1966 (10) TMI 22 - HC - Income Tax

Source of investment - assessee s explanation was that he purchased the house benami for his wife and that the consideration of Rs. 14,500 was received by his wife from her widowed mother - this explanation was not found acceptable to the department - provisions of section 28(1)(c) were attracted

Summary

Issues:
Interpretation of section 28(1)(c) of the Income-tax Act in relation to penalty proceedings.

Analysis:
The judgment pertains to a case stated under section 66(1) of the Income-tax Act, focusing on whether section 28(1)(c) was applicable. The assessee's original assessment revealed discrepancies regarding the purchase of a property, leading to the initiation of penalty proceedings under section 28(1)(c). The contention raised was that the burden of proof in penalty proceedings lies with the department and that insufficient evidence was presented to justify the penalty. Reference was made to previous court decisions highlighting the penal nature of penalty proceedings and the need for substantial evidence to establish guilt. However, the court emphasized that the department had discharged its burden by showing that the property was registered in the assessee's name, shifting the onus to prove innocence onto the assessee. Consequently, it was held that the penalty proceedings under section 28(1)(c) were justified based on the facts and circumstances of the case.

The judgment also addressed a procedural argument regarding the jurisdiction of the Income-tax Officer who levied the penalty. The assessee contended that the officer lacked jurisdiction due to a different officer handling the initial notice under section 28(3). However, this argument was not raised before the Income-tax Appellate Tribunal and lacked merit during the proceedings. The Appellate Assistant Commissioner had rejected the jurisdictional claim, citing the assessee's delayed response to the notice and the subsequent opportunities provided for clarification. Ultimately, the court found no valid grounds to challenge the jurisdiction of the officer who levied the penalty, further solidifying the validity of the penalty imposed.

In conclusion, the court answered the question posed in the affirmative, ruling against the assessee. The judgment upheld the levy of the penalty under section 28(1)(c) based on the department's fulfillment of the burden of proof and dismissed the jurisdictional challenge raised by the assessee. The assessee was directed to bear the costs of the reference, including counsel fees, as assessed by the court.