1962 (2) TMI 131 - HC - Indian Laws

Penalty upheld for inaccurate income particulars under Income-tax Act

P.K. Kalasami Nadar Versus Commissioner Of Income-Tax,

The court upheld the penalty imposed under section 28(1)(c) of the Indian Income-tax Act on the assessee for furnishing inaccurate income particulars. The ... - Issues:Levy of penalty under section 28(1)(c) of the Indian Income-tax Act on the grounds of inaccurate particulars of income. Interpretation of penalty imposition by the Income-tax Appellate Tribunal. Burden of proof in penalty proceedings under section 28(1)(c) of the Act. Degree of evidence required to establish guilt in penalty proceedings. Application of legal principles from Commissioner of Income-tax v. Gokuldas Harivallabhdas.Analysis:The case involved the levy of a penalty under section 28(1)(c) of the Indian Income-tax Act on the assessee for furnishing inaccurate particulars of income. The Income-tax Officer initially imposed a penalty of Rs. 20,000, which was later reduced to Rs. 10,000 by the Income-tax Appellate Tribunal. The issue raised was whether the Tribunal's decision to sustain the penalty was valid. The assessee, a trader in grocery and a public carrier, had failed to include income from his lorry business in the return of income for the assessment year 1950-51. The assessing officer treated certain cash entries as income from undisclosed sources, as the assessee failed to provide sufficient proof of the source of the funds. The Tribunal upheld the penalty, stating that the concealment of income was evident from the records, even though the charge against the assessee was not explicitly framed. The Tribunal's decision was based on the satisfaction that the requirements of section 28(1)(c) were met, justifying the penalty imposition.The assessee argued that penalty proceedings are quasi-criminal in nature and that the burden of proof lies with the department to establish the guilt. Citing the decision in Commissioner of Income-tax v. Gokuldas Harivallabhdas, it was emphasized that the department must prove the offense, and a false explanation by the assessee does not discharge this burden. The court acknowledged the penal nature of section 28 proceedings and the need for a high degree of probability in establishing guilt. The court referred to the distinction between the degree of evidence required in civil and criminal cases, emphasizing the need for a high probability of guilt in penal proceedings. The court highlighted that the findings from the assessment proceedings, where the cash credits were treated as taxable income, could be relied upon to establish a prima facie case of deliberate furnishing of inaccurate income particulars. Ultimately, the court upheld the Tribunal's decision to impose the penalty, as the department and the Tribunal were reasonably satisfied based on the evidence presented.In conclusion, the court answered the question against the assessee, who was directed to pay the costs of the department. The legal principles regarding the burden of proof in penalty proceedings under section 28(1)(c) were reiterated, emphasizing the need for a high degree of probability to establish guilt. The court upheld the Tribunal's decision, considering the findings from the assessment proceedings and the lack of sufficient evidence provided by the assessee to refute the charges of inaccurate income particulars.