P.V. Dixit, C.J.
1. This is an application under Articles 226 and 227 of the Constitution for the issue of a writ of certiorari for quashing an order passed by the Additional Assistant Commissioner of Sales Tax, Indore, imposing a penalty of Rs. 20,000 on the petitioner under Section 43(1) of the Madhya Pradesh General Sales Tax Act, 1958 (hereinafter referred to as the Act).
2. The material facts are that an order for the assessment of sales tax for the year 1962-63 was made by the Additional Assistant Commissioner of Sales Tax on 14th February, 1964. At the conclusion of that order the Assistant Commissioner observed that during assessment it had been noticed that the petitioner had deliberately concealed its turnover and had submitted false returns; and that this called for action under Section 43(1) of the Act and directed the issue of a notice to the petitioner under that provision.
3. On receipt of the order of assessment and a notice of demand as also a notice under Section 43(1), the petitioner applied for copies of certain documents relied on by the Additional Assistant Commissioner in the order of assessment passed by him. The petitioner's grievance is that copies of many documents were not given to it and copies of some documents were furnished to it after the passing of the order of penalty on 16th March, 1964. The petitioner, however, filed its reply to the notice under Section 43(1). Therein it was stated that the applicant had maintained correct accounts; that there was no deliberate concealment of its turnover; and that it had not been supplied with copies of certain statements and documents on the basis of which the order of assessment had been made. The reply also contained a prayer for being allowed to examine some 30 witnesses and for the verification of accounts.
4. The Additional Assistant Commissioner rejected the submissions made by the petitioner in its reply. In the impugned order he observed that 'the books and documents on which the assessment order was passed were not new to the assessee and that it had. inspected them several times'; that those books and documents had been examined at the time of assessments; that it was not necessary to examine any witnesses; and that they should have been examined at the time of assessment. The Additional Assistant Commissioner rejected the contention of the petitioner that the findings given in assessment proceedings could not operate as res judicata in penalty proceedings by just observing that the petitioner had not been able to prove that the concealment of its turnover was not deliberate. After making these observations the Additional Assistant Commissioner stated his conclusion that the petitioner-assessee had deliberately concealed its turnover and had submitted false returns. It must also be noted that an appeal filed by the petitioner against the order of assessment dated 14th February, 1964, is pending before the appellate authority. The Additional Assistant Commissioner rejected the prayer of the petitioner for staying the penalty proceedings till the disposal of the appeal.
5. Having heard learned Counsel for the parties we have reached the conclusion that this application must be granted. Section 43(1) of the Act is as follows:--
43. Power of Commissioner or appellate authority to impose penalty. --(1) If the Commissioner or the appellate authority in the course of any proceeding under this Act, is satisfied that a dealer has deliberately concealed his turnover in respect of any goods or furnished a false return, the Commissioner or the appellate authority, as the case may be, may after giving the dealer a reasonable opportunity of being heard, direct that the dealer shall, in addition to the tax payable by him, pay by way of penalty a sum not exceeding the amount of the tax which would have been avoided if the return furnished by the dealer had been accepted as correct.
It will be seen that a penalty under Section 43(1) can be imposed on an assessee only if the authority mentioned in the provision is satisfied that the assessee had deliberately concealed his turnover or furnished a false return, and only after giving the assessee a reasonable opportunity of being heard. The proceedings under Section 43(1) being in their very nature penal proceedings, the burden of proving the essential ingredients for imposition of the penalty is not on the assessee but on the department. The assessment proceedings and penalty proceedings are different in their nature. The findings given in assessment proceedings are no doubt relevant and admissible in penalty proceedings; but they do not operate as res judicata for the reason that the considerations that arise in penalty proceedings are entirely different from those in assessment proceedings. Under Section 43(1) a penalty can be imposed only if there is deliberate concealment of turnover or if the dealer has furnished a false return. The conclusion, therefore, of the assessing authority in assessment proceedings that the return filed by the assessee is false or that he has concealed his turnover cannot be made the sole basis of an order of penalty. In rebuttal of the evidence led by the department the assessee is entitled to adduce evidence to show that no penalty ought to be imposed on him. The provisions of Section 43(1) are analogous to Section 28(1)(c) and (3) of the Indian Income-tax Act, 1922. With reference to the provisions in the Indian Income-tax Act it has been held in several cases that it is for the department to establish that there has been conscious and deliberate concealment of income on the part of the assessee; that the findings given in assessment proceedings do not operate as res judicata in penalty proceedings; and that any evidence sought to be adduced in the course of penalty proceedings by the assessee is relevant and admissible not for the purpose of affecting or varying the assessment order in any way but for showing that no penalty could or ought to be imposed on him. (See Dwarka Prasad Sheokaran Das v. Commissioner of Income-tax, U.P.  24 I.T.R. 410, Commissioner of Income-tax, Burma v. A.A.R. Chettiar Firm  1 I.T.R. 285; and Commissioner of Income-tax v. Gokuldas Harivallabhdas  34 I.T.R. 98). The principles laid down in the cases just referred to apply equally in the case of an imposition of penalty under Section 43(1) of the Act.
6. Here, in passing an order of penalty against the petitioner the Additional Assistant Commissioner disregarded all these principles. He disallowed the petitioner from examining any witness on the ground that the proper stage of examining witnesses and account books was the time of assessment. Without giving the petitioner any opportunity of proving that there was no deliberate concealment of its turnover he observed that the petitioner had not been able to prove that the 'concealment was not deliberate' and thus brushed aside the petitioner's contention that the finding in assessment proceedings did not operate as res judicata. The Additional Assistant Commissioner denied the petitioner a reasonable opportunity of being heard also by refusing to furnish copies of statements and documents on the basis of which the assessment order had been passed. The Additional Assistant Commissioner all along proceeded on the basis that it was for the petitioner to prove its innocence and not for the department to prove the guilt; and that the finding reached by him in the assessment proceedings about the petitioner having concealed its turnover and submitted false returns concluded the matter. It is thus plain that the order of penalty passed by the Additional Assistant Commissioner is patently in violation of the provisions of Section 43(1) of the Act and cannot be sustained.
7. The impugned order of penalty is so manifestly arbitrary and capricious that the applicant, cannot be denied the relief of the issue of a writ of certiorari for quashing that order merely because under Section 38 of the Act the assessee could have appealed against that order.
8. For these reasons, the order passed on 16th March, 1964, by the Additional Assistant Commissioner of Sales Tax under Section 43(1) of the Act imposing a penalty on the petitioner is quashed. As the appeal filed by the petitioner against the assessment order is still pending, it would but be proper for the Additional Assistant Commissioner to stay further proceedings under Section 43(1) of the Act till the disposal of that appeal. The petitioner shall have costs of this application. Counsel's fee is fixed at Rs. 150.