TaxTMI 
TaxTMI 
1970 (4) TMI 1
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....thorities were justified in imposing a penalty on the assessee under section 28(1)(c) of the income-tax Act ? " The assessee, during the assessment year 1947-48, the corresponding previous year being the financial year ending on March 31, 1947, was a partner in the firm of M/s. Haji Sk. Md. Hussain Md. Jan of Calcutta. The Income-tax Officer while making the assessment discovered an undisclosed bank account of the assessee with the Central Bank of India Ltd. at Bettiah, Bihar. It was found that a cash deposit of Rs. 87,000 had been made by the assessee on November 21, 1946, in that bank. He was asked to explain the source of the amount of deposit. According to his explanation, all his relations got panicky during the communal riots in Bi....
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....but he reduced the amount of penalty by Rs. 22,000. Subsequently, he rectified his order under section 35 and confirmed the penalty of Rs. 66,000 imposed by the Income-tax Officer. The assessee went up to the Appellate Tribunal in appeal. The Tribunal took the view that penalty proceedings were of a criminal nature. The onus lay on the department to show by adequate evidence that the amount of the cash stated to have been concealed by the assessee was of a revenue nature and was assessable as income and that the assessee had concealed it or deliberately furnished false particulars in regard thereto. This onus, in the opinion of the Tribunal, was not discharged by the income-tax authorities by showing merely that the explanation given by the....
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.... the particulars of income. The mere fact that the assessee had given a false explanation did not prove that the receipt necessarily constituted income of the assessee. The Allahabad High Court, however, in Mohan Ram Ram Kumar v. Commissioner of Income-tax, observed that where the explanation offered by the assessee in respect of an item of income shown as capital receipt was deliberately false it was open to the Income-tax authority to impose a penalty under section 28(1)(c). In the earlier judgment in Lal Chand Gopal Das v. Commissioner of Income-tax, the Allahabad High Court had said that if a receipt was income but was disguised in the account or in the return as a non-assessable receipt it was clearly a case of concealment of the parti....
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....e against the public interest. It is significant that in C. A. Abraham's case this court was not called upon to determine whether penalty proceedings were penal or of quasi-penal nature and the observations made with regard to penalty being an additional tax were made in a different context and for a different purpose. It appears to have been taken as settled by now in the sales tax law that an order imposing penalty is the result of quasi-criminal proceedings (Hindustan Steel Ltd. v. State of orissa). In England also it has never been doubted that such proceedings are penal in character : Fattorini (Thomas) (Lancashire) Ltd. v. Inland Revenue Commissioners. The next question is that when proceedings under section 28 are penal in charact....