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TMI Blog1971 (11) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 256(2) of the Income-tax Act, 1961 (Act No. XLIII of 1961) (hereinafter referred to as "the Act"), for directing the Appellate Tribunal to state the case and refer the following questions of law to this court for its opinion: "(i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that no penalty can be levied under section 271(1)(c) of the Income-tax Act, 1961 ? (ii) Whether, on the basis of material on record and in view of specific opportunity given to the assessee to prove the amount as his income, could an inference of concealment of income be drawn or not ? (iii) Whether it was necessary for the department to prove by positive evidence the fact of concealment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because, in his opinion, the hundies were bogus. The Income-tax Officer thereafter under section 271(1)(c) of the Act initiated penalty proceedings against the assessee for claiming- (i) personal expenses of the partners as business expenses; and (ii) for claiming interest and commission on bogus hundies. However, as the minimum penalty imposable was above Rs. 1,000, he referred the matter to the Inspecting Assistant Commissioner under section 274(2) of the Act. The Inspecting Assistant Commissioner held against the assessee on both the counts and in consequence levied on it a penalty of Rs. 1,29,340. The assessee appealed to the Tribunal. Two submissions were advanced- (i) that against the order of the Income-tax Officer hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x v. Gokuldas Harivallabhdas, it was held that the proceedings for the levy of penalty under the Income-tax Act were in the nature of criminal proceedings and it was for the department to prove the concealment. In C. A. Abraham v. Income-tax Officer, the Supreme Court had held that a penalty was no more than an additional tax. The application of the aforesaid principle was extended to imposition of a penalty for concealment of income by the Allahabad High Court in Lal Chand Gopal Das v. Commissioner of Income-tax. It was held that there was no essential difference between a tax and a penalty and that the proceedings for the levy of a penalty were not in the nature of criminal proceedings. The aforesaid view of the Allahabad High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asi 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 character what would be the nature of the burden upon the department for establishing that the assessee is liable to payment of penalty. As has been rightly observed by Chagla C. J. in Commissioner of Income-tax v. Gokuldas Harivallabhadas the gist of the offence under section 28(1)(c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and, therefore, the department must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that whether there was concealment or not was a question of fact. In Commissioner of Income-tax v. Kotrika Venkataswamy and Sons, dealing with a similar question, the Supreme Court held that if, on the material before it, the Tribunal refused to draw the inference that there was concealment, its finding was purely one of fact on which no reference was permissible. In the instant case also the Tribunal considered the totality of material before it and came to the conclusion that no concealment was proved by the department, to warrant the levy of a penalty on the assessee. This finding was a finding of fact and, under the circumstances, the Tribunal was quite justified in rejecting the application of the Commissioner for a reference ..... X X X X Extracts X X X X X X X X Extracts X X X X
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