Deliberate concealment of income does not entitle an assessee to claim the benefit of submitting a revised return under Section 22(3) of the Income Tax Act.

Horace Owen Compton Beasley, Kt., C.J.

1. The Commissioner of Income Tax has of his own motion referred to us the following question Whether on the facts of this case the return submitted on the 7th January, 1929, should have been treated as a revised return covered by the provisions of Section 22(3) of the Income Tax Act.

2. The assessee made a return of his income on the 22nd August, 1928. Unfortunately that return was incorrect, not with regard to a small amount but to the extent of Rs. 34,327. The Income Tax. Officer has found, and his finding has been upheld by the Assistant Commissioner and the Commissioner of Income Tax, that the omission of that sum was deliberate. We take that to mean that the assessee knew when he made his return that it was false. After the assessee had made that return, the Income Tax Officer, whilst examining some other accounts, made certain discoveries and in the beginning of January, 1929, he appeared to be on the point of discovering this deliberate and fraudulent omission of the assessee. Faced with this impending discovery the assessee put in a revised return on the 7th January, 1929, under Section 22(3) of the Indian Income Tax Act which reads as follows:

If any person has not furnished a return within the time allowed by or under Sub-section (1) or Sub-section (2), or having furnished a return under either of those sub-sections, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made, and any return so made shall be deemed to be a return made in due time under this section.

3. The Income Tax Officer assessed the assessee to Income Tax on his* revised return but at the same time inflicted on him a penalty of Rs. 2,000 under Section 28 of the Act owing to the concealment of income. It is argued here that the assessee discovered on the 7th January, 1929, that his previous return was an inaccurate one and that he was, therefore, entitled to claim the benefit of Section 22(3) and make a revised return and as that has been accepted no penalty can be inflicted upon him for having concealed his income. That certainly is a correct statement of what an assessee is entitled to do, if he makes a bona fide discovery that he has made a previous incorrect return but it certainly does not apply to the facts of this case which show clearly that the previous return was deliberately dishonestly made. It is seriously argued that, notwithstanding that fact, the assessee is still enabled to put in a return correcting his former inaccurate one and that he is to be absolved from liability to have any penalty inflicted upon him. That, it seems to me, is to put a premium on dishonesty and nowhere in the Income Tax Act do we find any provision which does anything of the kind. The contention that this was a discovery within the meaning of Section 22(3) is of course futile. As the Income Tax Commissioner points out in his order of reference the assessee did not discover on that day that he had made an incorrect return because at the time when he made his previous return he knew it was incorrect and he could not at any subsequent time have discovered something which he knew at an earlier time. Under these circumstances, the Income Tax authorities were perfectly correct and writhin their rights in inflicting the penalty upon the assessee. The answer to this question must, therefore, be that, although the later return may, for the purposes of assessability to Income Tax, be treated as a revised return under Section 22(3), the Income Tax authorities are entitled to look at the previous incorrect return and are under Section 28 entitled to inflict a penalty upon the person who has made it. Costs to the Commissioner Rs. 250.

Kamesam, J.

4. I agree.

Cornish, J.

5. I agree.