JAGADISAN J. - The Income-tax Officer, Tuticorin, levied a penalty of Rs. 20,000 on Kalasami Nadar, the assessee, on the ground that he deliberately furnished inaccurate particulars of his income in the assessment year, 1950-51, and that the provisions of section 28(1)(c) of the Indian Income-tax Act were attracted. On appeal by the assessee the Appellate Assistant Commissioner, Tuticorin, confirmed the levy, but the Income-tax Appellate Tribunal on a further appeal to it reduced the levy to a sum of Rs. 10,000. At the instance of the assessee this court directed the Tribunal to state a case raising the following question of law :
'Whether the order of the Tribunal sustaining the imposition of the penalty to the extent it did is valid'
The facts are as follows : The assessee is a trader in grocery and he is also carrying on business as a public carrier running the service of transport by lorries. In respect of the assessment year 1950-51, he submitted a return of his total income as Rs. 7,113 without including his income from the lorry business. This lorry business is run by the assessee both in his name and in the name of his minor son, P.K.K. Selvaraj. In response to the statutory notice issued to the assessee in the course of the assessment proceedings he furnished details of profits from his lorry business on 15th December, 1950. The assessing officer appears to have treated the information furnished by the assessee on 15th December, 1950, as a return of his income from the lorry business. Two credit entries in favour of the assessee, (i) Rs. 26,360 dated 1st June, 1949, and (ii) Rs. 15,000 dated 2nd January, 1950, were as already stated, is the lorry business of the assessee run in the name of his son. The total of these two amounts, Rs. 41,360, was treated by the assessing authority as income of the assessee form undisclosed sources of remittances from Burma.
It must now be stated that the assessee claimed to have owned properties in Burma. He left Burma when the Second World War broke out and managed to reach India. After the cessation of the war he went back to Burma and sold his properties. He explained the two cash entries in the books of account as representing moneys brought from Burma after disposal of his capital assets in that place. Except his statement there was no proof of the source of the money covered by these cash entries and the taxing authorities treated the amount as income from an undisclosed source and assessed him accordingly. This assessment to tax of the said amount has now become final.
Notice was issued to the assessee to show cause why penalty should not be levied on the ground of his having concealed his income under the camouflage of credit entries in his favour in the accounts of the lorry business run in the name of his son. The assessee again reiterated the hands as they represented the amounts brought to India by effecting sales of his lands in Burma. Even at this stage the assessee failed to produce any evidence in support of his version. The Income-tax Officer, therefore, reached the conclusion that the assessee was liable to the imposition of penalty as he came within the mischief of section 28(1)(c) of the Act. That provision enables the authorities to levy penalty if they are satisfied that any assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income. The Appellate Assistant Commissioner practically affirmed the view of the Income-tax Officer. The Tribunal has, however, chosen to sustain the penalty imposed, on reasons which are somewhat different from those adduced by the department. The Tribunal has given its reasoning in the following terms :
'The above concealments from the return are not disputed. The fact that the notice did not specify this omission from the return is not of much practical help to the assessee. The assessee had given his explanation for the omission in his letter dated 15th December, 1950, and it is going to be no different if it had been mentioned in the section 28(3) notice; he had availed himself of suitable opportunity to put forth this version; it will, therefore, be needless to send the case back to the Income-tax Officer for completion of the formalities which cannot eventually alter the basis facts of the case. For the above reasons we hold that this is a case which attracts penalty under section 28(1)(c).'
The learned counsel for the assessee contends that the only charge which the assessee was called upon to meet was that he was guilty of concealment of income in the shape of credit entries, that there was no charge of failure to furnish the return of his total income, nor was there any charge of his failure to include the income from lorry business in the first return made and that the Tribunal after having accepted the case of the assessee that the department failed to prove concealment of income ought not to had affirmed the order levying penalty in the manner it did. In other words, the argument is that the assessee has been found guilty of charge no framed against him and which he had no opportunity to answer. We are unable to agree with this contention. Though the order of the Tribunal is not clear and convincing and suffers from the infirmity of bad reasoning it cannot be gainsaid that it was satisfied that the requirements of section 28(1)(c) are fully present so as to justify the levy of penalty.
It is urged on behalf of the assessee that penalty proceedings being quasi-criminal in character the charge should be brought home to the assessee by positive evidence adduced by the department. Section 28 of the Act is no doubt a penal provision of law intended to punish tax dodgers for their evasiveness and fraudulent misdeeds, screening taxable income from taxation. Proceedings for the levy of penalty area quite clearly in the nature of criminal proceedings. The department is the prosecutor and the assessee is the culprit charged. Unless the charge is established or proved the alleged delinquent goes scot-free as he cannot be called upon to establish his innocence. This golden thread, as Lord Sankey expressed it, runs through the web of the English criminal law. It is not necessary to cite any authority in support of the legal position as we conceive it to be a simple basic and elementary rule foundation of any civilised system of criminal jurisprudence.
We would, however, like to refer to the decision of the Bombay High Court in Commissioner of Income-tax v. Gokuldas Harivallabhdas as the learned counsel for the petitioner strongly relied on it. It was held in that case the question whether the assessee had committed an offence under section 28(1)(c) of the Act was a question of fact for the Tribunal to decide. It was further held that the proceedings under section 28(1)(c) being in the nature of penal proceedings, the duty to prove that the assessee was guilty of the offence was upon the department, and that this onus to prove is not discharged by reason only of the fact that the assessee gave a false explanation in regard to the income alleged to have been concealed. We may say that the general proposition of law laid down in the Bombay case regarding the nature of the penalty proceedings under the Act has our respectful concurrence.
To say that the burden of proof is generally on the department does not conclude all questions. What degree or quantum of proof is needed, is it mere likelihood or certainty of something in between the two extremes Speaking of the degree of cogency, which the evidence of a criminal charge must reach before the accused can be convicted, Denning J., as he then was (now Lord Denning), observed thus in Miller v. Minister of Pensions :
'That degree is well settled. It need not reach certainty, but it must carry a high degree of probability. Proof beyond reasonable doubt does not mean proof beyond the shadow of a doubt. The law would fail to protect the community if it admitted fanciful possibilities to deflect the course of justice. If the evidence is so strong against a man as to leave only a remote possibility in his favour which can be dismissed with the sentence of course it is possible, but not in the least probable, the case is proved beyond reasonable doubt, but nothing short of that will suffice.'
In regard to the degree of cogency which the evidence must reach to help the discharge of burden of an issue in a civil case, the learned judge observed :
'That degree is well settled. It must carry reasonable degree of probability, but not so high as is required in a criminal case. If the evidence is such that the tribunal can say : We think it more probable than not, the burden is discharged, but, if the probabilities are equal, it is not.'
We think that the above passages correctly, if we may say so with respect, demarcate the line of difference between civil and criminal cases regarding quantum of evidence necessary to discharge the onus of proof. Treating the penalty proceedings under the Indian Income-tax Act as being more in the nature of criminal proceedings than civil proceedings, we can say that the facts must establish a high degree of probability of the assessee being guilty of the charge against him and nothing more and, of course, nothing less. Imaginary possibilities ought no to be assumed to weaken the conclusion which is the result of a fair inference from the materials on record. Any rigid standard of proof in these matters cannot be laid down and we are hesitant to embark on such a venture.
Here is a case in which the assessee was confronted with two dubious entries of cash credits in his favour in his business accounts. It is not now disputed that the lorry service in the name of the assessees minor son really belonged to him. In the assessment proceedings which have now become final the cash credits have been treated as income liable to tax. This finding against the assessee will not of course really conclude the question whether the amounts constituted his income or not. It might have been open to the assessee even in the proceedings under section 28 of the Act to show that they were not his income and the department could not have prevented him from adducing proof in that behalf holding that different view had been taken in the assessment proceedings. But the department is not precluded from relying upon the finding in the assessment proceedings to establish, prima facie, that the cash credits represented his income. We are unable to see why an inference that the assessee deliberately furnished inaccurate particulars of his income should not be drawn from the fact that the sum of Rs. 41,360 was shown as mere cash entries in the business accounts, that the department found that it was taxable income, and that the assessee has all along been unable sustain the position that it represented capital and not income. The department and the Tribunal were reasonably and properly satisfied on the materials on record that the assessee fell within the mischief of section 28(1)(c) of the Act and we have no reason to differ from them.
The question is answered against the assessee, who will pay the costs of the department. Counsels fee Rs. 250.
Question answered in the affirmative.