Penalty for tax defaults covers the whole yearly tax liability, not just the undeclared income element.

Under section 25(3) of the Income Tax Act 1952, the phrase "treble the tax which he ought to be charged under this Act" was construed according to its ordinary meaning. The penalty was not confined to the tax attributable to undisclosed income or to the amount omitted in an inaccurate return; instead, it covered the whole tax liability for the relevant year. The court relied on the statutory language, the earlier penalty provisions, and the consolidating character of the Act to reject a narrower "excess tax" reading. The Revenue's position was therefore accepted.

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Issues: Whether, under section 25(3) of the Income Tax Act, 1952, the words "treble the tax which he ought to be charged under this Act" mean treble the whole direct tax liability for the relevant year or only the tax referable to the undisclosed income or default.

Analysis: The statutory phrase was examined in the context of the penalty scheme of the Income Tax Act, 1952 and its earlier predecessors. The Court rejected the view that the amount of penalty could be confined to the tax attributable to the undisclosed income or to the tax that had been omitted because of the inaccurate return. It held that the liability to penalty arises when the offence is committed, and that the words used in section 25(3) do not justify reading in a limited "excess tax" formula. The consolidating character of the 1952 Act, the earlier form of the penalty provisions, and the parallel language in related sections supported the ordinary meaning of the phrase.

Conclusion: The words "treble the tax which he ought to be charged under this Act" were held to mean treble the whole tax liability for the year, and not merely the tax on the undisclosed income. The appeal was therefore allowed in favour of the Revenue.

Ratio Decidendi: Where a tax penalty provision uses unqualified words directing trebling of "the tax which he ought to be charged," the court must apply the ordinary meaning and cannot restrict the penalty to the tax avoided by the particular default unless the statute itself expressly provides such limitation.

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