1934 (6) TMI 34

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..... he Income-tax Officer, being satisfied "that the accounts produced did not contain the whole of the assessees money-lending transaction, and that the assessees .had other accounts which were not produced" assessed their income at ₹ 75,892 under Section 23 (4) of the Act. The assessment at that figure is now final and conclusive. Thereafter proceedings were taken under Section 28 (1) of the Act for the purpose of imposing a penalty upon the assessees. Section 28 (1) runs as follows: "If the Income-tax Officer, the Assistant Commissioner or the Commissioner, in the course of any proceedings under this Act is satisfied that an assessee has concealed the particulars of his income or has deliberately furnished inaccurate .....

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..... could have been imposed under Section 28 (1) was the difference between the tax on ₹ 6,310 and the tax on ₹ 37,520. Mr. Foucar, on behalf of the assessees, submitted that the question to be decided was the amount of income tax that would have been avoided if the false return had been accepted as a correct return on the date when the false return was made. He contended that as at that time the estimated assessment under Section 23 (4) had not yet been made it followed that the only two figures that could have been taken into consideration were (i) the amount of income set out in the false return and (ii) the amount of the true income as subsequently ascertained in the course of the inquiry pursuant to Section 28 (3). I do not se .....

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..... come declared by the assessees and the tax on the income ascertained under the Income-tax Act in respect of which the assessment has been made ''; and in K.M.O. Chettiyar Firm v. The Commissioner of Income-tax [1934] ILR 12 Rang. 268, Burma. "that in imposing the penalty the maximum limit that is placed upon the quantum is that the penalty must not exceed the difference between the amount of the tax on the income assessable under the Act, and the amount of the tax upon the assessable income as returned by the assessee. In the present case the Commissioner of Income-tax in the exercise of his discretion did not impose the maximum penalty, and in proceeding under Section 28 the income tax authorities ought to act fairly and re .....

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