MANCHANDA J. - This is a case stated under section 66(1) of the Income-tax Act (hereinafter referred to as the Act). The question referred is :
'Whether, on the facts and in the circumstances of the case, the provisions of section 28(1)(c) were attracted ?'
The material facts are these : The original assessment of the assessee was completed on 28th January, 1950, on an income of Rs. 8,350 from business and Rs. 100 from property. On 19th February, 1952, a notice under section 34 was issued on the basis of information received that the assessee had purchased a house on 30th August 1948, for Rs. 14,500. The source of money for purchasing that property was not disclosed. The explanation furnished was that, though the sale deed and the property stood in the name of the assessee he was in fact a benamidar for his wife by her mother. The wife did not go into the witness box not was there any other material placed on the record by the assessee, and, a therefore, the sum, of Rs. 14,500 was treated as income from an undisclosed source. During the course of the assessment proceedings a penalty notice under section 28(1)(c) was issued. In due course, a penalty of Rs. 3,392 was levied. The Appellate Assistant Commissioner and the Tribunal upheld the levy of the penalty. Hence, the reference at the instance of the assessee.
The main contention of learned counsel for the assessee is that the penalty proceedings are quasi criminal in nature and the burden of proving concealment or the furnishing of inaccurate particulars is always upon the department, and, in the present case, that burden has not been discharged, because there was no material placed on the record in these proceedings except that which was already to be found in the assessment proceedings and that evidence can never be enough on which to found a penalty under section 28(1)(c) of the Act. It was urged that the initiation of penalty proceedings under section 28(1)(c) was invalid. Reliance has been placed for this proposition on an unreported decision of this court in Gangadhar Baijnath v. Commissioner of Income-tax and the decision of the Patna High Court in Khemraj Chagganlal v. Commissioner of Income-tax. The facts of the former case dare not known, but, in the latter case, there was a credit entry in the name of the wife of one of the members of the family in the account books of the Hindu undivided family and in the course of the assessment proceedings, the explanation given that the amount really belonged to the wife of one of the members was disbelieved and the impugned sum was added as income from an undisclosed source. When it came to the penalty proceedings the mere rejection of the explanation in the assessment proceedings was made the basis for imposing the penalty. The Patna High Court, in those circumstances, pointed out that penalty proceedings are penal in the character and go to show that the assessee was guilty of the offence mentioned in that section. Further, that the mere fact that the assessee was not able to establish by satisfactory evidence the explanation offered did not mean that the explanation was false or that the assessee had been guilty of deliberate suppression of the particulars of its income within the meaning of section 28(1)(c). Therefore, on the facts of that case, it was held that there was no material before the income-tax authorities to hold that the assessee had been guilty of the suppression of the particulars of its income. On the other hand, a Division Bench of this court in Lal Chand Gopal Das v. Commissioner of Income-tax has taken the view that there is no essential difference between 'tax' and 'penalty' and, as the nature of the receipt is within the personal or special knowledge of the assessee, the onus will lie upon him to prove it, and that there is no warrant for saying that there must be some material in addition to that before the authorities in the assessment proceedings to go into this question, for, even if it is assumed that penalty proceedings are quasi-criminal in character, the burden upon the department has been duly discharged. The sale deed was in the name of the assessee, and it was, therefore, for him to have disclosed in his return the purchase of the house in his name with an explanation as to why the income therefrom was not being returned as he was only the benamidar for his wife. The department therefore, was entitled to presume that the apparent state of affairs was the real one and that per se was sufficient to discharge the initial burden. Thereafter, the burden undoubtedly shifted to the assessee to prove that he was only a benamidar for his wife and that he had nothing to do with this property or the income therefrom. On the facts and the circumstances of this case, therefore, it must be held that the penalty proceedings under section 28(1)(c) were attracted.
It was attempted to be argued by learned counsel for the assessee that the Income-tax Officer who had levied the penalty was different from the one who had given the assessee an opportunity under section 28(3) of the Act, and, therefore, he had no jurisdiction to levy the penalty. No such grievance appears to have been made before the Income-tax Appellate Tribunal and no facts bearing upon it have been set out in the statement of the case. Therefore, no such question can be said to arise out of the order of the Tribunal. It is no doubt true that before the Appellate Assistant Commissioner such a contention was raised but this was rejected on the ground that, although the notice under section 28(3) was issued on the 22nd of February 1957, and was served on the assessee personally on the 8th of March, 1957, yet he had not cared to respond to it till the 14th October, 1958. Further, the contention on merits had also no force as the Appellate Assistant Commissioner had remanded the matter to the Income-tax Officer whereupon the assessee was given every opportunity of elucidating the stand already taken by him. The remand report was submitted on the 12th January, 1960, and, upon considering it, the penalty levied was affirmed. On the facts of this case, therefore, even if such a question could be said to arise out of the order of the Tribunal, it would be one without merit.
For the reasons given above, the question is answered in the affirmative and against the assessee. The reference is answered accordingly. The assessee will pay the costs of the reference which we assess at Rs. 200. Counsels fee is also assessed at Rs. 200.
Question answered in the affirmative.