This is an application for the issue of an appropriate writ for quashing an order imposing a penalty upon the petitioner under section 271 of the Indian Income-tax Act, 1961, hereinafter referred to as the Act. For the assessment year 1954-55, the petitioner did not file her return. After the close of the year in question the Income-tax Officer found in dealing with the assessment of her son, Sri. M. K. Mohammed Kunji, that there were certain deposits in the name of the petitioner in a bank. As the Income-tax Officer had reason to believe that by reason of the failure on the part of the assessee to make a return, her income chargeable to income-tax for the year had escaped assessment, he issued a notice under section 34(1) (a) of the repealed Act calling upon the petitioner to file a return of the escaped income.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 field 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 against exhibit P-1 order before the Appellate Tribunal, Madras. It is stated that the appeal has not been disposed of. The order imposing the penalty was followed by a notice demanding the amount. The petitioner questions the validity of exhibit P-1 order on various grounds.
The main submissions on behalf of the petitioner were : (1) that no proceedings could have been started under section 271 of the Act as, under section 297 of the Act, proceedings for the imposition of penalty could only be initiated under the repealed Act of 1922 and, therefore, the proceedings in the instant case ought to be quashed, and (2) that the petitioner is being subjects to greater penalty than that which was in force at the time of the commission of the offence in that the petitioner stands in danger of being prosecuted under the Act from which he was immune under section 28 (4) of the Income-tax Act, 1922.
As regards the contention, that, since there was a reduction in the assessable income of the petitioner by the order of the Appellate Tribunal the order impugned requires reconsideration, I need only say that as the petitioner has already filed an appeal against the order imposing the penalty, it is open to the appellate authority to consider the question whether any modification in the order appealed against is necessary in view of the fact that there has been a reduction in the assessable income of the petitioner by the Appellate Tribunal.
The learned Advocate-General, appearing for the petitioner submitted that proceedings for imposition of penalty upon the petitioner could be taken only under the repealed Act and that the proceedings taken under the Act were incompetent. In support of this contention he relied on section 297(2)(d) which reads :
'Where in respect of any assessment year after the year ending on the 31st day of March, 1940, -
(i) a notice under section 34 of the repealed Act had been issued before the commencement of this Act, the proceedings in pursuance of such notice may be continued and disposed of as if this Act had not been passed;
(ii) any income chargeable to tax had escaped assessment within the meaning of that expression in section 147 and no proceedings under section 34 of the repealed Act in respect of any such income are, pending at the commencement of this Act, a notice under section 148, may, subject to the provisions contained 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 interpretations of that clause. Clause (g) of sub-section (2) of section 297 reads of 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, may be initiated and any such penalty may be imposed under this Act.'
From this clause it appears to me that proceedings for imposition of penalty in respect of any assessment for the year ending on 31st March, 1962, or any earlier year which is completed on or after the 1st day of April, 1962, shall be under the Act. As the assessment was for the assessment year 1954-55, and as it was completed after April, 1962, the proceeding for imposition of penalty under the Act was perfectly competent. It, therefore, appears to me that the proceeding for the imposition of penalty under section 271 of the Act are not open to attack.
The learned Advocate-General next submitted that, though under section 52 of the Income-tax Act of 1922 concealment of the particulars of income by an assessee was an offence punishable with simple imprisonment or with fine or with both, if a penalty was imposed upon an assessee under section 28 of that Act, a prosecution upon the same facts could not have been launched for the commission of an offence as section 28 (4) expressly prohibited it, but that under the Act, since there is no such prohibition, a prosecution can be launched on the same facts even after the imposition of a penalty, as section 271 of the Act does not prohibit it, and that this would be a violation of the provisions of article 20(1) of the Constitution. The learned Advocate - General contended that, since no prosecution could have been launched against the petitioner under the repealed Act if a penalty had been imposed upon her, under section 271 of the Act, even if that section does not contain a provision similar to that in section 28 (4) of the repealed Act. In other words, the argument was that as article 20(1) of the Constitution prohibits the imposition of a penalty greater than that which might have been imposed upon her, under section 271 of the Act, even if that section does not contain a provision similar to that in section 28 (4) of the reapealed Act. In other words, the argument was that as article 20(1) of the Constitution prohibits the imposition of a penalty greater than that which might have been imposed upon the petitioner under the law in force on the date of the commission of the offence, she is not liable to be prosecuted, as a penalty has already been imposed upon her on the same facts. The answer to this contention is twofold. In the first place, the petitioner is not being subjected to a greater penalty. No prosecution has been started against her. The department has not taken any steps in that direction. Therefore, it is not necessary for me to make a pronouncement 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 a 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 person 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 227 of the Act. Section 277 reads as follows :
'If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable with simple imprisonment which may extend to six months, or with fine which may extend to one thousand rupees, or with both.'
From the wording of the section it is clear that, unless person makes a statement in any verification under the Act or under any rules made thereunder or delivers an account or statement which is false and which he either knows or believes to be false or does not believe to be true, he shall not be punishable. The act of the petitioner is not an offence under the provisions contained in section 52 of the repealed Act. Therefore, a prosecution on the basis that she committed an offence under the provisions of section 277 would not lie. Hence the apprehension of the petitioner that she will be prosecuted under the Act is an idle one. But is she liable to be prosecuted for an offence under section 52 of the repealed Act, as section 28 (4) of that Act has been repealed Section 28 (4) was as follows :
'No prosecution for an offence against this Act shall be instituted in respect of the same facts on which a penalty has been imposed under this section.'
Since a penalty has been imposed upon the petitioner in respect of the act of the petitioner committed while the repealed Act was in force, it is doubtful whether a prosecution under section 52 of the repealed Act would lie, even though section 28 (4) has been repealed. At any rate counsel for the department submits that the department has no intention to prosecute the petitioner under section 52 of the repealed Act. Therefore, I see no basis for the apprehension of the petitioner that she stands in danger of a prosecution either under the repealed Act or under the Act.
The learned Advocate-General then submitted that no minimum in the quantum of the penalty was fixed under section 28 of the repealed. Act, whereas under section 271 of the Act a minimum has been prescribed, and that the effect of the minimum in the quantum of the penalty was to subject the petitioner to a greater penalty for the commission of the offence within the meaning of article 20(1) of the Constitution. The relevant portions of section 28 of the repealed Act and 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 particular of such income;
he or it may direct that such person shall pay be 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 be 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 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 shall pay by way of penalty,...
(iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than twenty per cent., but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the as the correct income.'
The argument was that since a minimum in the quantum of the penalty was prescribed under the Act that took away the discretion which the concerned officer, had under the repeated Act in the matter of imposing the penalty, and therefore the petitioner is being subjected to a greater penalty. I am not impressed by the argument. The decision reported in Satwant Sing v. State of Punjab, although it deals with imposition of fine on conviction, indirectly throws light upon the question. It is observed in the judgment;
'The fine which could have been imposed upon the accused under section 420, Penal Code, was unlimited. A law which provided for a minimum sentence of fine on conviction could not be read as one which imposed a greater penalty then that might have been inflicted under the law at the time of the commission of the offence where for such an offence there was no limit as to the extent of fine which might be imposed. Under article 20 of the Constitution all that has to be considered is whether the ex post facto law imposes a penalty greater than that which might be inflicted under the law in force at the time of the commission of the offence. It could not be said that section, 10 of the Ordinance 29 of 1943 imposed any such penalty and, therefore, was in contravention of the provisions of article 20' (See the head-note).
The maximum penalty being the same in both the enactments, I think there is no substance in the contention that the petitioner is being subjected to a greater penalty under the Act because a minimum is specified in section 271 of the Act. Quite apart from this, I do not think that article 20(1) has any application even if it be assumed that there has been an enhancement in the quantum of the penalty to be imposed under the Act. Penalty is nothing but compensation for damages collected by the State for attempting to evade the provisions of the Act (see Sivagaminatha Moopanar & Sons v. Income-tax Officer) The object of sections 52 and 28 of the repealed Act were different. The object of the former was to vindicate a 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 fact. That these are mutually exclusive remedies appears from what Brandies 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 addition to a tax has been made clear by this court in passing upon similar legislation. That are provided primarily as a safeguard for the heavy expense of investigation and the loss resulting from the taxpayers 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 made clear the character of that here invoked. The sanction of fine and imprisonment.... for willful attempts in any manner to evade or defeat any income-tax introduced into the Act under the heading penalties is obviously a criminal one. The sanction of 50 per centum addition if any part of any deficiency is due to fraud with intent to evade tax.... introduced into the Act under the heading Additions to the tax was clearly intended as a civil one. This sanction and other additions to the tax are set forth in Supplement M, entitled Interest and additions to the tax.'
And also from what Jackson J. said in Spies v. United States :
'The penalties imposed by Congress to enforce the tax laws embrace both civil and criminal sanction. The former consist of additions to the tax upon determinations of fact made by an administrative agency and with no burden on the Government to prove its case beyond a reasonable doubt. The latter consist of penal offences enforced by the criminal process in the familiar manner. Invocation of one does not exclude resort to the other.'
No conviction for any offence is involved in the imposition of a penalty. Article 20(1) of the Constitution will have application only when a person is subjected to penalty greater then that which might have been inflicted under the law in force at the time of the commission of the offence. This would indicate that commission of an offence and a conviction thereof are necessary in order that the provisions of the article may be attracted. A question has been raised in some cases a to whether the prohibition extends to penalties other than punishments awarded in judicial proceedings. No such question will arise if the word 'penalty' is read with the word 'convicted' in the earlier part of the clause. While the first part of the article bars a conviction, the second part relates to the punishment or sentence that may be inflicted upon such conviction. A penalty, therefore, would come within the purview of article 20(1) only if the earlier part of the clause is attracted, i.e., there must have been a conviction for an offence. Unless there is a conviction, no question of the latter part of the article applying will arise. Although the concealment of the particulars of the income was made an offence under section 277 of the Act, I cannot say that the penalty imposed under section 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 offence. 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 case where a penalty is imposed not as punishment for failure to pay tax would not have attracted the application of the corresponding article of the Constitution of the United States : see Bankers Trust Co. v. Blodgett. In that case, in answer to the contention that to reach into the past and provide greater punishment that 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 statutes was not in punishment of crime, and it is only such that the constitution prohibition applies.'
So, I take the view that, even assuming that the penalty has been enhanced under the Act, that would not attract the constitutional inhibition of article 20(1) because the penalty is imposed not as punishment for the commission of an offence, even though the act for which the penalty is imposed is an offence liable to be punished. I, therefore, overrule this contention of the learned Advocate-General.
The writ petition fails, and it is dismissed. No costs.