JUDGMENT Sahai, J.
1. In pursuance of an order passed by this court, the Income-tax Appellate Tribunal, Allahabad Bench, has referred the following question of law for the opinion of this court:
" 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in applying the provisions of Section 271(1)(c) of the Act ?
2. Whether, on the facts and in the circumstances of the case, merely because a revised return and thereafter another revised return was filed by the applicant voluntarily disclosing the profit earned by the applicant amounting to Rs. 61,460 and Rs. 51,810 there was a concealment of income under Section 271(l)(c) of the Act ?
3. Whether there was any material for the Tribunal to hold that the assessee must have known from the action of the officer in December, 1968, that he is making enquiries about the sale of import licence in M/s. Damo-dar Das & Company ? "
2. Facts on which these questions of law have been founded are that penalty proceedings, under Section 271(l)(c) of I.T. Act, were initiated against the assessee, a manufacturer of carpets, maintaining its accounts from Diwali to Diwali, for the non-disclosure of Rs. 61,460, Rs, 50,810 and Rs. 3,200 in its return filed under Section 139(l) for the assessment year 1968-69, received from Damodar Das and Co., Bombay, M/s. C. A. Agarwal Ltd., Bombay, and Amrit Silk Store, Bombay, respectively, as incentive profit for sale of import licence. The sum of Rs. 61,460 was recorded in the balance-sheet of 1966-67. The lTO, therefore, asked the assessee to supply details of the transaction and particulars of the company at Bombay. But as the assessee avoided and took adjournments the ITO took action on his own under Section 131 and sent summons to the company at Bombay. The company informed that goods as per import entitlements were delivered to them at Bombay as far back as September 2, 1966, and they, after obtaining the bill dated March 20, 1967, from the assessee, closed the transaction in the last week of March, 1967. They also sent a photostat copy of the original bill signed by one of the partners submitted on August 20, 1967, for Rs. 17,20,719-10 resulting in a profit of Rs. 61,460. Being armed with this material the ITO issued a written requisition, under registered cover, on November 25, 1969, asking the assessee to explain various transactions of incentive profit which was returned with an endorsement, "refused". Soon after on 9th December, 1969, the assessee filed a revised return under Section 139(5) for 1968-69, and a return under Section 139(7) for 1969-70 also, including this amount as receipt of that year as well. It appears that the assessee was not aware till then of the detailed information obtained by the ITO. Therefore, it was taking all possible chances to make it appear that its conduct was bona fide and the mistake was inadvertent. After assessment, when penalty proceedings started, the assessee pleaded mistake and lack of knowledge of Hindi and Mahajani. The circumsances were, however, so glaring that the ITO did not see any merit in the explanation and levied the penalty. In appeal, the IAC agreed with the finding of the ITO and held that the conduct of the assessee was not clean. In further appeal, the Tribunal upheld the conclusions as, from the making of the inquiry since 1968 about Damodar Das and Co., presence of the assessees' agent in Income-tax Office on November 25, 1969, filing of revised return immediately thereafter, disclosing the same income in 1969-70, then excluding it by filing revised return and submission of original bill under signature of one of the partners on which profit was not negligible, it was obvious that assessee was concealing its income.
3. The learned counsel for the assessee argued that the return filed under Section 139(1) was supplanted by a revised return and as it was a statutory right the question of penalty did not arise. The argument goes a little too far. Section 139(1) makes it obligatory on an assessee whose income exceeds the maximum, which is not chargeable to income-tax, to file a return of its total income. In case of discovery or wrong statement it may file a revised return under Section 139(5), the acceptance of which depends on the fulfilment of these essentials. It is not the voluntary disclosure but the disclosure in the circumstances mentioned in the section which enures to the benefit of the assessee as a disclosure may be voluntary, yet dishonest. Even without this sub-section there could have been no bar for an honest disclosure. This sub-section only gives statutory recognition to what was otherwise inherent in it. But if the disclosure is to;cover up or was in the knowledge of the assessee or made in bad faith then it does not come within the ambit of Section 139(5), nor can the assessee claim any benefit on it. The original and revised return become one if they are in accordance with Section 139(1) and (5) but not otherwise. The guilt of non-disclosure is not washed off by the admission of confession. The mere filing of a revised return, therefore, does not rule out the applicability of Section 271. In Amjad Ali NazirAli v. CIT [1977] 110 ITR 419, it was held by a Division Bench of this court (p. 426):
"In cases where an assessee has deliberately omitted particulars of his income or made wrong statement in the return, the revised return filed by him would be outside the pale of Section 139(5) of the Act, and it would not be a revised return as contemplated by the Act. Once this position is reached the question of considering the revised return for the purposes of penalty would hardly arise, for, in the eye of law, there would be no revised-return as contemplated by Section 139(5). Such a revised return cannot supplant the original return and, for the purposes of penalty, it will be only the original return that will have to be looked into."
4. It was then argued that on the findings recorded by the Tribunal no offence under Section 271(l)(c) was made out. According to the learned counsel, even if the explanation of the assessee was disbelieved it was not sufficient to fasten the guilt on it particularly when the department did not lead any evidence. In other words, he relied on the well-known principle laid down by the Supreme Court in CIT v. Anwar Ali [1970] 76 ITR 696. But after this decision was given, an Explanation was added to Section 271(1 Xc) by the Finance Act, 1964 which provided that if the total income returned by any person was less then eighty per cent. (of the assessed income), the burden to prove that (the difference in the) income did not arise from any fraud or any gross or wilful neglect was on the assessee; else it would be deemed to be his concealed income. According to the learned counsel, this Explanation does not apply as the difference (sic) between the returned income and the assessed income is not less than eighty per cent. if the voluntary disclosures made in the revised returns are taken into account. The argument has no merit in it. The difference of eighty per cent. of the assessed income has to be from the total income returned (sic). The words "total income" referred to in the Explanation to Section 271(l)(c) refers to the "total income" disclosed by the assessee in its return filed under Section 139(l). Whatever is disclosed subsequently by way of filing a revised return may relate back and become part of total income provided it is covered in Sub-section (5). Itn a case where the disclosure is not bona fide, although not necessarily fraudulent or wilful, the difference of eighty per cent. has to be taken with respect to the return filed under Section 139(1).
5. The learned counsel then attempted to argue that the finding of the Tribunal was vitiated as it relied on inadmissible evidence. According to him, the only presumption on refusal of the requisition dated November 25, 1969, that arose was that a registered letter came from the I.T. Dept., but it could not be stretched to mean that the assessee shall be deemed to have known its contents as well. The argument need not be examined as the Tribunal did not draw any inference that the assessee must have known about its contents. It only held that whether the requisition was served or not was immaterial, as assessee must have known that inquiries regarding the transaction with the company at Bombay were going on since 1968. And it cannot be said that this inference was unreasonable or unjustified.
6. As none of the submissions advanced by the learned counsel for the assessee have been found to have any merit, the finding of the Tribunal that the assessee was guilty of concealment of Rs. 61,460 appears to be well founded. In fact, the plea of mistake in the circumstances of the case, was so flimsy that no reasonable inference could be drawn except the one arrived at by the Tribunal that it was not a case of discovery of a mistake after the filing of the return but of the deliberate omission of a fact which was in the knowledge of the assessee which it attempted to conceal with a view to evade payment of tax till the end and came out with the disclosure only when it became sure that its game was up.
7. In respect of Rs. 50,810 also the assessee filed a revised return on 6th February, 1970. But for this amount there was no evidence nor was it the subject-matter of the inquiry by the ITO in the written requisition sent to the assessee on November 25, 1969. The Tribunal, however, upheld the penalty on the finding:
"The second return showing a further sum of Rs. 50,810 as profit has again been explained as mistake. Here also we are unable to agree with this contention. It would only show that when the assessee filed the first revised return it had not taken care to go through the other transaction."
8. It was argued by the learned counsel for the assessee that, as the finding is based on no evidence, the order of the Tribunal eannot be maintained. This was objected to by the learned counsel for the department and relying on CIT v. Koirika Venkataswamy and Sons [1971] 79 ITR 499 (SC), it was argued that no question having been called, nor the Tribunal having submitted any statement on it, the learned counsel could not challenge the finding on this ground. The objection is without substance. Facts on which the decision was rendered by the Supreme Court were so different from the facts in the present case that the learned counsel had to admit that he was relying only on a sentence which runs as under (p. 501):
" The High Court cannot obviously be satisfied that the decision of the Tribunal in not submitting a statement on a question is incorrect when the Tribunal was never asked to submit a statement of case on that question."
9. The ratio of a decision shorn of its context cannot be appreciated. The Supreme Court in that decision did not permit an entirely new question to be raised. In this case, the assessee had raised the question, in the application filed under Section 256(1), that the finding was based on conjectures and surmises. A question that the finding is based on no material is not different from the question that the finding is based on conjectures and surmises. All the same the contention of the assessee cannot be accepted as the inference drawn from the facts or a finding based on circumstances is also a finding of fact based on the material. The inference drawn by the Tribunal that the assessee was not careful when it filed its first return cannot be considered to be a finding based on no evidence.
10. Even then the question is whether this finding can form a foundation for the guilt of concealment, by virtue of the Explanation added by the Finance Act of 1964, which bifurcates assessees into two classes and departing from the normal procedure places the burden to prove that the concealment was not due to fraud or gross or wilful conduct, on the assessee if the difference (sic) between the returned and the assessed income is less than eighty per cent. As the nature of the burden is negative and it is part of a penal provision in a taxing statute it has to be construed strictly. The Act is silent on the manner and method of discharge of this burden although it uses the word "proves". According to the Evidence Act, a fact is said to be proved when after considering the matter before it the court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. It is true that the Evidence Act does not apply to the I.T. Act, but in the absence of anything contrary, it is reasonable to accept the test of a reasonable man. A fact, therefore, can be said to be proved if, on the evidence led, a prudent man would assume its existence. While considering the nature of the burden of proof contemplated by the Explanation, a Division Bench of the Gujarat High Court in CIT v. S. P. Bhatt [1974] 97 ITR 440 at p. 445, observed :
" Now this burden is not of the same nature as the burden which rests on the prosecution in a criminal case where the prosecution has to establish the guilt of the accused beyond reasonable doubt nor it is of the same nature as the burden which lies upon the revenue in establishing that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. It is a burden akin to that in a civil case where the determination is made on preponderance of probabilities. It is also not necessary that any positive material should be produced by the assessee in order to discharge this burden which rests on him."
11. The question then is when can the assessee be said to have failed to discharge the burden giving rise to the guilt of concealment. The dictionary meaning of "concealment" is to hide, to keep secret. The Explanation does not alter or extend this meaning. It only assumes it to exist if the assessee fails to prove that disclosure (sic) was not due to fraud or wilful conduct. Between fraud and innocence, carefulness and gross or wilful conduct there may be numerous stages. One may not be innocent, yet he may not be a fraud. An action may not be careful but for that reason only it cannot be considered gross or wilful. The assessee may lead evidence in penalty proceedings or may rely on circumstances on record to show that the disclosure was not due to fraud or wilful conduct. And the Tribunal may find as has been found in this case that the assessee was not careful. Can it be said that the assessee was guilty of concealment. The answer can be in the negative only, because if non-disclosure was due to not being careful it was obviously not due to fraud or wilful conduct. The argument of Sri Gulati that once the explanation of the assessee that the non-disclosure was due to a mistake was rejected the Explanation applied, cannot be accepted. Even after the rejection of the explanation the authorities may find that the conduct of the assessee could not be called fraudulent or wilful. Reliance was placed by Sri Gulati on Mool Chand Mahesh Chand v. CIT [1978] 115 ITR 1, a Division Bench decision of this court, where it was held that the disclosure made under a threat of exposure was not voluntary. The decision is not helpful. Disclosure under threat of pressure implies knowledge. It cannot be equated with disclosure which, with more alertness, an assessee could have had made. The one assumes knowledge, the other negatives it. The difference between "has" or "could have had" is vital and significant. Knowing something to exist and disclosing it only when a fear of detection is there may amount to fraud or gross or wilful conduct. But a fact of which knowledge could have been had cannot be fraudulent or gross or wilful as the primary ingredient of intention of these well-established strong concepts in law is missing.
12. The proof that disclosure was not due to care amounts to saying that it was not due to fraud or gross or wilful conduct. As the assessee succeeded in establishing that the disclosure of Rs. 50,810 could have been given in the first revised return if it had taken care, the burden placed on it by the Explanation stood discharged and it could not be said that assessee failed to prove that disclosure (sic) was not due to fraud or gross or wilful conduct. In this view no presumption could be raised and the assessee could not be deemed to be guilty of concealment. The order of the Tribunal imposing a penalty for the disclosure (sic) of Rs. 50,810 cannot be upheld,
13. As regards the third amount of Rs. 3,200 from the frame of question No. 2 it appears that the assessee did not press or the Bench (of the ITAT) did not agree for any question being called on it. Further, this amount was included in the requisition dated November 25, 1969, and it was not disclosed either in the first or the second revised return. The Tribunal further found that the facts of this item were identical to the first. In either case, the finding of the Tribunal that the assessee was guilty of concealment appears to be well founded and the finding having not been challenged specifically, it no longer survives for consideration.
14. In the result, the reference is decided by saying that the Tribunal was justified in applying the provisions of Section 271(l)(c) in respect of the disclosure made of Rs. 61,460 in the first revised return.
15. That the assessee discharged the burden placed on it by the Explanation to Section 271(l)(c) in respect of Rs. 50,810 disclosed by the second revised return and, therefore, no penalty was leviable under Section 271(1)(c). The parties shall bear their own costs.