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TMI Blog1972 (4) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ad neither adduced any evidence to indicate the nature of the debt nor to establish that the debt had become bad. The Income-tax Officer further added an amount of Rs. 18,000 on account of cash credit in the account of Shri Sujan Singh Sadana as assessee's income from undisclosed sources. The Income-tax Officer started penalty proceedings under section 271(1)(c). Inasmuch as the minimum penalty that was imposable was more than Rs. 1,000 he referred the case to the Inspecting Assistant Commissioner of Income-tax. The assessee preferred an appeal against the assessment to the Appellate Assistant Commissioner. The assessee contested the disallowance of bad debt only to the extent of Rs. 31,350 but without success. Out of the addition of Rs. 18,000, the Appellate Assistant Commissioner sustained the addition of Rs. 15,000. The assessee then preferred an appeal to the Income-tax Appellate Tribunal. The Appellate Tribunal affirmed the decision of the Appellate Assistant Commissioner with regard to the amount of Rs. 41,420 but modified the decision with regard to the addition of Rs. 15,000 on account of cash credits. The Tribunal held that only an addition of Rs. 8,000 was justified. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,-... (iii) in the cases referred to in clause (c) in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished. Explanation.-Where the total income returned by any person is less than eighty per cent. of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), Such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section." It is common ground that the Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the correct income: Provided that- (a) no penalty for failure to furnish the return of his total income shall be imposed on an assessee, whose total income is less than three thousand five hundred rupees unless he has been served with a notice under sub-section (2) of section 22; (b) where a person has failed to comply with a notice under sub-section (2) of section 22 or section 34 and proves that he has no income liable to tax, the penalty imposable under this sub-section shall be a penalty not exceeding twenty-five rupees; (c) no penalty shall be imposed under this sub-section upon any person assessable under section 42 as the agent of a person not resident in the taxable territories for failure to furnish the return required under section 22 unless a notice under sub-section (2) of that section or under section 34 has been served on him; (d) when the person liable to penalty is a registered firm or an unregistered firm which has been assessed under clause (b) of sub-section (5) of section 23, then, notwithstanding anything contained in the other provisions of this Act, the amount of income-tax and super-tax payable by the firm itself shall be taken to be an amount equal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , can be invoked. It is no doubt true that in the matter of assessment of income, the law, as it prevails on the first day of the assessment year, will be applicable. But that would not be the position in the case of imposition of penalty. Their Lordships of the Supreme Court in Commissioner of Income-tax v. Anwar Ali, made it plain that the penalty proceedings for certain purposes could not be equated with the assessment proceedings. The relevant observations of their Lordships are as follows: " One line of argument which has prevailed particularly with the Allahabad High Court in Lal Chand Gopal Das's case is that there was no essential difference between tax and penalty because the liability for payment, of both was imposed as a part of the machinery of assessment and the penalty was merely an additional tax imposed in certain circumstances on account of the assessee's conduct. The justification of this view was founded on certain observations in C. A. Abraham v. Income-tax Officer, Kottayam. It is true that penalty proceedings under section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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