Sahai, J. - (1.) IN pursuance of an order passed by this court, the INcome-tax Appellate Tribunal, Allahabad Bench, has referred the following question of law for the opinion of this court: " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in applying the provisions of Section 271(1 )(c) of the Act ? 2. Whether, on the facts and in the circumstances of the case, merely because a revised return and thereafter another revised return was filed by the applicant voluntarily disclosing the profit earned by the applicant amounting to Rs. 61,460 and Rs. 51,810 there was a concealment of income under Section 271(l)(c) of the Act ? 3. Whether there was any material for the Tribunal to hold that the assessee must have known from the action of the officer in December, 1968, that he is making enquiries about the sale of import licence in M/s. Damo-dar Das and Company ? "
(2.) FACTS on which these questions of law have been founded are that penalty proceedings, under Section 271(l)(c) of I.T. Act, were initiated against the assessee, a manufacturer of carpets, maintaining its accounts from Diwali to Diwali, for the non-disclosure of Rs. 61,460, Rs, 50,810 and Rs. 3,200 in its return filed under Section 139(l)for the assessment year 1968-69, received from Damodar Das and Co., Bombay, M/s. C. A. Agarwal Ltd., Bombay, and Amrit Silk Store, Bombay, respectively, as incentive profit for sale of import licence. The sum of Rs. 61,460 was recorded in the balance-sheet of 1966-67. The lTO, therefore, asked the assessee to supply details of the transaction and particulars of the company at Bombay. But as the assessee avoided and took adjournments the ITO took action on his own under Section 131 and sent summons to the company at Bombay. The company informed that goods as per import entitlements were delivered to them at Bombay as far back as September 2, 1966, and they, after obtaining the bill dated March 20, 1967, from the assessee, closed the transaction in the last week of March, 1967. They also sent a photostat copy of the original bill signed by one of the partners submitted on August 20, 1967, for Rs. 17,20,719-10 resulting in a profit of Rs. 61,460. Being armed with this material the ITO issued a written requisition, under registered cover, on November 25, 1969, asking the assessee to explain various transactions of incentive profit which was returned with an endorsement, "refused". Soon after on 9th December, 1969, the assessee filed a revised return under Section 139(5) for 1968-69, and a return under Section 139(7) for 1969-70 also, including this amount as receipt of that year as well. It appears that the assessee was not aware till then of the detailed information obtained by the ITO. Therefore, it was taking all possible chances to make it appear that its conduct was bona fide and the mistake was inadvertent. After assessment, when penalty proceedings started, the assessee pleaded mistake and lack of knowledge of Hindi and Mahajani. The circumsances were, however, so glaring that the ITO did not see any merit in the explanation and levied the penalty. In appeal, the IAC agreed with the finding of the ITO and held that the conduct of the assessee was not clean. In further appeal, the Tribunal upheld the conclusions as, from the making of the inquiry since 1968 about Damodar Das and Co., presence of the assessees' agent in Income-tax Office on November 25, 1969, filing of revised return immediately thereafter, disclosing the same income in 1969-70, then excluding it by filing revised return and submission of original bill under signature of one of the partners on which profit was not negligible, it was obvious that assessee was concealing its income. The learned counsel for the assessee argued that the return filed under Section 139(1) was supplanted by a revised return and as it was a statutory right the question of penalty did not arise. The argument goes a little too far. Section 139(1) makes it obligatory on an assessee whose income exceeds the maximum, which is not chargeable to income-tax, to file a return of its total income. In case of discovery or wrong statement it may file a revised return under Section 139(5), the acceptance of which depends on the fulfilment of these essentials. It is not the voluntary disclosure but the disclosure in the circumstances mentioned in the section which enures to the benefit of the assessee as a disclosure may be voluntary, yet dishonest. Even without this sub-section there could have been no bar for an honest disclosure. This sub-section only gives statutory recognition to what was otherwise inherent in it. But if the disclosure is to;cover up or was in the knowledge of the assessee or made in bad faith then it does not come within the ambit of Section 139(5), nor can the assessee claim any benefit on it. The original and revised return become one if they are in accordance with Section 139(1) and (5) but not otherwise. The guilt of non-disclosure is not washed off by the admission of confession. The mere filing of a revised return, therefore, does not rule out the applicability of Section 271. In Amjad Ali NazirAli v. CIT [1977] 110 ITR 419, it was held by a Division Bench of this court (p. 426): "In cases where an assessee has deliberately omitted particulars of his income or made wrong statement in the return, the revised return filed by him would be outside the pale of Section 139(5) of the Act, and it would not be a revised return as contemplated by the Act. Once this position is reached the question of considering the revised return for the purposes of penalty would hardly arise, for, in the eye of law, there would be no revised-return as contemplated by Section 139(5). Such a revised return cannot supplant the original return and, for the purposes of penalty, it will be only the original return that will have to be looked into." It was then argued that on the findings recorded by the Tribunal no offence under Section 271(l)(c) was made out. According to the learned counsel, even if the explanation of the assessee was disbelieved it was not sufficient to fasten the guilt on it particularly when the department did not lead any evidence. In other words, he relied on the well-known principle laid down by the Supreme Court in CIt v. Anwar Ali [1970] 76 ItR 696. But after this decision was given, an Explanation was added to Section 271(1 Xc) by the Finance Act, 1964 which provided that if the total income returned by any person was less then eighty per cent. (of the assessed income), the burden to prove that (the difference in the) income did not arise from any fraud or any gross or wilful neglect was on the assessee; else it would be deemed to be his concealed income. According to the learned counsel, this Explanation does not apply as the difference (sic) between the returned income and the assessed income is not less than eighty per cent. if the voluntary disclosures made in the revised returns are taken into account. The argument has no merit in it. The difference of eighty per cent. of the assessed income has to be from the total income returned (sic). The words "total income" referred to in the Explanation to Section 27l(l)(c) refers to the "total income" disclosed by the assessee in its return filed under Section 139(l). Whatever is disclosed subsequently by way of filing a revised return may relate back and become part of total income provided it is covered in Sub-section (5). Itn a case where the disclosure is not bona fide, although not necessarily fraudulent or wilful, the difference of eighty per cent. has to be taken with respect to the return filed under Section 139(1).
(3.) THE learned counsel then attempted to argue that the finding of the Tribunal was vitiated as it relied on inadmissible evidence. According to him, the only presumption on refusal of the requisition dated November 25, 1969, that arose was that a registered letter came from the I.T. Dept., but it could not be stretched to mean that the assessee shall be deemed to have known its contents as well. THE argument need not be examined as the Tribunal did not draw any inference that the assessee must have known about its contents. It only held that whether the requisition was served or not was immaterial, as assessee must have known that inquiries regarding the transaction with the company at Bombay were going on since 1968. And it cannot be said that this inference was unreasonable or unjustified. As none of the submissions advanced by the learned counsel for the assessee have been found to have any merit, the finding of the Tribunal that the assessee was guilty of concealment of Rs. 61,460 appears to be well founded. In fact, the plea of mistake in the circumstances of the case, was so flimsy that no reasonable inference could be drawn except the one arrived at by the Tribunal that it was not a case of discovery of a mistake after the filing of the return but of the deliberate omission of a fact which was in the knowledge of the assessee which it attempted to conceal with a view to evade payment of tax till the end and came out with the disclosure only when it became sure that its game was up.;