Law:

Section:

Section 28(1)(c) of the indian income-tax act, 1922 [corresponding to section 271(1)(c) of the income-tax act, 1961]-Penalty-For concealment of income-Assessee-firm filed original return declaring income of Rs. 23,947-serious irregularities and discrepancies in closing stocks detected by ITO-Assessee filed revised return showing income of Rs. 47,406-Whether penalty exigible-Held, yes, as revised return was not within the meaning of section 139(5) of the 1961 act Facts The assessee-firm filed a return on 30-5-1962, showing an income of Rs. 23,947 for the assessment year 1961-62 relevant to the accounting year ended 31-5-1960. The ITO discovered considerable manipulation in assessee's accounts, by way of (a) short crediting sales, (b) discrepancies in pledged stocks for obtaining key loan facilities from bank and its closing stock recorded in books, and (c) other serious irregularities. The assessee sought to explain that certain stocks were borrowed from two parties which were not produced before the ITO for examination. The assessee subsequently retracted and furnished details of unaccounted stocks and simultaneously it filed a revised return on 29-12-1965 showing an income of Rs. 47,406 which was eventually assessed at Rs. 50,206. This default of concealment under section 271(1)( c) entailed a penalty by the IAC of Rs. 20,000 but reduced by the Tribunal to Rs. 13,000. On reference, the assessee contended that (i) there must be a finding of conscious concealment, and (ii) the revised return was at least a relevant factor for determining the quantum. Held 1. The Tribunal duly recorded in its order its findings about concealment. This finding meets the requirements of law and cannot be attacked as being vitiated or defective. 2. Section 139(5) contemplates a revised return submitted voluntarily on discovering an omission or a wrong statement in the original return and not when the assessee gets trapped by events and circumstances suggesting imminent penalty. In this case, it cannot be held that the revised return was one under section 139(5). 3. The quantum was a matter essentially in the discretion of the Tribunal and warrants no interference. Editor's Note The…

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