AJIT WIRE INDUSTRIES LTD. vs Income Tax OFFICER.

Per Shri Chander Singh, AM - This is an appeal by the assessee against the order of the CIT (A), dated 1-10-1985 confirming the penalty of Rs. 72,634 imposed by the ITO u/s 271(1) (c) of the Income Tax Act, 1961 for the assessment year 1980-81.

The learned counsel for the assessee has vehemently argued that there was no material before the revenue authorities to levy the penalty of Rs. 72,634. The assessee had filed the return of income on 5-8-1980 declaring the total income at Rs. 18,02,130. However, the assessee subsequent to the date of filing the original return, realised that a genuine and bona fide mistake had been committed and, therefore, sought to rectify the said mistake by filing a revised return on 9-12-1981 declaring the total income at Rs. 18,99,910. Since the revised return was filed there was no justification for the revenue authorities to initiate and impose penalty u/s 271(1) (c). Reliance, in this connection, has been placed on the decisions relied upon before the revenue authorities. The learned counsel for the assessee has thus contended that it was not a fit case to invoke the provisions of section 271(1) (c).

On the other hand, the Departmental Representative has pointed out that it was a deliberate attempt on the part of the assessee to suppress the taxable income. The assessee was aware of the fact that purchases worth Rs. 97,613 from Vinodchandra D. Gandhi were not genuine but were in the nature of hawala purchase entries. Since the assessee was a party to the hawala purchases it was aware of the fact and, therefore, it could not be said that it was a bona fide mistake on its part.

The Departmental Representative has further pointed out that the revised return was filed by the assessee after the concealment had already been detected by the ITO. It is urged that the filing of the revised return after detection of concealment will not exonerate the assessee from the penal provisions of section 271(1) (c). In this connection, reliance has been placed on the decisions in the cases of Dayabhai Girdharbhai Vs. Commissioner of Income Tax, Madhya Pradesh and Bhandara, Nagpur, , Commissioner of Income Tax Vs. J.K.A. Subramania Chettiar, and Garden Silk Weaving Factory Vs. Commissioner of Income Tax, .

We have considered the rival submissions and perused the facts of the case. It is seen that the assessee had made a debit entry for a sum of Rs. 97,613 which turned out to be hawala purchases. With a view to verify the correctness of the return filed, the ITO vide his letter, dated 17-9-1981 had made certain enquiries regarding the payment of commission, sales, unsecured loans, etc. It also appears that specific enquiries were directed about the hawala purchases. After the assessee received the letter, dated 17-9-1981 from the ITO, it submitted the revised return disclosing the additional sum.

I may not be out of place to mention here there is a letter on record from the D. D. I. in respect of Vinodchandra D. Gandhi. This letter dated 24-10-1981 was addressed to the assessee-company itself. The facts of the case, therefore, show that as on 24-10-1981 the assessee had full knowledge that the department had come to know about its bogus dealings with Vinodchandra D. Gandhi. The revised return, therefore, appears to have been filed as a result of these enquiries. The filing of the revised return, therefore, shall not come to the rescue of the assessee. As per the scheme of the Act a revised return can be filed by an assessee when there is omission or wrong statement or any inadvertent mistake. The word omission connotes an unintentional act. Equally, the words wrong statement will not take in a statement known to be false to the person who had made the statement. If a person who furnished the return was aware of the falsity of the statement and the incorrectness of the particulars of income at the time when the original return was filed, there is no question for that person subsequently discovering the existence of the omission or creeping in of the wrong statement in the return already filed by him. Therefore, the revised return of income may absolve the assessee from penal consequences only in the case of omission or wrong statements or inadvertent mistakes, and not in the case of concealment or false statement. In other words, a return filed so as to include concealed income cannot be treated as a revised return because Amazon to file the correct income in the original return cannot be said to be due to any bona fide mistake or omission. In the case of the assessee, as discussed above, the concealment had already been detected. It may also be mentioned that it was within the knowledge of the assessee that he had indulged in hawala transactions. Therefore, the assessee, with full knowledge, tried to suppress the fact and made a false statement in the return of income. It was with full knowledge of hawala transaction that he filed the original return. The visiting of penal consequences, therefore, cannot be stopped by merely filing a revised return. Moreover, the case of the revenue is well supported by the ratio of the decisions adverted to above and relied upon by the Departmental Representative.

Keeping in view the facts of the case and the legal position, we are of the view that was justification to levy the penalty u/s 271(1) (c) of the Income Tax Act, 1961. We, therefore, decline to interfere.

The appeal by the assessee is accordingly dismissed.