I.T.A. NO. 254/LB OF 1995, DECIDED ON 30TH MARCH, 1995. VS I.T.A. NO. 254/LB OF 1995, DECIDED ON 30TH MARCH, 1995.
1996 P T D (Trib.) 759
[Income-tax Appellate Tribunal Pakistan]
Before Nasim Sikandar Judicial Member, Khalid Mahmood and Inam Elahi
Sheikh, Accountant Members
I.T.A. No. 254/LB of 1995, decided on 30/03/1995.
Per Inam Elahi Shaikh, Accountant Member, agreeing with Nasim Sikandar, Judicial Member---
(a) Income Tax Ordinance (XXXI of 1979)---
----S.57---Revised return of total income ---Assessee is entitled to file a revised return under the provision of S.57, Income Tax Ordinance, 1979 at any time before the assessment is finalized.
Cannon Products Ltd. and others v. I.T.O. and others 1985 PTD 549 ref.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.57---Revised return of total income ---Assessee a builder---Second return filed by assessee constituted a "revised return" as envisaged under S.57 of the Income Tax Ordinance, 1979---Assessing Officer's failure to take due notice of it would colour the subsequent proceedings.
Per Nasim Sikandar, Judicial Member---
After filing of the revised return by the assessee the scope of further proceedings and inquiry-could only be the declarations etc. made in the revised return and not on the basis of the original return. This having not been done arid the-assessing officer having continued proceedings and the scope of inquiry, having remained the original return, all subsequent steps after filing of the revised return definitely coloured the whole assessment proceedings. These were accordingly set aside alongwith the impugned order and it was directed that the case should be remitted to the assessing officer to base his further inquiry on the declarations/statements made in the revised return.
Cannon Products Ltd. and others v. ITO and others (1985) 51 Tax114 ref.
Per Khalid Mahmood, Accountant Member (Minority view)--
CIT v. Sodra Devi (1957) 32 ITR 615 (SC); Tarulata Shyam v. CIT (1977) 108 ITR 345 (SC); Arunachalam Chattiar v. CIT (1931) 6 ITC 58; CIT v. Badridas Ramrai (1939) 7 ITR 613; CIT v. Angara Satyam 37 ITR 230; Amjad Ali Najir Ali v. CIT (1977) 110 ITR 419; CIT v. Subramania Chattiar (1977) 110 ITR 602; Sulemanji Ganibhai v. CIT (1980) 121 ITR 373; Union Engineering Co. v. CIT (1980) 122 ITR 719; CIT v. Radhey Shyam (1980) 121 ITR 125; Muhammad Ibrahim Ajimulla v. CIT (181) 131 ITR 680; CIT v. Hajt P. Muhammad (1981) 132 ITR 623; CIT v. Mahim (1984) 149 ITR 737 and Cannon Products Limited v. ITO 1985 PTD 549 ref.
Abrar Hussain Naqvi for Appellant.
Qaiser M. Yahya, D.R. and Shebaz Butt, L.A. for Respondent.
Date of hearing: 13th February, 1995.
ORDER
NASIM SIKANDER, (JUDICIAL MEMBER).---This further appeal by a URF assails an order recorded by C.I.T.(A), Zone-V, Lahore on 11-12-1994.
2. The assessee returned. a loss of Rs.20,57,950 for the year 1991-92. No books of accounts were produced and therefore, the assessing officer rejected the declared version. On 29-3-1994 the assessee revised its return to declare nil income. However, the assessing officer rejected the revised return and continued proceedings on the original return, filed declaring the aforesaid loss. After serving the assessee with notices under section 62 of the Ordinance and seeking its explanation to various aspects an assessment was finally framed at net income of Rs.89,95,809. The assessing officer further found that the assessee had committed concealment by showing less sale price in respect of a shop and therefore, concealed an income of Rs.137,500. Accordingly concealment proceedings were also contemplated separately. Learned first appellate authority' by way of the impugned order confirmed rejection of the revised return on the ground that the enabling provisions contained in section 57 of the Ordinance were only meant for removing bona fide mistakes while in the case of the assessee there was no question of a bona fide mistake having crept in the original return. Other submissions made on the merits of the case qua estimation of price of plot on which the Plaza was being constructed upon as well as rate of sale per sq. ft. in respect of the shops and plots allegedly sold in the period under review were also rejected and the assessment order confirmed for somewhat sketchy reasons.
3. Parties have been heard. The learned counsel for the assessee states that a 44 marlas plot was owned by a lady Rashida Begum as an individual. She entered into a kind of loose partnership made with other persons in order to generate funds and to associate them in the profit that might accrue on final disposal of the shops and flats in the Plaza. It is further claimed that during the year under review viz. 1991-92 only one room No. 121 was sold to a lady namely Kalsoom for a consideration of Rs.85,000. That 8 shops and 7 room were disposed in the years 1989-90 and 1991-92 while the other 8 shops and 8 rooms were still unsold. We have also been informed that in the years 1989-90 and 1990-91 returns were filed on service of notice under section 56 of the Ordinance declaring the Plaza "under construction". It is further stated that the return filed under the year under review was revised on discovering an omission that correct and detailed facts could not be brought or indicated therein. However, the assessing officer rejected the revised returns solely on the ground that in the previous returns for the assessment years 1987-88 to 1990-91, the assessee had indicated that Plaza was incomplete. It was further observed that no books of accounts were produced and as such filing of the revised return for the year 1991-92 declaring nil income was without any basis. Learned counsel has also addressed us on facts of the case and elaborated and convincing contentions have been made against estimation of price of the plot in question as well as the sale price adopted in respect of shops and rooms etc. However, we find that his preliminary objection against rejection of revised return bears considerable weight and therefore, the other submissions on merit do not need a detailed appraisal.
4. The assessee could revise its return where after having filed the same it discovered any omission or wrong statement therein. In such situation the comparison of the return so filed with those filed in the earlier years rather confirmed its view that some omission had occurred. There appears only a general restriction under section 57 of the Ordinance that a return cannot be revised after assessment has been framed. In 1985 PTD 549 (HC Karachi) Re: Cannon Products Ltd. and others v. ITO and others' their Lordships of the Karachi High Court held that a revised return could be filed by an assessee in terms of section 57 of the Ordinance at any time before an assessment was made even for the purpose of self assessment scheme so long as the assessee concerned qualified in terms of the scheme. The petitioner in that case was a partner of a firm M/s Achhor Associates. She filed her income tax return on 10-10-1983 declaring her income at Rs.34,828. On 1-11-1983 she revised her return and declared total income at Rs.41,447 against the assessed income in the immediate preceding year viz. 1982-83 at Rs.33;242. Her case was excluded from the purview of the self-assessment scheme and taken up for detailed scrutiny. The controversy before their Lordships of the Karachi High Court was that whether she could file revised return for availing the benefits of self-assessment scheme. Their Lordships holding as above found that she could do so. The decision in this case indicates absence of any clog on exercise of the right under section 57 of the Ordinance unless such exercise is per se contumacious. To keep check on unscrupulous revisions of returns section 57 of the Ordinance provides an inbuilt mechanism that such revisions shall be without prejudice to any liability incurred by an assessee under other provisions of the Ordinance. In such case one may refer to the provisions contained it section 118 of the Ordinance which provide for prosecution for false statement in verification. In presence of such a harsh and stringent provision, rejection of revised return cannot be justified for the reasons assigned both by the assessing officer as well as the first appellate authority. The observation contained in the impugned order that a return can only be revised to remove a bona fide mistake in the original return does not find support from the provisions of section 57.
5. In. this view of the matter, we would agree with the learned counsel for the assessee that after filing of the revised return the scope of further proceedings and inquiry could only be the declarations etc. made in the revised return and not on the basis of the original return. This having not been done and the assessing officer having continued proceedings and the scope of inquiry having remained the original return, all subsequent steps after filing of the revised return on 28-3-1994 definitely coloured the whole assessment proceedings. These are accordingly set aside alongwith the impugned order and it is directed that the case shall be remitted back to the assessing officer to base his further inquiry on the declaration/statements made in the revised return filed on 28-3-1994.
(Sd.)
NASIM SIKANDAR,
JUDICIAL MEMBER.
6. KHALID MAHMOOD (ACCOUNTANT MEMBER).--In the order recorded in the foregoing paras. the learned Judicial Member has set aside the assessment proceedings alongwith the impugned order for the reason that after revision of return by the assessee, further proceedings should have been based on the revised return and in view of the Assessing Officer's failure to do so, all steps .taken by the revenue subsequent to the filing of revised return on 28-3-1994 "coloured the whole assessment proceedings". Having given careful consideration to the argument made by my learned brother, I am however, not pursuaded by it in view of the facts and circumstances of the case enumerated below.
7. As evident from the sequence of assessment proceedings, the quantum of sales declared at Rs.28,95,000 by the assessee in the original return was found to be understated by the assessing officer. The record shows that shop No. 15 of the plaza constructed by the appellant was shown to have been sold for a sum of Rs.1,25,000 while on verification it came to the knowledge of the assessing officer that the said shop had been sold for Rs.2,62,500 as per sale agreement produced by the purchaser. Likewise, certain other discrepancies with respect to Shops Nos.6 to 9 were noted by the assessing officer which indicated that the sales disclosed were fictitious. When confronted with these inaccuracies through a written notice, the appellant filed a revised return declaring nil income on the ground that there was no transaction during the year under appeal. The counsel for the assessee pleaded before the assessing officer that shops and offices were actually sold during assessment years 1989-90 and 1990-91- and there was no sale during the year under appeal i.e. 1991-92. This was in complete contrast to the earlier position established on record that the assesee had filed nil return for assessment years 1987-88 to 1990-91 declaring that the project was not yet completed. Neither registered deeds of shops/offices to show the specific period of sale nor books of accounts were produced in support of this radically new position taken by the assessee.
8. Keeping this in view, the revised return was ignored by the assessing officer as he found the assessee' s plea of making sales during earlier assessment years and not making any transaction during the year under reference contrary to record and in conflict with appellant's owned declarations made in the preceding returns.
9. Before the first appellate authority, appellant raised the preliminary objection that since return was revised before assessment, the assessment could not be made on the basis of original return. It was contended at the first appeal stage that the assessing officer's failure to issue a notice under section 61 after the filing of revised return rendered the assessment proceedings illegal. This argument did not find favour with the first appellate authority who held that a revised return could be filed under section 57 of Income Tax Ordinance in case an omission or a wrong statement was discovered by the tax-payer in his original return. The learned first appellate authority expressed the view that the purpose of making provisions in section 57 was to enable the tax-payer to remove bona fide mistakes from the original return. Remaining unconvinced that such a mistake existed in the original return, the first appellate authority ruled that in these circumstances the issue of filing the revised return did not arise and it had been correctly rejected. Other submissions made on the merits of the case were also rejected and the assessment was thus confirmed.
10. Appearing before us, the learned counsel for the appellant reiterated that revision of return was a consequence of discovery of an omission, viz., the inaccuracy of the original declaration. Sustaining this preliminary objection, my learned brother did not go into a detailed appraisal of other submissions made by the appellant's counsel on merit. The present examination must, therefore, remain confined to the limited issue whether on the facts obtaining in the instant case the revised return filed by the appellant could be made the basis of an assessment. In order to appreciate the scope of section 57 of the Income; Tax ordinance which envisages filing of a revised return, it may be beneficial , reproduce the provision:---
"Revised return of total income.----If any person has not furnished return of total income as required by, or under, any provision of this Ordinance (hereinafter in this section referred to as 'return'), or having furnished a return, discovers any omission or wrong statement there:.. he may, without prejudice to any liability incurred by him under provision of this Ordinance or the repealed Act, furnish a returnrevised return, as the case may be, at any time before the assessment is made. "
11. Evidently, once a return has been filed the condition precedent for permitting its revision is the discovery of any omission or wrong statement made therein. The statutory language being plain, admits of only one meaning that the discovery of omission/wrong statement has to be made by the person filing the return and not by the tax authorities. Had it been otherwise and the intention of the Legislature were to give a right to the tax-payer to revise his return after a discovery even by a person other than the assessee it could have been explicitly so stated. The accepted principles of construction do not permit an interpretation that involves writing in words which are not there. (Maxwell). Same principle has been approved in CIT v. Sodra Devi (1957) 32 ITR 615 (SC) and Tarulata Shyam v. CIT (1977) 108 ITR 345 (SC) wherein it was held that the normal rule of interpretation is that the intention of Legislature is to be gathered primarily from words used by the statute.
12. This being so the proceedings of the instant case clearly, indicate that the discovery, if any, was not made by the appellant but by the Department that the sales were prima facie understated inasmuch as the information collected by the assessing officer with regard to sale of Shops Nos. 6 to 9 and No. 15 amounted to an omission or wrong statement on the face of it. In the presence of such a discrepancy, no tax law would permit a tax-payer to file a false return initially and to revise it when caught through the vigilance of tax administration. Failure to prevent such a practice would make a mockery of the basic requirement of filing, by each citizen, of a correct and complete return. Allowing total initiative to be wrested by a tax-payer through the mechanism of revising a return to remove an initial discrepancy discovered by the revenue may lead to actively promoting rather than preventing tax evasion. It may also lead to an undesirable situation where a tax-payer may never let the assessment proceedings attained finality by filing a series of revised returns.
13. The issue whether a return is permitted to be revised after detection of concealment or discrepancies by the Department has come before the superior Courts in our neighbouring jurisdiction very often. In Arunachalam Chattiar v. CIT (1931) 6 ITC 58 and late in CIT v. Badridas Ramrai (1939) 7 ITR 613, it was held that the assessee cannot be permitted to file a fesh return if he had made a false return originally. This principle was followed in all the subsequent judgments i.e. CIT v. Angara Satyam 37 ITR 230, Amjad Ali Najir Ali v. CIT (1977) 110 ITR 419, CIT v. Subramania Chattiar 197 (1977) ,110 ITR 602, Sulemanji Ganibhai v. CIT (1980) 121 ITR 373, Union Engineering Co. v. CIT (1980) 122 ITR 719, CIT v. Radhey Shyam (1980) 123 ITR 125, Muhammad Ibrahim Ajimulla v. CIT (181) 131 ITR 680, CIT v. Haji P Muhammad (1981) 132 ITR 623 and CIT v: Mahim (1984) 149 ITR 737. In all these cases revised returns were filed after concealment was detected by the revenue but it was held in each case that the second return filed by the tax-payer did not merit consideration as it could not be regarded a revised return contemplated by the relevant provision.
14. My learned brother has cited the case of Canon Products Limited v. ITO 1985 PTD 549. Respectfully, the issue is that case was whether a revised return was eligible for acceptance under the self-assessment scheme. Neither the original return was false nor the revenue had detected any concealment in the case under reference. The question for determination before the Court was not whether the revised return was valid but whether the income as revised qualified for acceptance under the self-assessment-scheme or not. The issue is totally different in the instant case. The question to be determined here is whether a revised return filed after concealment is detected by the revenue in the original return constitutes a revised return as envisaged in section 57. The principle as established in the aforementioned case may not hence be directly applicable.
15. The proposition that revision of return contemplated by section 57 of the Ordinance is not unlimited in scope derives further strength on examination with respect to the penalty provision in our tax law. The condition precedent for levy of penalty under section 111 for concealment is the evidence that a tax payer has "concealed his income or furnished inaccurate particulars of his income". Such income or. particulars thereof are disclosed in the return furnished; by a taxpayer. For the levy of penalty, two conditions are to be observed. Firstly, that a return is filed and secondly that return is false. In a case of prima facie concealment, once a revised return is accepted and made basis of further inquiry, the original return becomes functus officio. If the original return is false C and the assessee is permitted to "revise the return on discovery of concealment, he may be liable for prosecution under section 111, yet no penalty under section 111 is leviable as the return in which the concealment is discovered would not be (sic) in the field and no concealment would have been committed in the revised return which forced the basis of assessment. Thus section 111 would be rendered in effective and surplus unless the scope of section 57 was curtailed. '
16. In view of the foregoing, I am of the opinion that the second return filed by the assessing officer does not constitute "revised return" contemplated under section 57 of the Ordinance and the assessing officer was fully justified in ignoring this return and making the assessment on the basis of the original return. The preliminary objection raised by the appellant not being sustainable,' this case should be decided on its merit.
(Sd.)
(KHALID MAHMOOD),
ACCOUNTANT MEMBER.
Since a difference of opinion has arisen between us, following question is formed for resolution by a-Third Member:
"Whether the second return filed by the assessee constituted a revised return as envisaged under section 57 of the Income Tax Ordinance and the assessing officer's failure to take the due notice of it coloured the subsequent proceedings."
Accordingly, the learned Chairman is requested to make the reference under section 133(7.) of the Income Tax Ordinance.
(Sd.)
(KHALID MAHMOOD),
ACCOUNTANT MEMBER.
(Sd.)
(NASIM SIKANDAR),
JUDICIAL MEMBER
17. INAM ELAHI SHEIKH (ACCOUNTANT MEMBER).--I have been entrusted with this duty to answer the question which has arisen due to difference of opinion between the two learned Members of the Bench as indicated above.-In order to answer the above question, I have heard Mr. Abrar Hussain Naqvi, Advocate, the learned counsel for the appellant and Mr. Shahbaz Butt, the learned Legal Adviser, for the Department as assisted by Mr. Qaisder M. Yahya, the learned D.R.
18. Briefly stated, the facts are that the notices under section 56 of the Income Tax Ordinance (hereinafter called the Ordinance) were issued for the assessment years 1987-88, 1988-89, 1989-90, 1990-91 and 1991-92 in response to which the assessee filed returns on 7-12-1991. For the assessment years 1987-88 to 1990-91, the assessee did not disclose any income and the returns for these years simply stated "not completed". For the assessment year 1991-92, the assessee declared a loss of Rs.20,57,950 with a note" loss accumulated from previous years as per computation chart attached. However, the learned Legal Adviser submitted that no chart was attached to the return but a separate chart had been filed the same day showing details of shops and offices sold and un-sold. Such chart is available on the assessment record and this also shows in manuscript the total amount of sales value of shops and offices and the cost of the plaza and the admin. expenses. The assessing officer started the assessment proceedings and various notices. were issued including a notice under section 62 of the Ordinance, dated 3-3-1994. Before the issuance of such notice, dated 3-3-1994, the assessing officer made enquiries to verify the loss as declared and also he asked for sale-deeds and other information.' Some discrepancies were found in the value of sales declared -when the alleged purchasers either denied to have purchased the property or a different consideration was communicated to the assessing officer. The assessee was confronted on such discrepancies vide the notice, dated 3-3-1994. The assessing officer filed a reply to this notice through the A.R. and also revised the return showing nil income with the plea that no transaction of sales had taken place during income year relevant to the assessment year 1991-92. The assessing officer did not accept this explanation or the revised return and he made the assessment for the assessment year 1991-92 on 11-4-1994 at an income of Rs.89,95,805: as against the declared loss of Rs.20,57,950. Instructions were also issued for the issuance of a notice under section 116 of the Ordinance for the concealment of income in respect of a Shop No. 15 mentioned in the body of the assessment order. The proceedings for the assessment years 1987-88 to 1990-91 were filed on the same date. The first appellate authority maintained this treatment including the rejection of the revised return and maintaining the assessment on the basis of the original assessment. Before the Tribunal, the assessee took various pleas including the plea that the assessing officer had no power to reject the revised return. My learned brother, the Judicial Member, accepted this plea and he ordered the setting aside of the assessment in the manner indicated in his own order. In view of the setting aside of the assessment to be made afresh on the basis of the revised return, and further enquiries, the learned Judicial Member did not adjudicate the other grounds in appeal. My learned brother, the Accountant Member, however, did not agree with this decision in view of reasons stated in his order. The main reason for rejecting the revised return by the learned Accountant Member appears to be contained in para. 15 of his order. It has been observed by the learned Accountant Member that no penalty under section 111 of the Ordinance is leviable, as the return in which the concealment is discovered would not be in the field and no concealment would have been committed in the revised return. Thus, according to the learned Accountant Member, the provisions of section 111 would be. rendered ineffective unless the scope of section 57 of the Ordinance was curtailed. Thus the learned Accountant Member has held that the second return filed by the assessee did not constitute a revised return under section 57 of the Ordinance. The learned Judicial Member has relied on a case cited as 1985 PTD 549 in re: Cannon Products Limited and others v. ITO and others to hold that -the second return filed by the assessee was a revised return within the meaning of section 57 of the Ordinance. The learned Accountant Member, on the other hand, has referred a number of cases which I need not repeat immediately as the same have been enumerated in paras. 11 and 12 of his order above.
19. The learned counsel of the assessee has strongly attacked the orders of the learned. CIT (Appeals) and the learned Accountant Member firstly on the plea that the appellate authorities should have only given a finding on the reason adopted by the assessing officer for rejecting the revised return. It was-argued that the appellate authorities could not improve the ITO's reason for rejecting the revised return. However, this argument was not substantiated by any case law. The learned counsel of the assessee submitted that there were two ways to work out the income in a case like one under consideration. One of these bases was said to be annual basis and the other project completion basis. It was further submitted that the plaza was completed. in the period relevant to the assessment year 1991-92. It was further submitted by the learned counsel of the assessee that the assessee had prepared the original return by declaring the value of shops or offices whether sold or unsold. The learned counsel of the assessee further gave detail of the sales of various shops and offices to various parties. The learned counsel of the assesee further submitted that the income could not have been earned until all the shops and offices have been sold. Thus he justifies the submission of revised return which is said to be on the basis of project completion basis. It was further submitted that there were no sales in the year under consideration and there was said to be no profit or loss. It was submitted by the learned counsel that the sales had taken place in the earlier years when the assesee had filed the returns to indicate that the project was not completed. The learned counsel of the assessee further argued that the assessing officer should not have filed the proceedings for the assessment years 1987-88 to 1990-91 if he intended to assess the income on annual basis.
20. The learned counsel of the assessee strongly agitated that the assessing officer could not deny the assessee the right to revise his return for a bona fide mistake before the assessment is made. The learned counsel of the assessee further agitated that the case-law relied upon by the learned Accountant Member was not relevant to the facts of this case as all those cases related to the imposition of penalties and did not answer the question whether the assessee had aright to revise the return under a particular circumstance.
21. First of all I shall deal with the objection of the learned counsel of the assessee that the case-law relied upon by the learned Accountant Member deal with the issue of penalties imposed or concealment involving revised return and did not answer the question directly whether the assessee was entitled to revise the return whether the omission or mistake was not deliberate. This contention of the learned counsel of the assessee appears to be correct. For instance, in the case of Amjad Ali Nazir Ali v. CIT, Kanpur reported as (1977) 110 ITR 419, the following question was referred to the Allahabad High Court:---
"Whether, on the facts and in the circumstances of the case, the minimum penalty to be levied was to be determined by reference to the tax that would have been avoided if the first return submitted had been accepted or to the tax that would have been avoided if the second return submitted by the assessee had been accepted?"
In another case of CIT, Kerala-II v. K. Mahim reported as (1984) 149 ITR 737, again the issue before the Kerala High Court was of penalty and concealment of income and fact of filing of revised return. Similarly, in the case of Muhammad Ibrahim Azimullah v. CIT reported as (1981) 131 ITR 680, the Allahabad High Court dealt with the question of imposition of penalty following the filing of revised return. These are three of the cases referred to by my learned brother, the Accountant Member in paragraph 13 to come to the conclusion that the second return filed by the tax-payer did not merit consideration as it could not be regarded as a revised return contemplated by the relevant provision. The learned counsel of the assessee has objected to this conclusion as misdirected and the objection of the learned counsel of the assessee appears to be correct. It may also be mentioned here that the provision of law with regard to the filing of revised return in the Indian Income Tax Act, 1961 is somewhat different from the provision of section 57 of the Income Tax Ordinance, 1979 in Pakistan. My learned brother, the Accountant Member has already reproduced the provision of section 57 of the Ordinance in paragraph 10 above, whereas the Indian case-law refers to the provisions of section 139(5) of the Indian Income Tax Act, 1961, the relevant portion of which is reproduced below:---
"(5) If any person, having furnished a return under subsection (1) or in pursuance of a notice issued under subsection (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier "
A comparison of the above provision with the provision of section 57 of the Ordinance would show that the Indian provision of law with regard to the filing of revised return does not lay down any specific qualification with regard to the other liabilities, i.e., penalties etc., which can be deduced from the provision of section 57 of the Ordinance. The main difference is that the provision of section 57 of the Ordinance qualifies the right to file a revised return with the clause "without prejudice to any liability incurred by him under any provision of this Ordinance" and on this point I will also like to refer to the provision of section 111(1) of the Ordinance dealing with the penalty for concealment of income, etc., which reads as follows:---
"Section 111(1).---Where, in the course of any proceedings under this Ordinance, the Deputy Commissioner/the Appellate/Additional/Commissioner or the Appellate Tribunal is satisfied that any person has, either in the said proceedings or in any earlier proceedings relating to an assessment in respect of the same income year, concealed his income or furnish inaccurate particulars of such income, he or it may impose upon such person a penalty not exceeding two and a half times but in no case less than the amount of tax which the said person sought to evade by concealment of his income or furnishing of inaccurate particulars of such income, as aforesaid."
The above provision of section 111(1) of the Ordinance gives wide powers to the tax authorities and the Tribunal to levy penalties for concealment of income or furnishing of inaccurate particulars either in the said proceedings or in any earlier proceedings relating to an assessment in respect of the same assessment year. I do not find such wide power in section 271 of the Indian Income-tax Act which deals with the consequences of concealment etc. Thus in my view the apprehension of the learned Accountant Member that a penalty could not be imposed if the assessee is permitted to revise the return on discovery of concealment as expressed in paragraph 15 above. '
22. My learned brother, ,the Judicial Member, on the other hand, relied on a decision of the Karachi High Court in Re: Cannon Products Ltd. and others v. ITO and others reported as 1985 PTD 549. In one of those cases, the assessee had revised the return only to avail the Self-Assessment Scheme benefit. It was held by the Karachi High Court that the return could be revised to avail the benefit of Self-Assessment Scheme. It may be noted that the' assessee had filed two returns declaring two different amounts of income and both of them could not be correct at the same time. Thus in my considered view an assessee is entitled to file a revised return under the provision of section 57 of the Ordinance at any time before the assessment is finalized.
23. In the present case the assessee filed returns for the assessment years 1987-88 to 1990-91 indicating that the project was not completed whereas for the assessment year 1991-92 the assessee originally filed a return to declare a loss of Rs.20,57,950. The assessee declared total sales at Rs.28.95,000. A chart was filed to support the sales value. A perusal of this chart shows that the assessee had included the value of sold as well as unsold shops and offices in the said amount of Rs.28,95,000. Obviously income or loss could not be determined on unsold shops and offices. The assessee has also not shown the dates of sales of such shops and offices so as to determine the relevant income year or assessment year for profit or loss on the sale of each shop or office. This is not a case of a contractor that one proceed to determine the profit or loss on project completion basis. Thus this was a patent mistake in the return filed originally. The assessing officer, on the other hand has also proceeded on a similar basis and he has applied an estimated sale rate to the total covered area for shops as well as offices without considering the fact that some of these remained unsold or were not sold during the year under consideration. Thus this assessment order could also not be upheld as income of every income year/assessment year has to be determined separately except in the case of a contractor when an option is exercised to determine income on project-completion basis. Even in such cases j an assessment is made on a yearly basis and final adjustment is made in the year in which the project is completed. Thus this assessment order itself was not made in accordance with the provision of law. Thus in the facts and circumstances of the case the inescapable conclusion is that the assessee was entitled to revise the return and the assessment made by the assessing officer on the basis of the original return had to be set aside.
24. I do not find any force in the arguments of the learned counsel of the assessee that the assessment had to be made on project-completion basis. The learned counsel of the assessee has also taken a plea that there was no sale during the year. This contention is contrary to the claim of the learned counsel taken before the Division Bench on 13-2-1995 as recorded in paragraph 3 of this order above, whereby it was claimed that a Room No. 121 had been sold for Rs.85,000 during the year under consideration. I also do not find any force in the contention of the learned counsel of the assessee that the appellate authorities could not improve the ITO's reasoning for rejecting the revised return.
25. In view of the above discussion my answer to the question referred to me by the Hon'ble Division Bench is with affirmative. However, I would like to point out that even the second return may not be a correct return as the assessee has itself admitted the sale of a room. Hence, I would agree with my learned brother, the Judicial Member and order setting aside of the assessment for further enquiries. The question is so answered.
M.B.A. /207/Trib. Order accordingly.