Technical meaning of "income" under tax penalty law includes false deduction claims and inaccurate particulars.

The Lahore High Court construed "income" in Section 28 of the Income-tax Act, 1922 in its technical, assessable sense, not its narrow popular meaning. It held that the statutory scheme for computation of total income, returns, assessment and tax payable requires consideration of allowable deductions and exemptions when determining true taxable income. On that basis, a deliberate false claim relating to deductions or exemptions was treated as falling within the penalty provision for concealment or furnishing inaccurate particulars. A construction limited to money actually received would undermine the purpose of the penal provision by permitting false deduction claims to escape liability.

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Issues: Whether the word "income" in Section 28 of the Income-tax Act, 1922 was confined to money actually received by the assessee, or included false claims relating to deductions and exemptions so as to attract penalty for concealment or furnishing inaccurate particulars.

Analysis: The expression "income" was construed in the setting of the Act as a technical term, not in its narrow popular sense. The scheme of the Act, including the provisions for computation of total income, assessment, returns and determination of tax payable, showed that the return and assessment process concerned the assessable figure after allowable deductions and exemptions. A narrow construction would defeat the purpose of the penal provision by allowing an assessee to make false claims about deductions or exemptions while escaping liability so long as the gross receipts were stated correctly. The reasoning was supported by the principle that, in determining profits and gains, all losses and allowable deductions must be considered to arrive at the true taxable income.

Conclusion: The word "income" in Section 28 was held to include false claims affecting deductions and exemptions, and the assessee's deliberate false deduction fell within the scope of the penalty provision.

Final Conclusion: The petition was rejected because the assessee's conduct constituted concealment or furnishing of inaccurate particulars within the meaning of the penalty section.

Ratio Decidendi: In construing a penal provision in the income-tax law, "income" is to be understood in the technical and assessable sense required to compute true taxable profits, so that deliberate false claims relating to deductions or exemptions can attract penalty for concealment or inaccurate particulars.

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