In respect of the same concealment, two penalties cannot be levied under the Income-tax Act, 1922.

Judgement

SARKAR, J. : This is an appeal against a judgment of the High Court at Bombay given on a case stated to it under the Income-tax Act and answering in the affirmative the following question :

"Whether the levy of Rs. 68,501/- as penalty for concealment in the original return for the assessment year 1951-52 is legal ?"

2. The question arose in the assessment of the appellant, a firm for the year 1951-52 in respect of which the accounting year was the calendar year 1950. The assessee carried on business at Surat. It had a branch at Bangkok to which it exported cloth from India. The branch also made purchases locally and sold them. During the last world war the business at Bangkok had been in abeyance but it was restarted after the termination of the hostilities.

3. In its return for the assessment year 1949-50 the assessee did not include any profit of the Bangkok branch but stated that the books of account of the Bangkok branch were not available and that therefore its profit might now be assessed on an estimate basis subject to action under S. 34 or 35 on production of statement of account. The assessment was thereupon made on the basis of profit as 5 per cent on the export to Bangkok branch appearing in the Surat books.

4. For the year 1950-51 again there was no reference to the Bangkok branch in the return and a similar estimate was made for this year also. For the year 1951-52 also the Bangkok business profits were not shown but on January 11, 1952, the Income-tax Officer issued a notice to the assessee under S. 22(4) of the Act to produce the profits and loss account and balance-sheet with the relevant books. The assessee excused itself by alleging on January 29, 1952 that the books were at Bangkok and the profit and loss account and the balance-sheet could not be drawn up unless its partner, Hatimbhia A. Malbary, went there personally and there was no certainty as to when he would go there and promising that in the following year these accounts for the calendar year 1950 would be produced. Thereupon the Income-tax Officer made an estimate of the sales of the Bangkok branch at Rs. 7,50,000/- and of the net profits at 5 per cent thereon, amounting to Rs. 37,500/-. This assessment was made on January 31, 1952. On the same day he issued a notice under S. 28(3) of the Act requiring the assessee to show cause why a penalty under S. 28(1) (c) for concealment of the particulars of the income of 1950 should not be levied. The assessee was heard on this notice and on January 22, 1954, the Income-tax Officer imposed a penalty of Rs.20,000/- on it as its explanation was not acceptable.

5. In the meantime assessment proceedings for the year 1952-53 had commenced and this year also the assessee adopted a similar attitude as in the previous years. The Income-tax Officer was however insistent and, therefore, after various adjournments, the assessee had on August 17, 1953 to produce the accounts and books of the Bangkok branch. It appeared from these books that in the calendar year 1950 the assessee had made a profit of Rs.1,25,520/-. The Income-tax Officer thereupon commenced proceedings under S. 34 of the Act against the assessee in respect of the assessment year 1951-52 and gave notice to the assessee to submit a return. The assessee then submitted a return stating therein correctly the profits for the calendar year 1950. The Income-tax Officer completed that assessment after directing the issue of a further notice under S. 28 (3) on April 8, 1954 requiring the assessee to show cause why penalty should not be levied for deliberately concealing the particulars of his income of 1950. Pursuant to this notice the Income-tax Officer passed another order on February 28, 1957 imposing a penalty of Rs.68,501/-. So there were two orders of penalty.

6. The assessee appealed to the Appellate Assistant Commissioner against both the aforesaid orders of penalty but the appeals were rejected. There is no dispute as to the assessment of the income. T