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TMI Blog1965 (3) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the escaped income. A return was filed by the petitioner and an assessment was made under section 23(3) read with section 34(1)(a) of the Income-tax Act, 1922. The petitioner filed an appeal against the assessment order to the Appellate Assistant Commissioner. That appeal was dismissed on 2nd January, 1963. Against this order she filed an appeal before the Appellate Tribunal and the Appellate Tribunal by its order dated 29th May, 1964, allowed the appeal in part. As the petitioner deliberately concealed the particulars of her income, the 2nd respondent referred the case to the 1st respondent, as the minimum penalty that will have to be imposed would exceed Rs. 1,000. The 1st respondent thereafter issued a notice under section 274(2) read with section 271 of the Act calling upon the petitioner to show cause why a penalty should not be imposed. The petitioner gave an explanation. After considering the explanation the 1st respondent passed the order impugned in this case imposing upon the petitioner a penalty of Rs. 5,896 on the ground that the petitioner has deliberately concealed the particulars of her income. Exhibit P-1 is a copy of that order. The petitioner filed an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 149 or section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly. " The assessment proceedings in the case were completed on 15th September, 1961, and, therefore, the learned Advocate-General submitted that since the assessment proceedings are in respect of an year after the year ending 31st March, 1940, the proceedings for the imposition of a penalty can be initiated only under the repealed Act. The argument of the learned Advocate-General was that, though clause (d) of section 297 speaks only of a notice under section 34 of the repealed Act the proceeding for imposition of penalty is really a part of the proceeding under section 34 of the repealed Act, and, therefore, the proceeding for the imposition of penalty would also come within the ambit of clause (d)(i). I am not satisfied that this is the correct interpretation of that clause. Clause (g) of sub-section (2) of section 297 reads as follows :- " Any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March, 1962, or any earlier year, which is completed on or after the 1st day of April, 1962, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon this question at this stage. But the learned Advocate-General referred me to the decision of the Supreme Court in K. K. Kochunni v. State of Madras and submitted that it is open to the petitioner to approach this court for a declaration under article 226 of the Constitution that she is not liable to be prosecuted as there is no provision in the Act corresponding to section 28(4) of the Act of 1922, even though no steps have been actually taken for that purpose. The learned Advocate-General also cited the cases of State of Bombay v. United Motors (India) Ltd. and Himmatlal H. Mehta v. State of Madhya Pradesh in support of his contention. I do not think that these cases have any application to the facts of this case. In all these cases the statutes impeached proprio vigore imposed liabilities on persons or changed their status which warranted the invocation of the jurisdiction under article 226. That apart, I do not think that there is any substance in the contention that the petitioner stands in danger of being prosecuted for an offence under section 277 of the Act. Section 277 reads as follows : " If a person makes a statement in any verification under this Act or under any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd section 271 of the Act are as follows : " 28. (1) If the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income ; he or it may direct that such person shall pay by way of penalty, in the case referred to in clause (a), in addition to the amount of the income-tax and super-tax, if any, payable by him, a sum not exceeding one and a half times that amount, and in the cases referred to in clauses (b) and (c), in addition to any tax payable by him, a sum not exceeding one and a half times the amount of the income-tax and super-tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income . . ." "271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner, in the course of any proceedings under this Act, is satisfied that any person---... (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer was to vindicate public justice by punishing the offender, whereas the object of the latter was to render evasion unprofitable and to secure to the State compensation for damages caused by attempted evasions. They were mutually exclusive and, but for section 28(4), there would have been no bar to launching a prosecution for an offence under section 52, even though a penalty has been imposed on the assessee on the same facts. That these are mutually exclusive remedies appears from what Brandeis J. said in Helvering v. Mitchell. " Congress may impose both a criminal and a civil sanction in respect to the same act or omission. The remedial character of sanctions imposing additions to a tax has been made clear by this court in passing upon similar legislation. That are provided primarily as a safeguard for the protection of the revenue and to reimburse the Government for the heavy expense of investigation and the loss resulting from the taxpayer's fraud .... The fact that the Revenue Act of 1928 contains two separate and distinct provisions imposing sanctions and that these appear in different parts of the statute, helps to make clear the character of that here invoked. The san ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 28 of the repealed Act or under section 271 of the Act was or is imposed on the basis that it was or is an offenee. For the offence punishment was or is prescribed such as imprisonment, fine or both. The imposition of penalty on the basis of an act or omission by an assessee is not because the act or omission constitutes an offence, but because that act or omission would constitute an attempt at evasion. Therefore penalty is exacted not because an act or omission is an offence but because it is an attempt at evasion of tax on the part of the assessee. Article 20(1) of the Constitution can have no application to a case where a penalty is imposed not as punishment for an offence but for some other collateral purpose. A heavier penalty for failure to pay tax would not have attracted the application of the corresponding article of the Constitution of the United States : see Banker's Trust Co. v. Blodgett. In that case, in answer to the contention that to reach into the past and provide greater punishment than what the law did when the crime was committed incurred the constitutional prohibition of an ex post facto law, the court said : " The penalty of the statute was not in pun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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