of his previous default and furnish a fresh revised return at any time before the assessment is made. Only in that eventuality, his original filing of the false return is excusable and no penalty can be imposed thereon under s. 271 of the Act but it does not mean that the ITO will keep on issuing notices from time to time to the same or different assessees under s. 148 of the Act and every time it will be for the ITO to choose any one of the returns in order to fix the liability on an assessee for purposes of penalty which may either help an assessee or may go against him. Therefore, couns....
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....n be worthwhile take notice of s. 271(1)(c) of the Act which is to the effect--" has concealed the particulars of his income or furnished inaccurate particulars of such income ". A reading of this provision would show that it is not the filing of the return which is the basis for the imposition of penalty but the concealment of income or furnishing of inaccurate particulars of such income. In other words, the moment income is concealed or inaccurate particulars are furnished, the offence for the imposition of penalty under this clause is committed by the assessee but the offence becomes complete when the document in which concealment is made is placed in the hands of the ITO and this is done by the filing of the return. So, the offence for purposes of penalty is complete the moment the return is placed before the ITO and that is why all courts have held that, under s. 271 (1)(c) of the Act, the offence of concealment of income or furnishing of inaccurate particulars of income takes place by the filing of the return by the assessee. In this regard, reference may again be made to C.V. Bagalkoti's case [1978] 115 ITR 131 (Kar), Bhan Singh Boota Singh's case [1974] 95 ITR 562 (Punj), C....