TMI Blog1971 (11) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961, was justified ? " The assessee is a Hindu undivided family having income from property, share from the firm of M/s. Maduri Rajiahgari Kistaiah and from their own business. For the assessment year 1960-61 as against a return of income of Rs. 54,069 the assessable income was fixed at Rs. 1,59,298 as certain amounts were disallowed towards brokerage and entertainment expenses and gross profits disclosed being found to be less. Therefore, holding that the assessee had deliberately inflated these items of expenditure and suppressed the profits, penalty proceedings were started and as the minimum penalty leviable exceeded Rs. 1,000, the case was referred to the Inspecting Assistant Commissioner and he, after enquiry, levied a penalty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1922. Section 28(1) of that Act reads as follows : " If the Income-tax Officer, the Appellate Assistant. Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person,--...... (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he or it may direct that such person shall pay by way of penalty, in the case referred to in clause (a), in addition to the amount of the income-tax and super-tax, if any, payable by him, a sum not exceeding one and a half times that amount and in the cases referred to in clauses (b) and (c) in addition to any tax payable by him, a sum not exceeding one and a half times the amount of the income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income. " This shows that though the maximum fixed is the same, as under section 28(1) of the old Act, a minimum of 20 per cent. has been fixed in the new Act and no discretion is left to the assessing officer to levy any penalty less than the minimum, whatever the circumstances be, while under the old Act, there is no minimum and the assessing officer could levy any amount befitting the circumstances of the case. However, under section 297(2)(g) of Income-tax Act, 1961, "any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st March of 1962, or an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. " The above article, it may be seen, has two limbs, the first dealing with conviction for any offence and the second dealing with penalty to be imposed on the commission of the offence. What is now contended is that a case of penalty imposed under the Income-tax Act attracts the second limb of the above article and no penalty, greater than that which might have been inflicted under the law then in force at the time the act attracting penalty was committed can be imposed. The fallacy lies in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the concealment thereof, therefore, attracted the penalty provisions. From those observations it cannot be said that the acts that attracted the penalty are in the nature of offences. The framers of the Income-tax Act have chosen to make a difference between the two--while section 271 of the Income-tax Act, 1961, relates to penalty proceedings, section 277 of the Income-tax Act, 1961, prescribes what are offences under the Act and what punishment has to be imposed for the said offence. Therefore, penalty proceedings cannot be equated to criminal proceedings attracting punishment. Even in the case cited above, it has been pointed out that penalty proceedings are included in the expression " assessment " and the true nature of penalty ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is involved in the imposing of a penalty. From a reading of the provisions of article 20(1) of the Constitution it is evident that the first limb and the second limb are interlinked and have to be read together, that while the first limb refers to a conviction for an offence, the second limb refers to the punishment that has to be inflicted with regard to an offence. Penalty is, on the other hand, levied for an act or omission of the assessee, not because it is an offence but because it is an attempt at evasion in the payment of the tax. Therefore, article 20(1) of the Constitution is not attracted. In M. P. Indra Co. v. Union of India [1967] 64 ITR 664 (Raj) it was held that though under the provisions of section 271 of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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