Punjab-Haryana High Court
Commissioner Of Income-Tax vs Dr. Sajjan Singh Malik on 6 October, 1988
Equivalent citations: [1989]178ITR643(P&H)
JUDGMENT Gokal Chand Mital, J.
1. Under the orders issued by this court, the Income-tax Appellate Tribunal, Amritsar, drew up a statement of case and referred the following question for the opinion of the court for the assessment year 1969-70 :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that penalty under Section 271(1)(c) was not exigible?"
2. For the assessment years 1965-66 to 1968-69, Dr. Sajjan Singh Malik filed voluntary returns on October 3, 1968, wherein he showed the amounts received by him as a medical practitioner under the Employees' State Insurance Scheme. No amount was shown as having been earned in private practice. On January 20, 1969, the Income-tax Officer heard the case for the aforesaid assessment years in the presence of the assessee. During the hearing, the assessee admitted that he had done private practice but had no accounts. By assessment orders dated March 31, 1969, the Income-tax Officer added Rs. 1,000 towards private practice for the first year and Rs. 1,500 for each of the subsequent years.
3. On August 13, 1969, the assessee filed a return for the assessment year 1969-70 showing a net income of Rs. 3,061. No income from private practice was shown. On October 14, 1969, an Inspector of the Income-tax Department visited the premises of the assessee and found that he was carrying on private practice. On August 29, 1970, the assessee filed a revised return, wherein he estimated his income from private practice at Rs. 7,539. He also showed an amount of Rs. 834 as interest on fixed deposit receipts. By assessment order dated September 21, 1970, the net income was computed as Rs. 19,401 and simultaneously penalty proceedings were initiated and since the minimum penalty exceeded Rs. 1,000, the matter was referred to the Inspecting Assistant Commissioner, Ludhiana. Against the assessment order, the assessee took the matter in appeal before the Appellate Assistant Commissioner who reduced the taxable income to Rs. 17,656.
4. In penalty proceedings, the learned Inspecting Assistant Commissioner, vide order dated November 13, 1972, took notice of all the aforestated facts and imposed penalty of Rs. 8,745.
5. On appeal, the Income-tax Appellate Tribunal, Chandigarh Bench, cancelled the penalty, vide order dated February 6, 1974, after recording a finding :
"Considering the totality of the circumstances, I hold that the assessee is not guilty of any conscious concealment of income."
6. Earlier, the view of this court was that in spite of amendments brought in Section 271(1)(c) of the Income-tax Act, 1961 (for short "the Act"), even if the matter was covered by the Explanation, the onus was on the Department to prove the concealment of income. However, that view was reversed by a Full Bench of this court in Vishwakarma Industries v. CIT [1982] 135 ITR 652, and this Full Bench view has been approved by the highest court of the land in Chuharmal v. CIT [1988] 3 SCC 588 ; [ 1988] 172 ITR 250. Keeping in view the aforesaid decisions, the facts of the case have to be appreciated.
7. For the four previous years, returns were filed without showing income from private practice, although admittedly the assessee was carrying on private practice as well. During the assessment proceedings, on January 20, 1969, the assessee made a statement admitting private practice and by assessment orders dated March 31, 1969, on estimate basis, Rs. 1,000 was added for the first year and Rs. 1,500 for each of the subsequent three years. In spite of his own statement and assessments for the previous four years, the assessee filed a return for the year in question on August 13, 1969, without showing any income from private practice. Not only this, he concealed income of interest on the fixed deposit receipts and showed taxable income of Rs. 3,061. On October 14, 1969, that is, nearly two months later, the Inspector of the Department visited the premises of the doctor and found that he was carrying on private practice. In spite of that, he waited for almost one year from the date of filing of the original return and 10 months from the visit of the Inspector and as late as August 29, 1970, filed a revised return showing much higher taxable income which included Rs. 7,539 from private practice; besides income from interest on fixed deposit receipts. Vide assessment order dated September 21, 1970, the taxable quantum was assessed at Rs. 19,401 which, on appeal, was reduced to Rs. 17,656.
8. A reading of the assessment order and the appellate order shows that it was concluded that the assessee had concealed income from private practice and interest on the fixed deposit receipts besides some other matter which are not very relevant for decision. Once a statement was made by the assessee on January 20, 1969, that he was carrying on private practice, although had not kept accounts, and was assessed in that regard on estimate basis for the previous four years, he knew fully well when he filed the original return on August 13, 1969, that he had concealed income from private practice. Two months thereafter, the inspector visited the premises of the assessee and collected material evidence to the effect that the assessee was carrying on private practice. It is long thereafter that a revised return showing income from private practice was filed. The statement made on January 20, 1969, the assessment for the previous four years estimating income from private practice, the visit of the Inspector on October 14, 1969, and the material collected regarding private practice and the assessment and the appellate orders constituted sufficient material for raising three presumptions as stated in Vishwakarma Industries' case [1982] 135 ITR 652 (SC) and it was for the assessee to rebut these presumptions which he failed to do. It is not disputed that the Explanatam applied to the case as the total income returned by the assessee is loss than 80 per cent of the total income assessed.
9. A reading of the following lines from the order of the Tribunal will show that it proceeded to decide the matter on wrong premises :
"Even though the assessment has become final, for the purpose of levying penalty it has to be proved that the assessee's conduct is contumacious and dishonest."
10. It was then argued that for the purpose of imposition of penalty, the revised return had to be taken into consideration. On the peculiar facts of this case, we are not impressed with the arguments as conscious concealment of income from private practice is clearly established. Moreover, in view of CIT v. J. K. A. Subramania Chettiar [1977] 110 ITR 602 (Mad), Amjad AH Nazir Ali v. CIT (1977] 110 ITR 419 (Alt), Mohd. Ibrahim Azimulla v. CIT [1981] 131 ITR 680 (All), Addl CIT v. Radhey Shy am [1980] 123 ITR 125 (All) and S. R. Arulprakasam v. Smt. Prema Malini Vasan, ITO [1987] 163 ITR 487 (Mad), the first return has to be taken into account for finding out the conduct of the assessee and the concealment made by him.
11. For the reasons recorded above, we answer the question in the negative, that is, against the assessee and in favour of the Department, as the penalty was clearly exigible under Section 271(1)(c) of the Act on the facts and in the circumstances of the case. The Department will have its costs from the assessee.