TaxTMI 
TaxTMI 
1983 (1) TMI 24
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsp; Rs. Concealment of particulars of income under the head 'Business' 14,000 Income from Other sources 21,500 ------ Total 35,500 &nbs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l negligence." Against this order of the Tribunal the assessee demanded and got reference to this court on the following questions of law: "1. Whether, on the facts and in the circumstances of the case, the provisions of section 271(1)(c) stood attracted to justify any penalty ? 2. Whether, on the facts and in the circumstances of the case, penalty of Rs. 14,000 would be exigible in respect of the addition to the gross profit in the assessment ? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the penalty of Rs. 21,500 in respect of the addition of a like amount under other sources as unproved credits ? " Section 271(1) of the Act makes appropriate provision for levying penalties on assessees in different eventualities. One is for non-filing of returns or delayed filing of returns without reasonable cause. The other is for non-compliance with the statutory notices for production of accounts and documents and with the summons for inquiry. The last one is for concealment of income. Each of these penalty provisions has two distinct limbs. One limb deals with the conditions precedent for initiating penalty a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave been concealed. This means that if particulars have been concealed in respect of one rupee of income, the minimum imposition will have to be one rupee by way of penalty. This is the implication of this clause. If in respect of one rupee particulars have not been concealed, then penalty cannot be levied on that rupee, either at a minimum of one rupee or at the maximum of two rupees or any amount in between. The reason why this penalty provision is so worded is not far to seek. The yoke of income-tax itself is already a heavy burden, especially on the higher income brackets, and a too high penalty would break the necks of most taxpayers. Besides, the measure of penalty is not on the tax effect, but on the income aspect, which would tend to make the penalty burden greater still. Because of these considerations, Parliament obviously took care to lay down that penalty, as an equivalent of income, cannot be levied unless the income in such and such an amount can be held to have been concealed. This is why we have stated that for each rupee concealed there can be a Minimum penalty of one rupee and a maximum penalty of two rupees, whereas for each rupee not concealed, there cannot b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 14,000 so as to justify the imposition on the assessee of a minimum penalty in that amount. As for the other part of the penalty amounting to Rs. 21,500, the Tribunal have regarded that amount as representing income only because the assessee had not offered any explanation about the nature and source of the cash credits in question. This means that there was no actual evidence on record that the credits represented income; the Tribunal merely working on a presumption which is relevant to the assessment process all right, but not to the penalty process. The Tribunal, however, relied on the Explanation to s. 271(1)(c) to hold that even for Rs. 21,500 penalty is exigible because the burden is on the assessee to show that his return of income of an amount less by twenty per cent. and more of the assessed income was not due to any fraud or any gross or wilful negligence. In our view the Explanation can hardly be pressed into service for the purpose of s. 271(1)(iii) which enjoins that only with respect to income, the particulars of which are concealed, minimum and maximum penalties or anything in between can be levied. The Explanation, in terms, is restricted to s. 271(1)(c). This m....