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TMI Blog1962 (3) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... closed sources in the assessment for 1946-47. In so doing, he observed as under: "The Amanat Khata shows a deposit of ₹ 3,000 on Pus S. 7 which was withdrawn on Magh B. 1. Then again a sum of ₹ 5,000 was deposited on Chait S. 7 and was withdrawn on Baisakh S. 9. The cash book shows that the cash was received from byopari but the name of byopari is not given. It has been contended by the assessee that ₹ 3,000 was deposited and then withdrawn and thereafter ₹ 5,000 was deposited. The sum of ₹ 3,000 is thus covered by the deposit of ₹ 3,000. However, considering the particular circumstances of the case, I add ₹ 5,000 for profit undisclosed." The assessment order for 1946-47 dated 28th October, 1949, is annexed as annexure "A" and forms part of the case. 3. On appeal before the Appellate Assistant Commissioner this addition was confirmed. He observed that: "For the profit of ₹ 5,000 the name of the depositor is not available in the account books nor any evidence has been given. I am, therefore, not prepared to interfere with the finding of the Income-tax Officer that the sum of ₹ 5,000 represents profits fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence to show that the sum of ₹ 5,000 represented in fact an item of secreted profit and as such it was not a case for penalty under section 28. In the result he confirmed the penalty order of the Income-tax Officer. The order of the Appellate Assistant Commissioner dated February 8, 1952, is annexure "C" and forms part of the case. 5. There was a further appeal to the Tribunal. It concurred with the department that the assessee was deliberately concealing the source of this income and that the penalty was clearly attracted. The order of the Tribunal dated July 28, 1952, is annexure "D" and forms part of the case. 6. The question of law is: "Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the department discharged its burden of proof in establishing that the sum of ₹ 5,000 was income of the assessee within the meaning of the word 'income' as given in section 28(1)(c) of the Income-tax Act?" 7. The draft statement of the case was placed before the parties. The assessee's learned counsel wanted the assessment order for 1946-47 to be annexed. This has been done. He agreed that all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit of ₹ 5,000 the name of the depositor is not available in the account books nor any evidence has been given. I am, therefore, not prepared to interfere with the finding of the Income-tax Officer that the sum of ₹ 5,000 represents profits from some undisclosed sources." No further appeal to the Income-tax Appellate Tribunal appears to have been filed. It may be stated, as noted by the Appellate Assistant Commissioner, that no evidence was given by the assessee to explain the nature and source of the amount of ₹ 5,000. The assessment order is at page 12 of our paper-book and it appears from that order that the silver account of the assessee was rejected by the Income-tax Officer as it disclosed too low a rate of profit and even though there were considerable purchases and sales of silver ornaments the details and names of sellers or the names of purchasers were not noted in the account books and the profits of the silver set had to be computed by application of a rate. Thus, so far as the assessment of this amount of ₹ 5,000 to income- tax was concerned, the position was that the mention of the name of byopari not having been made in the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... berately. The assessee is certainly not entitled to suppress full facts in his accounts and then try to take advantage of his own fault. In the circumstances he levy of penalty is not only fully justified but absolutely necessary." Thereafter the Income-tax Officer went on to consider the past record of the assessee and observed that: "The past record of the assessee is anything but clean. It is a story of unreliable and rejected accounts and dismissed appeals. For the assessment year 1943-44 the assessee was found to have reduced the totaIs in the trading accounts and thus concealed the income and a penalty of ₹ 11,000 was imposed under section 28(1)(c)." Lastly, with respect to the account of the year in question the Income-tax Officer observed: "The accounts produced by him lack details and I have no doubt that these are deliberately withheld so that the concealment may not be proved to the hilt." Thus when the Income-tax Officer came to impose a penalty under section 28 he took into account three further pieces of evidence, which do not appear to have been taken into account by him when he subjected the amount of ₹ 6,000 to income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere to be returned. (3) The names of the depositors were withheld in spite of specific opportunities and were not disclosed even at the appellate stage." The assessee went up in further appeal to the Income-tax Appellate Tribunal. The Tribunal rejected the explanation of the assessee that after the lapse of four years he could not remember the names of the depositors as being "no explanation at all". They went on to observe: "He must have a record of the persons with whom he was dealing in account books and the failure to give the names clearly indicates that he was gambling with the income-tax assessment with the intention that if this item in any way escaped the attention of the Income- tax Officer the assessee would get the benefit of a reduced assessment of income. We, therefore, concur with the department that the assessee was deliberately concealing the source of this income and the penalty is clearly attracted in this case." It will at once be noticed that the basis of the finding of the authorities below that the assessee "concealed the particulars of his income or deliberately furnished inaccurate particulars" was not merely the find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act. That chapter deals with "the machinery of assessment". Penalty under section 28 is imposed as a "part of the machinery for assessment of tax liability". Additional tax imposed on an assessee for his contumacious conduct is "designated" as penalty. From this it seems to follow that there is no essential difference between the tax and the penalty. The liability for payment of both is imposed as a part of the machinery of assessment and the penalty is merely an additional tax imposed in certain circumstances on account of the assessee's conduct. Moreover, a taxing statute itself is required to be interpreted "strictly" like a penal statute and a provision imposing a penalty in a taxing statute is not to be interpreted differently from any other provision. If there is material justifying the finding that an assessee has concealed particulars of income for the assessment purpose, there is no logic behind the view that it is not sufficient to justify it for the imposition of a penalty. In a recent decision of the Court of Appeal in Inland Revenue Commissioners v. Jackson [1962] 44 I.T.R. 386 (C.A.), a case of penalty, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e civil liability are parts of one penalty. The concept of double jeopardy is usually considered as requiring a criminal prosecution and the imposition of a penalty is not a criminal prosecution but a civil action. One interested in the comments by the Harvard Law Review approving this decision may refer to 47 H.L.R. 1438. We, therefore, cannot accept the contention that the penalty proceedings require a different or stricter standard of evidence than the assessment proceedings or that the evidence that is sufficient for assessment purposes may fall short of that required for the imposition of a penalty. It was next contended that the sole basis for the imposition of the penalty was the finding in the assessment proceedings that the receipt of ₹ 5,000 by the assessee was income for assessment purposes, but we see nothing illegal in this. Whatever were the materials in the assessment proceedings are materials in the penalty proceedings also and, if they are sufficient to justify the finding in the assessment proceedings that the receipt was income, there is no reason why they should not be sufficient for the same finding in the penalty proceedings. Once it is found in the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal or special knowledge of the assessee, the onus lies upon him to prove it; the onus is of proving the real nature of the receipt and not of proving that it is not income. If the materials that he produces satisfy the income-tax authorities that it is not income, they will not assess it and no question of imposition of a penalty will arise at all. If the materials are found to be false, or are not accepted as true, by them, it means that the assessee has not proved that it is a particular kind of non-assessable receipt, but it does not follow as a matter of course that it is assessable. There are several kinds of non-assessable receipts, and a receipt, now shown to be of one kind of non-assessable receipt, may still be of another kind of non-assessable receipt; consequently, the fact that it is not shown to be of one kind of non-assessable receipt does not automatically lead to the inference that it is an assessable receipt, because it can still be of another kind of non-assessable receipt. But if there are additional materials the income-tax authorities may hold that it is not a nonassessable receipt at all; if it does not belong to any kind of nonassessable receipts, it means t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the income-tax authorities. Onus of proof lies on a party and not on a tribunal that has to give a finding and the income-tax authorities are tribunals and are strictly speaking not parties. A tribunal cannot be a party before its own self. There can be no question of the income-tax authorities leading evidence to prove any fact; what is required under the law is that they must have materials to justify their finding of concealment of the particulars (or of deliberate furnishing of inaccurate particulars). They had to have materials also for their earlier finding that the receipt was not a deposit but was income and, if the assessee has not been able to produce further materials in support of his claim to show that the earlier finding was erroneous, they can be sufficient for the finding in the penalty proceedings that the receipt was not a deposit but income. If a receipt is income but is disguised in the accounts or in the return as a non-assessable receipt, it is clearly a case of concealment of the particulars or of furnishing inaccurate particulars of income and a penalty under section 28(1)(c) can be imposed on the assessee. The income-tax authorities must arrive at a cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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