I.T.AS. NOS. 196 (1B) TO 200 (IB) OF 1990-91, DECIDED ON 29TH MAY, 1991. VS I.T.AS. NOS. 196 (1B) TO 200 (IB) OF 1990-91, DECIDED ON 29TH MAY, 1991., 1992 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 713 (1991)

(a) Income Tax Ordinance (XXXI of 1979)---

----Ss. 57 & 111---Filing of revised return of total income---Deliberate act of continued concealment of income by assessee---Slip or a default by assessee could be condoned in a solitary instance---Continuous act of concealment for a number of years was detected by the departmental authorities when notices were issued obliging the assessee to file his return---Filing of revised return, in circumstances, declaring the correct income including the concealed income would not expatriate contumacious conduct in not having disclosed a true income in the original return.---[1986 PTD (Trib.) 446 and NTR 1990 Trib. 270 dissented from].

1986 PTD (Trib.) 446 and NTR 1990 Trib. 270 dissented from.

(b) Income Tax Ordinance (XXXI of 1979)---

----Ss.57 & 111---Concealment of income---Penalty---Filing of revised return by assessee during the course of assessment---Effect---"Discovery made by the Assessing Officer" and disclosure voluntarily made by assessee"---Distinction- Requirement of S.57 must be fulfilled to avoid penalty under S.111 --- Assessee concealing the particulars of his income or intentionally suppressing the particulars of his income to the prejudice of the revenue at the stage when it as his duty to disclose would be liable to imposition of penalty---Where there were intentional suppressions of material facts, revision of return by correctly disclosing true facts would not entitle the assessee immunity from penalty under S.111.

If provisions of section 57 of the Ordinance authorising the assessee to revise a return during the course of assessment proceedings are construed to mean that return can be revised before the date of completion of assessment, then the provisions of section 111 of the Ordinance empowering the assessing Authority to impose penalty for concealment of income would be redundant 'there is a thin line of demarcation between a discovery made by the assessing officer and disclosure voluntarily made by an assessee. In order to avoid or escape imposition of penalty under section 111, it is necessary that the requirements for filing a revised return under section 57 of the Ordinance must be fulfilled. In other words, the assessee must have discovered, an omission or wrong statement as is evident from a plain reading of S.57.

There should be an "omission" or "wrong statement" which should have been "discovered" by the assessee himself and in the light thereof, return should have been revised to cover up the deficiencies or default suo motu. Obviously, the expression "omission" connotes an unintentional act or neglect to perform what the legal obligation may be. And the words "wrong statement" would include within its ambit the statement which is not false to the knowledge of person making it. And the word "discovers" will take within its scope that which was concealed or hidden away or unknown. It is therefore, clear that the cover under section 57 cannot be claimed by a person who has filed original return knowing it to be false or untrue. An assessee deliberately omitting the true particulars of income or making wrong statement in the return would not be entitled to immunity from imposition of penalty under section 111 of the Ordinance by filing a revised return under section 57 of the Ordinance.

The assessee would invite imposition of penalty under section 111 of the Ordinance where he conceals the particulars of his income or furnishes inaccurate particulars thereof. And concealment would mean deliberate or intentional suppression of facts. Naturally, there cannot be any concealment until it is a duty to disclose. Therefore, the assessee concealing the particulars of his income or intentionally suppressing the particulars of his income to the prejudice of the revenue at the stage when it is a duty to disclose, would be liable to imposition of penalty. True particulars of income have to be disclosed at the time when the return is filed under section 55 of the Ordinance and if the assessee conceals the particulars of his income, he would naturally incur penalty under section 111 of the Ordinance. The provisions of law dealing with revision of return under section 57 of the Ordinance apply only to a person who having been furnished a return discovers any omission or wrong statement therein, may furnish a revised return before the assessment is made. An omission or a wrong statement that the assessee wishes to rectify by filing a revised return is one which is later on discovered by the assessee himself to be untrue. However, where there is intentional suppression of material facts, revision of a return by correctly disclosing true facts would not entitle the assessee immunity from penalty under section 111 of the Ordinance.

"' Sivagmin-tha v. C.1.T. 52 I.T.R. 591; Agarwal v. C.I.T. 102 I.T.R. 408; Amjad Ali v. C.I.T. 110 I.T.R. 419; C.I.T. v. Subramania v. CIT 122 I.T.R. 719 and C.I.T. v. Radhay Shyam 123 I.T.R. 125 ref.

(e) Income Tax Ordinance (XXXI of 1979)---

-----S. 57---Expression "omission" or "wrong statement" and "discovered" Connotation.

Akhtar Hussain for Appellant.

Taskeen Muzaffar, D.R. for Respondent.

ORDER

JUNEJO M. IQBAL (ACCOUNTANT MEMBER).---These are rive appeals filed at the instance of the assessee (hereinafter called the appellant) involving the charge years 1978-79 to 1982-83 contesting the consolidated order passed by the learned Appellate Assistant Commissioner, Rawalpindi Range, Rawalpindi on 27-12-1984 in Income Tax Appeals Nos. 1686 to 1690 confirming the penalties imposed under section 111 of the Income Tax Ordinance, 1979 (hereinafter called the Ordinance) for failure on the part of the appellant to :declare income from property which was liable to tax.

2. The relevant facts are that the appellant an individual serving as Deputy Chief of Protocol in the Ministry of Foreign Affairs failed to declare his income from property located on Plot No.l, Street 4, F-6/3, Islamabad in respect of all the five years under appeal. This information was received by the I.T.O. from the survey Organisation of the Income Tax Department, whereafter notices under section 56 of the Ordinance were issued and in response thereto returns were filed declaring income from the property for all the five years. The declared quantum of property income was accepted and subjected to tax. Besides, penalty orders under section 111 of the Ordinance were passed imposing penalties at Rs.6,502, Rs.22,050, Rs.25,562, Rs.25,146 and Rs.29,130 for the assessment years 1978-79, 1979-80, 1980-81, 1981-82 and 1982-83, respectively. Separate appeals were filed for all the five years contesting the penalties under section 111 of the Ordinance before the learned A.A.C., Rawalpindi Range, Rawalpindi, who maintained the imposition of penalties vide the impugned order. It is this order of the first appellate authority which has been further challenged by way of second appeal before this Tribunal.

3. Mr. Akhtar Hussain, Advocate appeared on behalf of the appellant and submitted that the proceedings imposing penalty for concealment of income are of quasi-criminal nature and the Department has to prove not only a guilty mind but be fulfilled before any penalty for concealment of income can be imposed. In the present case the appellant being a Government servant remained out of the country for a number of years. He belongs to the family of rulers of the former State of Chitral, and according to their traditions the eldest person was supposed to control the affairs of the family property. Sahibzada Asad-ur-Rehman the uncle of the appellant was under the impression that property in Islamabad enjoys exemption from payment of income-tax. This exemption was available in 1969 when the plot was purchased. The property was leased out by the uncle of the appellant after its construction was completed. It was only in December, 1983 when the appellant was asked to file income tax returns that he realised that the property income was liable to tax. Continuing further the learned counsel for the appellant submitted that the I.T.O. failed to appreciate the contentions of the appellant and .imposed penalties for all the five years under appeal, without realising that the default was not deliberate. In this regard, the learned counsel cited a decision of Madras High Court in the case of Commissioner of Income Tax v. Ramdas Pharmacy reported as (1970) 77 I.T.R. 276. In this case it was held that a revised return was filed before the completion of assessment disclosing true income. A penalty for concealment was imposed by the assessing Officer, but the Tribunal held that there was no concealment, and the High Court upheld the finding of the Tribunal that the assessee had not deliberately concealed income and therefore the penalty levied was not justifiable. It was further held by the Madras High Court that the Tribunal had the jurisdiction to fix the quantum of penalty leviable, if the penalty was attracted. The learned counsel further relied upon a Single Bench decision of the Tribunal reported as 1986 PTD (Trib.) 446, wherein it was held that the assessee having filed revised returns during the course of assessment proceedings, penalty for concealment could not be imposed by the I.T.O. It was further held that the imposition of penalty would mean denial of permission allowed by the I.T.O. It was further held that the imposition of penalty would mean denial of permission allowed by the statutes. Again the learned counsel for the appellant has relied upon the Single Bench of the Tribunal reported as NTR 1990 (Trib.) 270 (sic) holding the penalty to be untenable where after the concealment having been detected by the Department, the assessee revised the return by including the concealed income, quantum whereof was not controverted by the assessing officer. The learned counsel vehemently urged that there was no deliberate attempt in concealing income as the appellant is a Government servant, he remained abroad most of the time, and had left the affairs of his property to be managed by his uncle. If there was any default committed inadvertently by his uncle, he should not be penalised. Besides the appellant had revised the returns declaring property income alongwith the salary, and the returned income was accepted by the Department. Therefore, there was no question of concealment. The learned counsel prayed that the orders of both the officers below may be annulled in respect of the five years under appeal.

4. Mr. Taskeen Muzaffar, the learned Departmental Representative argued that ignorance of law is no excuse, moreso in the case of a Government servant. Continuing further the learned D.R. submitted that the tax exemption available to the property income was withdrawn after 30-6-1972, whereas the relevant assessment years were 1978-79 to 1982-83. It was therefore very strange to take the plea that the appellant was under the impression that the property income was exempt at Islamabad. Besides, the appellant had not voluntarily filed revised returns but this was done after issuance of notices under section 61 of the Ordinance from time to time. The appellant did not revise returns voluntarily, and could not take the defence that returns were revised and therefore no penalty could be imposed. The learned D.R. prayed that the orders confirming the penalty may be maintained.

5. After carefully considering the arguments advanced by both the parties and after going through the case-law qouted at the Bar by the learned counsel for the appellant, it is not difficult to conclude that the appellant did commit concealment of income. If the appellant was under the impression that the income from property was exempt at Islamabad as claimed at least the amount should have been shown in the relevant column of the Income Tax Returns, where exempt income is to be declared.

6. As far as the case-law quoted by the learned counsel for the appellant is concerned, we are of firm view that it is distinguishable inasmuch as, in the first case relied upon by the learned counsel for the appellant reported as (1970) 77 I.T.R. 276, the Tribunal had concluded after considering the facts and circumstances that the assessee had not deliberately concealed income, and therefore the penalty levied for concealment was not justifiable. This conclusion was upheld by the learned High Court of Madras. In the instant case, we feel that there was a deliberate act of concealment for the simple reason that an exemption available to property income at Islamabad having been withdrawn on 30-6-1972 could not be taken cover of after almost ten years. This conclusion is further fortified by the fact that the appellant is a responsible Government servant and was supposed to know his tax liabilities prescribed by the law. A slip or a default could be condoned in a solitary instance, but this was a continuous act of concealment for a number of years which was detected by the departmental authorities when the notices were issued obliging the appellant to file his returns or income. His filing of revises returns declaring the correct income including the concealed income will no expatriate contumacious conduct in not having disclosed a true income in the original return. The facts and circumstances lead to an irresistible conclusion that there was deliberate concealment of income on the part of the appellant. The other two Single Bench decisions reported as 1986 PTD (Trib.) 446 (ibid) and NTR 1990 Trib. 276 (sic) do not bail out the appellant, as we beg to differ from the conclusion arrived at in those decisions. If provisions of section 57 of the Ordinance authorising the assessee to revise a return during the course of assessment proceedings are construed to mean that return can be revised before the date of completion of assessment, then the provisions of section 111 of the Ordinance empowering the assessing authority to impose penalty for concealment of income would be redundant. There is a thin line of demarcation between a discovery made by the assessing officer and disclosure voluntarily made by an assessee. In order to avoid or escape imposition of penalty under section 111, it is necessary that the requirements for filing a revised return under section 57 of the Ordinance must be fulfilled. In other words, the assessee must have discovered an omission or wrong statement as is evident from a plain reading of that provision which is reproduced hereunder:-

"Section 57: Revised returns of total income. If any person has not furnished a return of total income as required by, or under, any provision of this Ordinance (hereafter in this section referred to as "return") or having furnished a return, discovers any omission or wrong statement therein, he may, without prejudice to any liability incurred by him under any provision of this Ordinance or the repealed Act, furnish a return or a revised return, as the case may be, at any time before the assessment is made.

7. As is clear from the perusal of the above provision of law that there should be an "omission" or "wrong statement" which should have been "discovered" by the assessee himself and in the light thereof, return should have been revised to cover up the deficiencies or default suo motu. Obviously, the expression "omission" connotes an unintentional act or neglect to perform what the legal obligation may be. And the words "wrong statement" would include within its ambit the statement which is not false to the knowledge of person making it. And the word "discovers" will take within its scope that which was concealed or hidden away or unknown. It is therefore, clear that the cover under section 57 cannot be claimed by a person who has filed original return knowing it to be false or untrue. An assessee deliberately omitting the true particulars of income or making wrong statement in the return, would not be entitled to immunity from imposition of penalty under section 111 of the Ordinance by filing a revised return under section 57 of the Ordinance.

8. The assessee would invite imposition of penalty under section 111 of the Ordinance where he conceals the particulars of his income or furnishes inaccurate particulars thereof. And concealment would mean deliberate or intentional suppression of facts. Naturally, there cannot be any concealment until it is a duty to disclose. Therefore, the assessee concealing the particulars of his income or intentionally suppressing the particulars of his income to the prejudice of the revenue at the stage when it is a duty to disclose, would be liable to imposition of penalty. True particulars of income have to be disclosed at the time when the return is filed under section 55 of the Ordinance and if the assessee conceals the particulars of this income, he would naturally incur penalty under section 111 of the Ordinance. The provisions of law dealing with revision of return under section 57 of the Ordinance apply only to a person who having been furnished a return discovers any omission or wrong statement therein, may furnish a revised return before the assessment is made. An omission or a wrong statement that the assessee wishes to rectify by filing a revised return is one which is later on discovered by the assessee himself to be untrue. However, where there is intentional suppression of material facts, revision of a return by correctly disclosing true facts would not entitle the assessee immunity from penalty under section 111 of the Ordinance, On this issue, if any case law is required, the following judgments would amply cover the instant issue:-

(1) Sivagmin-tha v. C.I.T. 52 I.T.R. 591.

(2) Agarwal v. C.I.T. 102 I.T.R. 408.

(3) Amjad Ali v. C.I.T. 110 I.T.R. 419.

(4) C.I.T. v. Subramania v. C.I.T. 122 I.T.R. 719.

(5) C.I.T. v. Radhay Shyam 123 I.T.R. 125.

9. In the present case, the argument of the learned counsel for the appellant that there should be not only a guilty mind but also a guilty conduct as well, does not hold water, as almost 10 years earlier could not be pressed into service. Obviously, this was act of deliberate suppression of true particulars of income. Therefore, the case-law quoted at the Bar, does not come to the rescue of the appellant. On the contrary, the fact of revision of return showing the correct income fully establishes the quantum of concealment. Both the Officers below were fully justified in meting out the treatment to the appellant as they did.

10. Consequently all the appeals fail and are dismissed.

M.B.A./1471/T Appeals dismissed.