TMI Blog1973 (5) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the first appeal of the petitioner had been dismissed, penalty proceedings were initiated against it by the Income-tax Officer, Jorhat, in terms of clause (c) of section 271(1) of the Act, The penalty proceedings had, however, to be referred by that Income-tax Officer to the Inspecting Assistant Commissioner, Dibrugarh, inasmuch as he found that the penalty payable shall exceed Rs. 1,000, which was beyond his jurisdiction. The Inspecting Assistant Commissioner ultimately imposed a penalty of Rs. 10,000 on the petitioner by his order dated September 2, 1966, and it is the validity of that order which is challenged before us in the petition. Two points have been urged by Sri Sen on behalf of the petitioner in support of the contention that the penalty proceedings are vitiated, being invalid, and to support the prayer that the penalty of Rs. 10,000 should be quashed. They are, firstly, that the penalty having been imposed by the aid of the Explanation appended to sub-section (1) of section 271, which Explanation had come into force with effect from April 1, 1964, the Explanation did not apply as the return in question related to the year which had concluded on March 31, 1964, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come, which we may appropriately describe as the actual income, and the assessees whose returned income is not less than 80 per cent. of their actual income. Article 14, it has been consistently held by the Supreme Court, does not forbid classification though it prohibits class legislation. Equality before the law means that among equals the law should be identical and that the like should be treated alike. At the same time, put in other words, equality before the law does not mean that things which are different shall be treated as though they were the same. The permissible classification, according to the pronouncements of the Supreme Court, must satisfy two conditions, namely, (1) it must be founded on intelligible differentia which distinguishes persons or things that are grouped together from others who are left out of the group, and (2) the differentia must have a rational relation to the object sought to be achieved by the impugned provision. It has also been repeatedly held that the differentia and object are different elements and that the object by itself cannot be the basis of classification. Another principle equally well settled is that article 14 condemns discriminati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inaccurate particulars of such income for the purpose of clause (c) of sub-section (1). In other words, if the margin of difference in the case of a particular assessee between the income returned by him and his actual income is more than twenty per cent., then it would be for him to establish that he had not concealed the particulars of his income or furnished inaccurate particulars of that income by reason of fraud or gross or wilful neglect on his part, while in the case of assessees whose returned income reveals less than twenty per cent. departure from the actual income, the burden of proving the ingredients of clause (c) shall rest, as before, on the income-tax authorities. Obviously, the main purpose of the Explanation is to place the burden of establishing want of fraud or gross or wilful neglect in the matter of income-tax return filed by an assessee on him where the difference revealed between the returned income and assessed income is more than twenty per cent. Therefore, although the ultimate object of the Explanation may be to provide effective checks against evasion of income-tax, the immediate object of the Explanation appears to be that if an assessee has been appar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney may have to discharge the burden of proving that their case does not fall within the ambit of clause (c) while those evading higher amounts but not coming within the letter of the Explanation may continue to enjoy the benefit of not being called upon to prove that their case does not fall within the purview of clause (c). The petitioner's counsel gave an illustration to make his point clear. He said that a big assessee who shows the returned income short by a few lakhs of rupees but that under-estimation is not less than eighty per cent. of the actual income would successfully avoid the claws of the Explanation, while a smaller assessee whose income may not exceed ten thousand rupees may yet come within the jaws of the Explanation if his returned income turns out to be less than eighty per cent. of the actual income. The argument on the face of it looks to be attractive. However, it is not for the courts to tell Parliament what sort of classification it should introduce. The function of the courts is only to find out whether the classification actually introduced by Parliament is hit by article 14 of the Constitution. There may be a variety of classifications which can be intro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's income during the course of assessment ", and that as such it cannot be said that the Explanation violates the provisions of article 14 of the Constitution. The petitioner's counsel has raised two objections against this decision of the Allahabad High Court being adopted by this court. He has stated in the first instance that the object of the Explanation as mentioned in the decision is not the real object of the Explanation, and that, in the second place, the Division Bench did not consider the lot of those persons whose returned income is not shown to be less than eighty per cent. of the actual income. The object behind the Explanation, according to the Allahabad High Court, was discouraging the concealment of the particulars of one's income during the course of assessment. The object which, according to the petitioner's counsel, Parliament had in view, while introducing this Explanation, we have already set out above. If we juxtapose that object with the object stated by the Allahabad High Court, we find no substantial difference between the two. The difference, if any, is wordy and not real. Nor can we subscribe to the contention that the Allahabad High Court did not con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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