TMI Blog1970 (4) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDGMENT The judgment of the court was delivered by GROVER J.-- This is an appeal by special leave from the judgment of the Calcutta High Court answering the following question which was referred to it by the Tribunal in the negative and in favour of the assessee : " Whether, on the facts and in the circumstances of the case, the income-tax authorities were justified in imposing a penalty on the assessee under section 28(1)(c) of the income-tax Act ? " The assessee, during the assessment year 1947-48, the corresponding previous year being the financial year ending on March 31, 1947, was a partner in the firm of M/s. Haji Sk. Md. Hussain Md. Jan of Calcutta. The Income-tax Officer while making the assessment discovered an undis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Income-tax Officer and the Appellate Assistant Commissioner. Penalty proceedings were initiated after the assessment and in due course the Income-tax Officer imposed a penalty amounting to Rs. 66,000 on the assessee under section 28(1)(c) for concealing income and deliberately furnishing inaccurate particulars. The Appellate Assistant Commissioner in appeal held that the case clearly called for a penal action but he reduced the amount of penalty by Rs. 22,000. Subsequently, he rectified his order under section 35 and confirmed the penalty of Rs. 66,000 imposed by the Income-tax Officer. The assessee went up to the Appellate Tribunal in appeal. The Tribunal took the view that penalty proceedings were of a criminal nature. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g inaccurate particulars of such income. The majority of the High Courts, namely, Bombay Commissioner of Income-tax v. Gokuldas Harivallabhdas Gujarat, in Commissioner of Income-tax v. L. H. Vora and Patna, in Commissioner of Income-tax v. Mohan Mallah, had expressed the view that proceedings under section 28(1)(c) were of a penal nature and it was for the department to establish that the assessee was guilty of concealment of the particulars of income. The mere fact that the assessee had given a false explanation did not prove that the receipt necessarily constituted income of the assessee. The Allahabad High Court, however, in Mohan Ram Ram Kumar v. Commissioner of Income-tax, observed that where the explanation offered by the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 28 are included in the expression " assessment " and the true nature of penalty has been held to be additional tax. But one of the principal objects in enacting section 28 is to provide a deterrent against recurrence of default on the part of the assessee. The section is penal in the sense that its consequences are intended to be an effective deterrent which will put a stop to practices which the legislature considers to be against the public interest. It is significant that in C. A. Abraham's case this court was not called upon to determine whether penalty proceedings were penal or of quasi-penal nature and the observations made with regard to penalty being an additional tax were made in a different context and for a different purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings under section 28 are of a penal nature and the burden is on the department to prove that a particular amount is a revenue receipt. It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income. It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive. However, it is good evidence. Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inacc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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