SIVAGAMINATHA MOOPANAR AND SONS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal has submitted a further and revised statement of the case in compliance with our order dated December 3, 1959. For the proper appreciation of the questions arising in the case, it is necessary to recapitulate briefly the facts which have given rise to this reference. The assessee is a Hindu undivided family, carrying on business in yarn and cloth at Madurai. There was a branch for this business at Ramachandrapuram in Ramanathapuram District. One part of the business of the assessee was to export handloom products to Ceylon under permits granted by the Government. The practice observed in regard to such exports was to prepare invoices in duplicate and send the original to the foreign purchaser and the copy to the Chamber of Commerce at Madurai. The Chamber also maintains a record for the prevailing market prices at Ceylon of handloom goods manufactured and despeatched from Madurai.

(2.) FOR the assessment year 1945 -46 (the year ending with April 12, 1945), the assessee submitted a return of the income on October 25, 1945, to the Income -tax Officer, South Madurai, disclosing an income of Rs. 25, 437 of which Rs. 25, 152 represented the income from business. The return was made on the basis of the entries in the account books maintained by the assessee. No voucher or copy of the balance -sheet or of the profit and loss account accompanied the return.

(3.) WE are, however, unable to agree with either of the two extreme contentions. Taking up Mr. Ranganathan's contention, it is one which is obviously opposed to the underlying principle of section 28(1)(c), as its essential requirement is that there should be "a concealment of the particulars of income or the deliberate furnishing of inaccurate particulars thereof". Concealment means a keeping books or hiding the information. It is a deliberate or intentional Act. Section 22(3) provides that, where a person furnishing a return discovers an omission or wrong statement therein, he could furnish a revised return at any time before the assessment is made. Therefore, in a case where the original return does not contain the turn particulars by reason of a genuine mistake or accidental omission, it would be open to the assessee to furnish a revised return containing the correct particulars at any time before the assessment. In Radha Rukmani Ammal v. Commissioner of Income -tax it was held that, notwithstanding the absence of the qualifying word "deliberately" in the first alternative in section 28(1)(c) referring to concealment, the concealment also should be a conscious and deliberate one. Where, therefore, the assessee was not conscious of his concealing any particulars at the time when he furnished the return, he could rectify it as soon as he discovers the mistake. In such as case it cannot be said that the assessee was guilty of concealment on the date when he submitted the return. It is not therefore the time of return that is material. What has to be seen is whether the assessee consciously submitted a false return. We agree with Mr. Kesava Ayyangar that, in a case where the assessee furnishes all the particulars but states falsely that the income was less than what the particulars show, the case is not one of concealment or furnishing false particulars but the mere raising of a false plea. In Commissioner of Income -tax v. Gokuldas Harivallabhdas certain credit entries were found to exist in the names of some persons. It was found that the entries were false and that they represented income from undisclosed sources. It was held that the proceedings under section 28(1)(c) being in the nature of penal proceedings, the burden of proving that the assessee was guilty of the offence of concealment would be on the department and that the mere fact that the assessee gave a false explanation could not necessarily mean that there was a concealment, the gist of the offence under section 28(1)(c) being concealment of particulars of income or deliberately furnishing inaccurate particulars of such income, and not of giving false explanation. In Khemraj Chagganlal v. Commissioner of Income -tax the account books of the assessee showed a credit entry purporting to be the sale proceeds of certain ornaments. In the assessment proceeding it was found that there was no sufficient evidence to establish that they represented sale of ornaments and that they should be treated as secreted profits of the assessee's business. Proceedings were thereafter initiated under section 28(1)(c) of the Income -tax Act. It was held that the mere fact that the assessee was not able to establish by satisfactory evidence the explanation offered by him in regard to the credit entry did not mean that the assessee had been guilty of a deliberate suppression of particulars of income within the meaning of section 28(1)(c).