VELU PILLAI J. - This petition is to quash exhibit P-7, by which the Income-tax Officer imposed a penalty on the petitioner under section 28(1)(c) read with section 18A(9) of the Indian Income-tax Act 1922 (referred to hereinafter as the Act). There was a completed assessment against the petitioner for the assessment year 1954-1955 for a sum of forty-six thousand odd rupees. The Income-tax Officer made a demand on the petitioner under section 18A of the Act for advance payment of income-tax for the assessment year 1956-57, specifying the petitioners income as forty-six thousand odd rupees, on the basis of the completed assessment as aforesaid for the year 1954-1955. The petitioner made a counter-estimate for an income of ten thousand rupees and ultimately by exhibit P2, he was assessed on a total income of thirty-four thousand nine-hundred and nine rupees for that assessment year. This was inclusive of the sum of over sixteen thousand rupees received by the petitioner by way of interest on an amount which had been decreed to him as compensation under the Land Acquisition Act and also of his share of the income of the firm which had taken over his business from April 1953. When exhibit P2 was passed the Income-tax Officer made a note in it that as the petitioner had not shown in his return the sum of sixteen thousand odd rupees received by him as interest as aforesaid action under section 28(1)(c) of the Act was being taken separately; but this was in respect of the contents of the return made by the petitioner and does not relate to the present proceedings which were based on the return of ten thousand rupees which the petitioner had submitted, in answer to the demand for advance payment of income-tax.
Section 18A(9) and 28(1)(c) so far as they are material to this case are as follows :
'18A. (9) If the Income-tax Officer in the course of any proceedings in connection with the regular assessment, is satisfied that any assessee -
(a) has furnished under sub-section (2) or sub-section (3) estimates of the tax payable by him which he knew or had reason to believe to be untrue, or.......
the assessee shall be deemed in the case referred to in clause (a), to have deliberately furnished inaccurate particulars of his income, and in the case referred to in clause (b) to have failed to furnish the return of his total income; and the provisions of section 28, so far as may be shall apply accordingly.'
'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 particulars of such income,
he or it may direct that such person shall pay by way of penalty,.....'
As held by Chagla C.J., in Commissioner of Income-tax v. Gokuldas Harivallabhadas :
'The proceedings under section 28(1)(c) in their very nature are penal proceedings, and the elementary principles of criminal jurisprudence must apply to these proceedings and nothing is more elementary at least in this country in crimianl jurisprudence than the principle that the burden of proving that the accused is guilty is always upon the prosecution....'
In passing exhibit P7 the Income-tax Officer relied on two grounds first that the explanation offered by the petitioner that the profits of the firm for the year in question could not be ascertained before the end of March, 1956 was unacceptable, and secondly, 'the fact that he himself had shown a much higher income than what he had estimated not to speak of the income fixed by me (him) in the assessment is a clear indication that he knew very well at the time of filing the counterestimate that it was a false one.' The sustainability of the first ground is not open for review under article 226 but the second ground constitutes an error of law apparent on the face of the record for from mere law be drawn. It is not known how far this error had contributed to the decision made by the Income-tax Officer to impose the penalty. This is sufficient ground for cancelling exhibit P7.
The petitioners learned counsel advanced a further contention that it is a debatable question, whether the interest received by the petitioner under the Land Acquisition Act constitutes income which assessbale to tax under the Act and that therefore the disparity in the Officer. The Allahabad High Court had taken the view in Behari Lal Bhargava v. Commissioner of Income-tax that it is not assessable, but this view has been doubted by two other High Courts in India. The this point before the Income-tax Officer. The notice to the petitioner to show cause against the levy did not specify the grounds doubt raised this point before the revisional authority but it was overruled. In the absence of any indication in exhibit P7 to the contrary it is reasonable to think that the Income-tax Officer had been influenced also by the fact that this amount was received by the petitioner just a few days before he filed his counter-estimate. The error which the Income-tax Officer could then be deemed to have committed in this respect consisted in allowing himself to be infuluenced by the receipt by the petitioner of this sum of money which accounted for a substantial part of the disparty between the counter-estimate made by him and the amount on which he was ultimately assessed for the year. This conclusion as to the error is of course a matter of inference though as I think a reasonable inference to make. However I prefer to rest my decision in this petition on the first ground set forth earlier. The result is that exhibit P7 is quashed but without costs.