MAL LODHA, J. - (1.) THIS reference application has been filed by dealer-assessee for directing the Board of Revenue for Rajasthan at Ajmer ("the Board" herein) to refer the question of law arising out of its order dated 27th August, 1980, passed in case No. 2/77/revision/st/sriganganagar as it erroneously reject its application under section 15 (1) of the Rajasthan Sales Tax Act, 1954 (No. 29 of 1954) ("the Act"), by its order dated 24th May, 1981. It has been prayed by the dealer-assessee that the Board may be directed to refer the following questions of law which arise out of its order dated 27th August, 1980 : " 1. Whether, in the facts and circumstances of the case, the learned Members of the Revenue Board were not justified in maintaining the penalty levied under section 16 (1) (e) of the Act without applying their judicial mind whether there was mens rea and the petitioner was guilty of international evasion of the tax, especially when the assessment had taken place on the basis of the revised trading account and the return filed by the petitioner ? 2. Whether, in the facts and circumstances of the case, the learned Members of the Board committed an apparent error in maintaining the quantum of penalty without applying their judicial mind as to what penalty would meet the ends of justice looking to the background of the petitioner and further the fact that he had filed the revised trading account and the return before the assessment and the assessment had taken place on the basis of the revised return filed by the petitioner ? 3. Whether, in the facts and circumstances of the case, when the learned Members of the Revenue Board held that the penalty imposed by the Commercial Taxes Officer was illegal being more than the twice leviable under section 16 (1) (e) of the Act, it was not open to the non-petitioners Nos. 1 and 2 to modify that penalty so as to reduce it to the maximum leviable under section 16 (1) (e) of the Act and thus committed an error because non-petitioners Nos. 1 and 2 ought to have sent back the case to the Commercial Taxes Officer to levy proper penalty. In any case they ought to have applied their judicial mind to determine as to what penalty should have been levied to meet the ends of justice in the circumstances of the case ?"
(2.) THE Rajasthan Sales Tax (Amendment) Act, 1984 (No. 20 of 1984) (for short "the Amendment Act"), came into force from 1st May, 1985. According to section 13 (10) of the Amendment Act the application which was pending for a direction to the Board for making reference is to be treated as a revision and is to be disposed to under section 15 of the Act as substituted by the Amendment Act. A revision under section 15 of the Act lies only on questions of law. We have heard the learned counsel for the petitioner as well as the learned counsel for the sales Tax department. The only question of law that arises for our determination in this application is whether the Board was right and justified in maintaining the levy of penalty under section 16 (1) (e) of the Act for the alleged concealment of particulars from the return furnished by the dealer-assessee for the accounting period 1st October, 1970, to 30th September, 1971, i. e. , in respect of the tax assessment for the year 1971-72. It was detected by the assessing authority that the dealer-assessee had furnished inaccurate particulars in the returns that were filed and concealed his taxable turnover to the extent of Rs. 9,64,100. 91 which relates to the taxable sales within the State attracting tax to the tune of Rs. 28,924. 92. As per trading account the dealer-assessee has shown these transactions as inter-State purchases for and on behalf of another dealer, M/s. Gill & Co. (P.) Ltd. , Sriganganagar, and was thus liable to tax under the Central Sales Tax Act. M/s. Gill and Co. (P.) Ltd. had not paid any Central sales tax relating to these purchases on the ground that all the purchases made by it were of Rajasthan sales tax-paid goods. In fact, purchase vouchers were issued by the dealer-assessee to M/s. Gill & Co. (P.) Ltd. showing levy of Rajasthan sales tax on such purchases. A show cause notice was issued to the dealer-assessee and thereafter the assessing authority levied tax on the concealed amount by increasing the taxable turnover to the extent of Rs. 9,64,100. 91 and imposed a penalty of Rs. 57,980 under section 16 (1) (e) of the Act for deliberately furnishing inaccurate particulars in the return filed by him. The assessee went in appeal to the Deputy Commissioner (Appeals), Commercial Taxes, Bikaner, who upheld the levy of tax on concealed turnover of Rs. 9,64,100. 91. However, the quantum of penalty was reduced nominally to Rs. 57,846 as according to him there was an error in computation of the amount. The dealer-assessee filed revision before the Board. While dealing with the contention raised on behalf of the dealer-assessee that penalty was not justified in the present case, the Board took into consideration the circumstances to which its attention was drawn and thereafter agreed with the view taken by the assessing authority as well as the Deputy Commissioner (Appeals) that a case for levy of penalty was made out. The revision was rejected. It is necessary to extract the following from the judgment dated 27th August, 1980, passed by the Division Bench of the Board : ". . . . . . . In respect of the transactions in the name of Messrs. Gill and Company it has been conceded by the learned authorised representative of the assessee before the learned Deputy Commissioner (Appeals), Commercial Taxes, Bikaner, that the said sales were taxable under the Rajasthan Sales Tax Act. The tax imposed on the disputed turnover of Rs. 9,64,100. 91 was maintained by the learned Deputy Commissioner in the circumstances. Now the only question to be considered at this stage is whether levy of penalty under section 16 (1) (e) is justified for alleged concealment of the above particulars from the returns furnished by the assessee. Both the assessing authority and the appellate authority have gone into this aspect of the case in great detail. The dealer had realised sales tax under the Rajasthan Act on the sales of Rs. 9,64,100. 91 and yet claimed in the original returns that the sales were inter-State sales. Delivery of the cotton to Messrs. Gill & Company was made within the State. Messrs. Gill and Company had claimed the above purchases as tax-paid and the assessments of that company under the Rajasthan and Central Sales Tax Acts were finalised on that basis. The assessee had been dealing with Messrs. Gill and Company in previous years also and in the earlier period the transactions were shown as local sales. Apart from this circumstantial evidence the conduct of the assessee in withholding the information from the assessing authority for a long spell was also a material factor. Despite issue of notice to the assessee and frequent adjournments granted for production of account books, the assessee did not produce his books of account from 27th June, 1974, to 11th July, 1975. On 1st October, 1974, he informed the assessing authority that the books of account were missing. On 13th December, 1974, he expressed his inability to produce his books of account and he even did not explain as to what efforts were made by him to trace out his books of account. Thereafter, the assessing authority directed the Commercial Taxes Inspector to collect information regarding the business dealings of the assessee from certain other dealers. Subsequently a show cause notice was issued on 28th April, 1975, to the assessee proposing a best judgment assessment against him on the proposed turnover of Rs. 70,00,000. It is only after this that the assessee came forward to produce his books of account. Another factor which has been given due emphasis by the learned Deputy Commissioner (Appeals) is that the sale transactions shown in the name of Messrs. Gill & Company have not even included by the assessee in his Central sales tax returns. Non-disclosure of transactions of such magnitude in the returns filed under both the Acts itself is clear evidence of his real intent to conceal the sales. " It appears that the Board was considerably influenced by the fact that non-disclosure of the transactions regarding which the concealment has been alleged is of great magnitude and this shows that the dealer-assessee intended to conceal the sales. In other words, the Board has given emphasis to the amount involved in the transactions which have been concealed for maintaining the penalty. We have duly considered the reasons given in para 6 of the judgment of the Board which is the only relevant para for the present purpose. It is not in dispute that prior to the completion of the assessment the dealer-assessee had furnished voluntarily revised trading account and return showing the concealed transactions in the turnover. The dispute turnover of Rs. 9,64,100. 91 was shown in the revised return. A great emphasis was given by the learned counsel for the assessee-dealer that the voluntary disclosure prior to the completion of the assessment by the assessing authority negatives the fact that there was either conscious concealment of the particulars from the returns furnish by the assessee-dealer or that the dealer-assessee had deliberately furnished inaccurate particulars therein and according to him the Board did not give the due weightage to it as it should have been done by it. On the other hand, Mr. K. C. Bhandari, learned counsel for the sales tax department, pressed that the voluntary filing of the return before the completion of the assessment by the assessing authority in the facts and circumstances of this case cannot be availed of by the dealer-assessee. According to him, that was done at a stage when all efforts for getting the correct particulars of the turnover have failed. The dealer-assessee was given notice and granted opportunities to produce the account books but he did not do that. In these circumstances filing of revised trading account and return cannot be said to be in good faith and bona fide. In view of these submissions, the task before us is whether a case for setting aside the penalty levied by the assessing authority and maintained by the Deputy Commissioner (Appeals) and the Board is made out or having regard to the facts and circumstances of the case what directions should be given in this case, if we come to the conclusion that the maintaining of the penalty by the Board is not in accordance with law. This has prompted us to make a probe into the relevant provisions of the Act and also to the case-law bearing on it. Section 16 of the Act deals with offences, penalties and prosecutions, etc. The relevant portion of section 16 for our present purpose reads as under : " 16. Offences, penalties and prosecutions, etc.- (1) If any person - (a ). . . . . . . . . . . . . . . . (b ). . . . . . . . . . . . . . . . (c ). . . . . . . . . . . . . . . . (e) has concealed any particulars from any return furnished by him or has deliberately furnished inaccurate particulars therein; or". Here, we may mention that section 271 (1) (c) of the Income-tax Act, 1961 (No. 43 of 1961) ("the Act of 1961" hereinafter), is in almost identical words. In so far as the two expressions with which we are concerned which have been used in section 16 (1) (e), viz. , "concealed any particulars" and "furnished inaccurate particulars therein", are the same as used in section 271 (1) (c) of the Act of 1961. Of course in the second part of section 16 (1) (e) the word "deliberately" has also been used. In Commissioner of Income-tax, West Bengal I v. Anwar Ali [1970] 76 ITR 696 (SC), while considering section 28 (1) (c) of the Indian Income-tax Act, 1922, which dealt with imposition of penalty, their Lordships of the Supreme Court held that before penalty can be imposed the entirely of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. It may be stated here that formerly in the provisions relating to imposition of penalty in the Act of 1961 in the second part of section 27 (1) (c) the word "deliberately" was there. The expression was "deliberately furnished inaccurate particulars of such income". The word "deliberately" was omitted by the Finance Act, 1964, w. e. f. 1st April, 1964.
(3.) ANWAR Ali's case [1970] 76 ITR 696 (SC) was followed in Anantharam Veerasinghaiah & Co. v. Commissioner of Income-tax, A. P. [1980] 123 ITR 457 (SC ). While considering the question of imposition of penalty, it was observed as under : " This is the provision as it stood at the relevant time. It is now settled law that an order imposing a penalty is the result of quasi-criminal proceedings and that the burden lies on the revenue to establish that the disputed amount represents income and that the assessee has consciously concealed the particulars of his income or has deliberately furnished inaccurate particulars : Commissioner of Income-tax v. ANWAR Ali [1970] 76 ITR 696 (SC ). It is for the revenue to prove those ingredients before a penalty can be imposed. Since the burden of proof in a penalty proceeding varies from that involved in an assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted as a finding to that effect in the penalty proceeding. In the penalty proceeding the taxing authority is bound to consider the matter afresh on the material before it and, in the light of the burden to prove resting on the revenue, to ascertain whether a particular amount is a revenue receipt. No doubt, the fact that the assessment order contains a finding that the disputed amount represents income constitutes good evidence in the penalty proceeding but the finding in the assessment proceeding cannot be regarded as conclusive for the purposes of the penalty proceeding. That is how the law has been understood by this court in ANWAR Ali's case [1970] 76 ITR 696 (SC), and we believe that to be the law still. It was also laid down that before a penalty can be imposed the entirely of the circumstances must be taken into account and must point to the conclusion that the disputed amount represents income and that the assessee has consciously concealed particulars of his income or deliberately furnished inaccurate particulars. " It is clear from the aforesaid observations that the finding in the assessment proceeding in respect of disputed turnover may be evidence in the penalty proceedings but it cannot be regarded as conclusive for imposing penalty and that before a penalty is imposed the entire circumstances should be considered and a positive finding should be recorded either that there was a conscious concealment of particulars in the return or the dealer has deliberately furnished inaccurate particulars therein. Section 271 (1) (c) of the Act of 1961 was examined in J. P. Sharma and Sons v. Commissioner of Income-tax, Rajasthan [1985] 151 ItR 333. The learned Judges constituting the Division Bench after noticing Anwar Ali's case [1970] 76 ItR 696 (SC) and some other authorities held that mere non-disclosure of true particulars of income or furnishing of inaccurate particulars is not sufficient to attract the penalty provisions contained in section 271 (1) (c) of the Act of 1961. But in order that penalty may be imposed, there should be conscious concealment of particulars or inaccurate particulars must have been furnished deliberately by the assessee. The learned Judges, while agreeing with the observations made in Commissioner of Income-tax v. Ramdas Pharmacy [1970] 77 ItR 276 held that the entirety of circumstances must be taken into consideration and the conduct of the assessee from the inception to the conclusion of the assessment proceedings must be viewed in order to find out whether a criminal intention of conscious concealment of true particulars of income or deliberate furnishing of inaccurate particulars by the assessee has been established. So having regard to the language used in section 271 (1) (c) which is more or less the same as used in section 16 (1) (e) of the Act, it is abundantly clear that before levying penalty under section 16 (1) (e) of the Act all the circumstances of the case have to be taken into consideration in the penalty proceedings and if from those circumstances conscious concealment or deliberate furnishing of inaccurate particulars are established then and then only penalty can be imposed. Having read the finding of the Board on the question relating to penalty under section 16 (1) (e) of the Act, we are of the opinion that the Board has not given its pointed attention to this aspect of section 16 (1) (e) that either there should be conscious concealment or there should be deliberate furnishing of inaccurate particulars in the return. It further appears to us that though the Board has taken into consideration some of the circumstances which according to us could justify the imposition of penalty nevertheless as is apparent the Board in coming to the conclusion that the dealer-assessee really intended to conceal the sales, it was considerably influenced by the fact that the dealer-assessee did not disclose the alleged transaction of sale which was to the tune of Rs. 9,64,100. 91. In our considered opinion, mere non-disclosure of a great magnitude of the transaction is not such a circumstance by itself which should undoubtedly lead to the conclusion that there was a real intention on the part of the dealer-assessee to conceal the sales. To what extent this circumstance has influenced the mind of the Members constituting the Division Bench of the Board cannot be spelt out for the reason that while considering some reasons which may be relevant or otherwise the Board has observed that non-disclosure of transaction of such magnitude in the return filed under both the Acts itself is clear evidence of his real intent to conceal the same. The use of the word "itself" leaves us in no doubt that the Tribunal has given undue weightage to the magnitude of the transactions relating to sales for holding that the dealer-assessee wanted to conceal the same. Apart from that the dealer-assessee had filed voluntarily revised trading account and return in which the disputed turnover of Rs. 9,64,100. 91 was shown and that too prior to the completion of the assessment by the assessing authority. May this be after issuance of the notice to the dealer-assessee or after giving opportunities for producing the account-books, etc. But the fact of filing the voluntary return before the completion of the assessment cannot be ignored while considering the question of conscious concealment or deliberate furnishing of inaccurate particulars. In J. P. Sharma & Sons' case [1985] 151 ItR 333, it has been stated that if the assessee himself voluntarily files a revised return before the the order of assessment is made, after he has himself discovered an omission or wrong statement in the original return, then in such a case, penalty for concealment of particulars of income or for furnishing inaccurate particulars of such income, as contemplated under section 271 (1) (c) cannot be imposed. Had this been given a proper consideration, one does not know to what conclusion the Board might have reached in connection with the imposition of penalty on the dealer-assessee. We have stated all this to show that the Board, while maintaining the imposition of penalty on the dealer-assessee, has not considered the circumstances in their entirety in the penalty proceeding in the right perspective and seems to have been influenced by considerations which have been given under weightage than which in fact should have been given. In view of the course that we have decided to adopt in this case, we do not consider it proper to give various reasons for or against the imposition of penalty on the dealer-assessee. The judgment maintaining imposition of the penalty by the Board cannot be sustained. We may make a passing reference to Vijai Hosiery Mills v. State of Rajasthan [1980] 45 STC 345 which was relied on by the learned counsel for the dealer-assessee and R. S. Joshi, Sales Tax Officer, Gujarat v. Ajit Mills Limited [1977] 40 STC 497 (SC) cited by the learned counsel for the sales tax department. In Vijai Hosiery Mills' case [1980] 45 STC 345 the question that was referred to in that case to this Court was whether after the amendment of section 5 of the Rajasthan Sales Tax Act by section 6 of the Rajasthan Amending Act (Act No. 13 of 1964) sales tax could be levied by the State of Rajasthan on goods sold by the petitioner during the period from 14th May, 1964, to 31st December, 1964, by virtue of Notification No. F. 5 (40)FD (R&t)/63-XIII dated 2nd March, 1963, issued by the Government of Rajasthan and penalty could be imposed on it under section 16 (1) (i) of the said Act. Section 16 (1) (i) of the Act deals with fraudulent evasion or avoidance of the payment of tax or concealment of liability to tax. While answering the aforesaid question a further question whether it can be said that the petitioner claimed exemption and did not pay the tax under the bona fide mistake that he was not liable to do so was considered. In that connection the matter of mens rea was considered. It was observed that section 16 of the Rajasthan Sales Tax Act, 1954, provides for imposition of penalties and prosecutions and is consequently penal in character and unless the non-payment of the tax is accompanied by a guilty mind it would not be proper to invoke the provisions of that section for imposing penalty. In the facts and circumstances of that case, it was not mala fide and thus there was no mens rea on the part of the petitioner. In the present case we are concerned with section 16 (1) (i) and the position is well-settled by the decisions of the Supreme Court as well as of this Court that either there should be conscious concealment or deliberate furnishing of inaccurate particulars therein. So far as Ajit Mills Ltd. 's case [1977] 40 STC 497 (SC) is concerned it need not detain us long. Section 37 (1) of the Bombay Sales Tax Act, 1959 (51 of 1959 as applicable to the State of Gujarat), came up for consideration. While considering section 37 (1) (a) which lays down that where there has been a contravention referred to in clause (a), a penalty of an amount not exceeding two thousand rupees. . . . . . . . . . . and in addition. . . . . . . . . . . any sum collected by the person by way of tax in contravention of section 46 shall be forfeited to the State Government. Their Lordships of the Supreme Court held that the notion that a penalty or a punishment cannot be cast in the form of an absolute or no-fault liability but must be preceded by mens rea is not correct. Therefore, the contention that section 37 (1) fastens a heavy liability regardless of fault has no force in depriving the forfeiture of the character of penalty and the fact that in section 37 (1) mens rea is excluded and the penal forfeiture can be enormous are germane to legislative policy, not for judicial compassion. This decision has little bearing on this case in view of the provisions of section 16 (1) (e) of the Act which are under consideration. The two decisions relied on by Mr. K. C. Bhandari are not of any assistance. ;