We are of the opinion, upon consideration of the evidence herein, that the respondent’s assertion of the fraud penalty for each of the years 1917 and 1918 should be sustained. The record *824is clear to the effect that the petitioner’s income for those years was understated in his return, and he admitted at the hearing that additional taxes are due for each of the years 1917, 1918, and 1919, in the amounts determined by the respondent. The petitioner’s closing cotton inventory for 1917 was understated by the amount of $14,000 and it appears that when the understatement was discovered by the revenue agent the petitioner changed an item on his books — which change would have the effect of reducing the inventory and making it appear not to have been understated. The petitioner also omitted to enter on his boobs and to include in his income-tax return for 1918, sales of cotton amounting to more than $37,000, and when this omission of sales and the changed item on his books were called to his attention by the revenue agent, the petitioner asked that he be let off as easy as possible. The petitioner denied at the hearing that his returns were intentionally understated, but produced no competent evidence to show that the irregularities established by the respondent were other than the result of his own wilful efforts to reduce his tax liability. Upon the record we believe that the petitioner wilfully filed false and fraudulent income-tax returns for the years 1917 and 1918, with intent to evade the tax, and we affirm the action of the respondent as to those years. We find no evidence of any fraud in the petitioner’s return for the year 1919, and we hold that the fraud penalty should not be asserted for that year.
Judgment will be entered on 15 days' notice, under Rule 50.