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TMI Blog1961 (10) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... e partners of the firm appeared before the Income- tax Officer and produced before him a certificate of posting. It was stated on the basis of the said certificate of posting, that a return had been posted but it appeared that for some reason or other the return may have been lost. An affidavit was also filed in support of the statement made by that partner. Meanwhile an application under section 27 of the Income-tax Act was made for setting aside the ex parte assessment. That application having been dismissed, an appeal was filed against the order of dismissal, but the appeal was also dismissed. This was on the 7th May, 1946. The business of the firm was discontinued in June, 1945, and the firm was also dissolved. The last assessment of the firm was made for the assessment yea, 1946-47, and the same was completed on the 12th September, 1950. From January 29, 1945, when the notice under section 28(1)(b) was issued to the firm nothing at all appears to have been done until the completion of the last assessment of the firm on September 12, 1950. The matter was allowed to continue to remain in abeyance for many years, after that date, also, and it was only on May 25, 1957, when a noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er made an application to the Income-tax Officer for inspection of the file. The Income-tax Officer has stated that on January 17, 1959, an order was passed on this application, for the issue of a challan for depositing the inspection fee. The petitioner states that four days later, on January 19, 1959, he again visited the Income-tax Officer in order to enquire as to what orders had been passed on his application dated January 15, 1959. On that date he was served with copes of the penalty order and the notice of demand, which were both dated January 15, 1959. It has already been noticed that January 15, 1959, was the date on which the petitioner had made an application for inspection of the record. Under the penalty order, a penalty of ₹ 5,000 was imposed upon the petitioner. Thereupon, on January 27, 1959, the petitioner filed this wit petition for the relief, which has already been stated in the beginning of this judgment. The main point, which Shri R.L. Gulati, learned counsel for the petitioner, has urged was that the conduct of the Income-tax Officer, in all the circumstances, was mala fide in imposing the penalty of ₹ 5,000. He has also argued that it was extr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, to my mind, there is nothing at all in the petitioner having sought adjournments and adjournments having been granted. The third ground which the Income-tax Officer has taken in support of his order is that the personal assessment of the petitioner was made under section 23(4) and a penalty had also been imposed. The petitioner did not file any application under section 27 for the cancellation of that assessment and also did not go up in appeal against the penalty order. From this the Income-tax Officer has concluded that the petitioner is a habitual defaulter . I do not see how the facts and circumstances of the personal assessment of the petitioner have any relevancy at all to the facts and circumstances of the assessment of the firm of which he was a partner. In any view of the matter, the penalty was not being imposed upon the petitioner for his being a habitual defaulter . The penalty was being imposed for failure to comply with the notices under sections 22(2) and 22(4) of the Income-tax Act and, therefore, to my mind, he himself in his personal assessment having been assessed under section 23(4) or penalty having been imposed, was a wholly extraneous consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Commissioner and passed a penalty order within two days of the writ petition having been moved in this court on 13th January, 1959. But suspicion, however strong, cannot be allowed to do the duty for proof. Therefore, as I have already stated, it is not possible for me on the materials to record a finding one way or the other. There is one other aspect of the matter to which I must now advert and that is, that it is well settled that proceedings for imposition of penalty are in the nature of criminal or quasi-criminal proceedings. In penalty proceedings, the burden is always upon the department to prove that the particular assessee as brought himself within the ambit of the penal provision. The mere fact that an explanation offered by the assessee may have been disbelieved does not, by itself, warrant the imposition of penalty. Even if, in spite of the rejection of the explanation offered by the assessee, the material is not enough to clinch the issue against the assessee, no penalty can be imposed. It is not necessary to cite authorities in support of such an elementary proposition in the income- tax law. I am not satisfied that, in this particular case, the income-tax depa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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