Desai, J.:— The question which arises for our determination on this reference is as under:

“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 assessee firm is carrying on business in cloth at Surat and in the course of its business, it has been exporting cloth to its branch at Bangkok in Thailand. During war years, the business at Bangkok had been suspended but was restarted some time in June, 1948, after the assessee obtained export licence. The head office at Surat charged a commission of about 2 per cent. which was loaded on to the price shown in the invoices relating to the export of goods to the branch at Bangkok. That amount of 2 per cent. was shown by the assessee in its profit and loss account. The exports so accounted by the assessee in the income-tax proceedings relating to the previous years 1948, 1949 and 1950 were as under:

Previous year Calendar year Assessment year Exports Commission added 1948 1949–50 2,00,000 (Approx.) Rs. 7,569 1949 1950–51 4,88,086 Rs. 18,527 1950 1951–52 7,50,000 (Approx.) Rs. 23,082

3. In its return for the assessment year 1949–50 the assessee did not include any profit of the Bangkok branch but made a declaration on the return filed by it as under:

“The books of account of the Bangkok branch are not available at present. I have no objection in case the profits earned there are estimated subject to action under section 34 or 35 on production of statement of accounts.”

4. The Income-tax Officer completed the assessment estimating the profits of the branch at 5% on the prices shown in the invoices. For the assessment year 1950–1951 (C.Y 1949) there was no reference to the Bangkok business in the return filed by the assessee. The Income-tax Officer did not accede to the plea of the assessee that the profits at Bangkok could not exceed 2 per cent. of the export value of the goods and estimated the profits once again on the basis of 5 per cent. of the export price of those goods. In respect of the assessment year 1951–52 (C.Y 1950) also the assessee did not show the Bangkok business nor made any reference to the same in its return. That return was filed on 23rd August, 1951. Pending the assessment proceedings the assessee wrote to the Income-tax Officer on 15th December, 1951, as follows:

“M/s. N.A Malbary and Bros has a branch at Bangkok. These account books are kept in Siamese language. So they are not called for here. The goods sent from here are sold there. Besides, purchases made there locally amount to about 15,000 tickets. The branch had been in existence since the past 80 years. It was closed down during the war. After the war, the business was resumed on a small scale. Its statements of profit and loss accounts are not called for here. To my impression, the branch earns profit at about 3% on sales there.”

5. It is clear from the statement of the case that the letter was written on 15th December, 1951, and was not sent along with the return, although Mr. Kolah has relied on what is stated by the Income-tax Officer in his order imposing the penalty of Rs. 68,501 that “the income from the Bangkok branch was not disclosed at all though a letter in vernacular was filed with the return stating that…” Obviously this was a mistake. We may also mention that the statement of the case is an agreed statement. This time the Income-tax Officer does not appear to have been satisfied with the modus operandi of the assessee firm and issued a notice on the assessee firm under section 22(4) to produce the profit and loss account and balance sheet with the relevant books. The assessee firm wrote to the Income-tax Officer as under:

“Bangkok branch books remained there. The method of accounting is such that profit and loss account and balance sheet cannot be drawn up. But it can be done if I go there personally. It is not certain when I shall go there. So, I regret, I cannot produce statement of profit and loss account and balance sheet and our case may be disposed of without them. Next year, I shall produce the statements of profit and loss accounts and balance sheet for C.Y 1950 and C.Y 1951 together for our branch there.”

6. The Income-tax Officer thereupon estimated the sales of calendar year 1950 at Rs. 7 ½ lakhs and arrived at the figure of Rs. 37,500 as estimated profits. At the same time, he also issued a notice under section 28(3) dated 31st January, 1952, requiring the assessee to show cause why a penalty under section 28(1)(c) for concealment of particulars should not be levied. In respect of the assessment year 1952–53 (C.Y 1951) the assessee firm adopted the same attitude but the Income-tax Officer persisted in production of the profit and loss account and books of the company which were eventually produced by the assessee firm and showed the following eloquent position:

Calendar year Assessment year Turnover Net Profit 1949 1950–51 Rs. 8,23,050 Rs. 59,232 1950 1951–52 Rs. 8,21,935 Rs. 1,25,520

7. With that information before him the Income-tax Officer commenced proceedings under section 34 for the assessment year 1950–51. The assessee firm made its return as required by that section, in which it showed the correct profits at Rs. 1,25,520. The Income-tax Officer completed the assessment after directing an issue of a further notice under section 28(3). That notice is dated 8th April, 1954. The position, therefore, at this stage was that two notices under section 28(3) had been issued on the assessee firm.

8. In respect of the first notice the reply of the assessee was that there was no concealment as the return was made in accordance with the past practice. By past practice, the assessee meant that the books of account were at Bangkok and were not available at the time of assessment. It was also part of his reply that the correct income had been declared in the return in the section 34 proceedings. Its reply to the second notice was inter alia as under:

“If the proceedings for penalty are sought to be initiated in relation to proceedings under section 34, the failure to make the return or concealment or other cause should have occurred in the course of the very proceedings under section 34. The default or the concealment at the original assessment, if any, will not afford any grounds for taking action. The expression ‘in the course of proceedings’ means the course of the proceedings which terminated the assessment. The proceedings under section 23 are different and separate from the proceedings under section 34 each of them being an independent one.”

9. If the Income-tax Officer in the first assessment was aware of the infraction or infringement entailing a penalty, but did not take steps to levy the penalty, the Income-tax Officer on the second occasion would have no jurisdiction.”

10. The Income-tax Officer held that there was concealment of particulars and imposed a penalty of Rs. 20,000 under the first penalty notice. He also imposed a penalty of Rs. 68,501 under the second penalty notice. The assessee appealed to the Appellate Assistant Commissioner who upheld the decision of the Income-tax Officer.

11. The matter was carried by the assessee firm to the Tribunal in two appeals filed against the two orders levying penalties of Rs. 20,000 and Rs. 68,501. The Tribunal allowed the appeal which related to the penalty of Rs. 20,000 and dismissed the other appeal with the result that the order levying the penalty of Rs. 68,501 was upheld. The material and relevant part of the order of the Tribunal is as under:

“Now coming to the two penalties imposed, it is indeed difficult to understand the action of the department, in splitting up one offence into two proceedings. So far as the levy on the basis of the 23(3) assessment is concerned, it appears to have no basis as till that stage, the department had not succeeded in establishing and bringing home any guilt. It was still in the region of estimate. Omission to refer to the Bangkok business as the only basis for such a levy is not only technical but open to serious argument in the unsatisfactory manner the assessment had been completed in the past. The levy of Rs. 20,000 therefore has to be remitted in full.

The levy of Rs. 68,501 is entirely different. With the definite knowledge that the Income-tax Officer had obtained that the profit for the year was Rs. 1,25,520, he has clearly proved guilt of concealment against the assessee; it was not declared by the assessee nor was a reference thereto made in the return with a request for proper ascertainment in due course. It is clear that the assessee had hoped for the best, but had been found out. It can be no defence for the assessee that it had faithfully shown this in the section 34 return; it is all the same true and cannot be disputed that it was not in the original return and it is this return that is material for penalty proceedings. There is abundant legal authority for this proposition. The quantum of the penalty is equal to the tax sought to be avoided. The offence proved to the hilt against the assessee is indeed grave and there are no extenuating circumstances. The penalty is not at all excessive and accordingly confirmed.

The argument that by the imposition of the first penalty, the assessee's liability under section 28 is discharged and the second impost accordingly void need not be considered any further as the first impost has been cancelled above. In our opinion, as stated above, there must have been only one levy under section 28(1)(c). If the department wanted a separate penalty at the earlier 23(3) assessment stage, it must have been under section 28(1)(b) for failure to produce the books or accounts of the Bangkok branch after a specific notice under section 23(2) or 22(4), which it is, however, not the case here.”

12. It will be convenient to set out a few dates and facts necessary for the appreciation of the arguments urged before us. The original assessment order was made on 31st January, 1952, and the first penalty notice was issued on 31st January, 1952, that is, on the same day. The first order levying penalty of Rs. 20,000 was made on 22nd January, 1954. The proceedings under section 34 were initiated on 23rd January, 1954, and the second penalty notice was issued on 14th April 1954. The proceedings under section 34 were completed on 15th April, 1954. One more date which requires to be stated here is that it was on 17th August, 1953, that the assessee produced a statement of profit and loss account and balance sheet for the calendar year 1950. We have already mentioned that the net profit for that year as transpired from that statement was Rs. 1,25,520.

13. The argument urged before the Tribunal on behalf of the assessee was that there was no basis whatever for levying the first penalty, because the department had not succeeded in establishing and bringing home any guilt to the assessee. That was obviously on the footing that when the assessment order was made on 31st January, 1952, and when the first penalty notice was issued on the same day, there was no material whatever before the Income-tax Officer even indicative of any concealment of any particulars. The Tribunal found in both the appeals that the material on record was sufficient to establish concealment of particulars from the original return. It accepted the contention relating to the penalty of Rs. 20,000 on grounds stated by it in its order, a part of which we have set out above. The Tribunal, however, agreed that the position regarding the levy of Rs. 68,501 was entirely different, as the Income-tax Officer had definite knowledge when he dealt with the second penalty notice that there was proof of concealment of the particulars relating to the profits at Bangkok. The argument urged before the Tribunal in respect of the penalty of Rs. 68,501 was that by the imposition of the first penalty, the assessee's liability under section 28 became discharged and therefore the second penalty imposed on the assessee was void and there was no question of considering any further that aspect of the matter. The suggestion was that a penalty could be imposed under section 28(1)(c) only once in respect of concealment of all the particulars of his income by an assessee. That argument did not find favour with the Tribunal and in our opinion rightly.

14. It has been argued before us by Mr. Kolah, learned counsel for the assessee, that there was no concealment of income and no deliberate furnishing of any inaccurate particulars in respect of either of the penalty notices. That obviously is a finding of fact and we do not see how Mr. Kolah can ask us to sit in appeal over any conclusion of facts reached by the Tribunal. Then, it is said that as to the second notice there was no dispute that in the return in the section 34 proceedings the income had been correctly stated and, as to the first notice, the Tribunal has found as a fact that the department had not succeeded “in establishing and bringing home any guilt.” The sequitor of this, it has been urged, is that the levy of penalties in both cases was void and illegal. Then, it has been argued that the Income-tax Officer had no jurisdiction to levy the penalty of Rs. 68,501 because he had already levied a penalty of Rs. 20,000 in respect of the same assessment year 1951–52. It has also been urged that the Income-tax Officer had no power to levy two penalties on the same facts. We agree that two penalties cannot be levied in respect of identical facts. At first blush it may seem that the facts on which the two penalties were levied were the same. But, when the facts are scrutinised and analysed, it does emerge that it was not on the same facts that the two penalties were imposed. It will be seen that the original assessment, so far as it touched profits in Bangkok, was solely on the basis of an estimate. No statement of the income at Bangkok and no facts relating to that business whatever were disclosed to the Income-tax Officer; nor were any books of account produced before him. The only alternative for the Income-tax Officer in those circumstances was to arrive at an estimate of the profits on such materials as were placed before him by the assessee firm and if he also wanted to levy any penalty, he had to do so only on the footing of those facts and that estimate. That was precisely what was done by the Income-tax Officer on 31st January, 1952. It will bear repetition to mention that it was only when the Income-tax Officer was dealing with the assessment year 1952–53 (C.Y 1951) that the books of account of the Bangkok business were produced before him and it was only when that evidence was before him that he found that the net profits for the assessment year 1951–52 (C.Y 1950) was Rs. 1,25,520. It was only at that stage that he came to know that the assessee had concealed the particulars of his income and deliberately furnished inaccurate particulars of his income at the time of the original assessment which had been made only on an estimate on such date as was supplied by the assessee.

15. It has been strenuously urged before us by Mr. Kolah that the Income-tax Officer had knowledge of all the relevant facts and particularly those gathered from the books of account of the Bangkok business and the statement of profits and losses which were produced before him on 17th August, 1953. This, it has been said, was before the order levying the first penalty of Rs. 20,000 was passed. The argument has run that it was on identical facts that the second penalty was imposed on the assessee. The argument in our opinion is ill-founded. The crucial date is not 22nd January, 1954, on which date the first order imposing the first penalty was passed but 31st January, 1952, on which the original order of assessment was made and on which date the first penalty notice was issued. We have to particularly bear in mind this date, 31st January, 1952, since the knowledge which the Income-tax Officer had at that stage must—even on Mr. Kolah's argument relating to knowledge being an important factor in this case—have bearing on the case. Let us see what knowledge, if any, the Income-tax Officer had on 31st January, 1952. The assessee had addressed to the Income-tax Officer a letter dated 15th December, 1951, and the Income-tax Officer had asked the assessee specifically by a notice under section 22(4) to produce the profit and loss account and the balance sheet along with the relevant books of the firm, but the assessee had pleaded the excuse that the books of the Bangkok branch had remained at Bangkok and the assessee firm was also unable to produce any statement of profit and loss account and balance sheet. The Income-tax Officer was in express terms asked to deal with the case without reference to the same, and an assurance was given to him that in the next year the assessee would produce statements of profit and loss account and balance sheet for the C.Y 1950 and 1951. It was under those circumstances that the Income-tax Officer estimated the sales of the C.Y 1950 at Rs. 7 ½ lakhs and the net profits at 5% and included Rs. 37,500 in the assessment and at the same time issued the notice under section 28(3). In the proceedings that ensued under that penalty notice, the Income-tax Officer was not in law entitled to take into consideration any facts that subsequently transpired. He had acted on information about the assessee's inability to produce the accounts in Bombay and there was nothing in that information on which any penalty could have been lawfully imposed. It was on this ground which appears to have been strongly urged before the Tribunal that the Tribunal reached the conclusion that the department had not succeeded “in establishing and bringing home any guilt. It was still in the region of estimate.”

16. Then, when we turn to examine the facts relating to the imposition of the penalty of Rs. 68,501 we find that the picture before the Income-tax Officer was totally different. By that time, he had before him the very material data gathered from the account books of the Bangkok business which had been produced before him in the course of the assessment proceedings for the year 1952–53 (C.Y 1951). It is on these lines that Mr. Joshi, learned counsel for the revenue, has presented his arguments before us and, in our opinion, there is considerable force in the same. Mr. Joshi has also stressed that the original assessment was only on the basis of an estimate. We agree that this is a material factor. For all these reasons it is impossible to accede to Mr. Kolah's contention that there was no new fact or new data on which the second penalty could have been imposed. We have already pointed out that for the present purpose it is not the date on which the order imposing the first penalty was passed that is to be regarded but the material date is the date on which the assessment order was made and the first penalty notice was issued. The facts which we have already summarised clearly go to establish that the basis for the two notices was not the same. We may point out that the quantum of any penalty to be imposed under section 28 has to be in a sum not exceeding 1/12 times the amount of income-tax and super-tax payable by the assessee and that amount can only be the amount of tax which has been assessed for that particular year. Therefore, the penalty that could be imposed in case of an assessment on the basis of an estimated income could not be more than Rs. 20,000, whereas in case of the second penalty, the position was quite different. The amount of income on which the assessment was to be levied was found as large as Rs. 1,25,520. Mr. Kolah has drawn our attention to some decisions. They do not have any particular bearing on the question which we are called upon to determine and it is not necessary to examine those cases. It will suffice if we only mention those citations: Vadilal Ichachand v. Commissioner of Income-tax [1957] 32 I.T.R 569 Bom.; Dayabhai Girdharibhai v. Commissioner of Income-tax [1957] 32 I.T.R 677 Bom..; Mayaram Durga-prasad v. Commissioner of Income-tax 1931 5 I.T.C 471 All..; Govindarajulu Iyer v. Commissioner of Income-tax [1948] 16 I.T.R 391 Mad... There are some general observations in the last mentioned case, but Mr. Kolah has not relied on the same and we need not burden this judgment with any discussion of the proposition considered there.

17. There remains to be mentioned one more argument of Mr. Joshi and it is this: Counsel for the revenue has urged that the contention urged by Mr. Kolah before us goes very much beyond the scope of the question which has been referred to this court. The way we read the question it is in language of amplitude and width and we do not think Mr. Joshi is right when he says that the contention pressed for our acceptance by Mr. Kolah travels beyond the ambit of the question.

18. Our answer to the question submitted to us is in the affirmative. Assessee to pay the costs.

19. Question answered in the affirmative.