COMMISSIONER OF INCOME TAX WEST BENGAL versus ANWAR ALI

Citation: [1971] 1 S.C.R. 446 · Decided: 29-04-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Judgment (excerpt)

446 
COMMISSIONER OF INCOME TAX WEST BENGAL 
A 
v. 
ANWAR ALJ 
April 29, 1970 
(J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.] 
Income-tax Act (II of 1922), s. 28-Penalty proceedings-Whether 
of a criniinal nature-,-()nus on deparflnent show a1nount concealed CIS 
incon1t>. 
B 
The Income-tax Officer, while assessing the respondent to tax discover-
ed an undisclosed bank account of the respondent for a large sum. 
He 
C 
did not accept the explanation of the respondent as to the source of the 
amount and held that it represented income from an undisclosed source. 
Therea'fter ne initiated penalty proceedings under s. 28 and imposed a 
penalty which was confirmed by the Appellate Assistant Commissioner. 
In appeal, the Tribunal held that penalty proceedings were of a criminal 
nature and that the burden lay 
on the department to show that the 
amount concealed was of a revenue nature and was assessable as income 
and that the onus was not discharged in the present case by merely show-
D 
ing that the assessee's explanation was not accepted in the assessment pro-
ceedings. The High Court agreed with the Tribunal. 
Jn appeal to this Court, 
HELD . ( 1) Penalty proceedings 
are included in the expression 
"assessment" and the true nature of a penalty is the imposition of an addi-
tional tax. 
But, one of the principal objects of s. 28 is to provide 
a 
deterrent against recurrence of default on the part of the assessee. There-
fore, the section is a penal provision and the proceedings were elf a penal 
nature. [450 B-C] 
c. A. Abraham v. Income-tax Officer, 41 l.T.R. 425 (S.C.), explained. 
Commissioner of Income-tax, Ahmedabad v. Gokuldas Harivallabhdas 
34 I.T.R. 
918, 
Commissioner of Income-tax Gujarat v. L. H. Vora, 56 
I.T.R. 126 and Commissioner of Income Tax Bihar and Orissa v. Mohan 
Mal/ah, 54 I.T.R, 499, approved. 
Mon1a11 Ran1 Ra1n Kun1ar v. Conimissioner of lnco1ne-tax, u·.P., 59 
l.T.R. 135 and Lal Chand Gopal Das v. Commissioner of 
lnco1ne-tax, 
U.P., 48 I.T.R. 324, not approved. 
Hi11durta11 Steel Ltd, v. State of Orissa, C.£.s. 
Nos. 883-892/66 dt. 
4-8-1969 and Fattorini (Thomas) (Lanchaslzire) Ltd, v. Inland Revenue 
Commissioner, (1943) (II) I.T.R. Supp. 50, referred to. 
E 
F 
G 
(2) The gist of the offence under s. 28(1) (c) is that the assessee has 
concealed the partjculars of his income or deliberately 'furnished inaccu-
rate particulars of such income, and 
therefore, 
the 
department 
must 
establish that the receipt of the amount in dispute constitutes income 
H 
of the assessee. 
If there is no evidence on the· record except the explana-
tion has been found to be false, if does not 'follow that the receipt consti-
tutes his taxable income. f450 E-G] 
C.I.T. v. ANWAR ALI (Grover, /.) 
447 
A 
Commissioner of Income-tax, Alimedubad v. Gokuldas 
Harivallabh-
B 
c 
D 
E 
F 
.G 
H 
d11s, 34 l.T.R. 98, approved. 
(3) Since the proceedings under s. 28 are of a penal nature and the 
burden is on the department to prove that a particular amount is a revenue 
receipt, the finding given in the assessment proceedings that the assessee's 
explanation is false and that the disputed amount rer.resents income is. 
evidence but is not conclusive. 
Before penalty cou d be imposed the· 
entirety of circumstanCes must reasonably point to the conclusion that 
the disputed amount represented income and that the assessee 
had 
consciously concealed the particulars oJ his income or had cdiberately 
furnished 
inaccurate particulars. !.450-451 A.CJ 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2560 of 
1966. 
Appeal from the judgment and order dated May 11, 1966 of 
'the Calcutta High Court in Income-tax Matter No. 98 of 1962. 
S. T. Desai, G. C. Sharma and R. N. Sachthey, for the 
appellants. 
· 
D. K. De, A. N. Sinha, Rathin Das for P. K. Mukherjee, for 
respondent. 
The Judgment of the Court was delivered by 
Grover, J, 
This is an appeal by special leave from a judg-
ment of the Calcutta High Court answering the following question 
which was referred to it by the Tribunal in the negative and 
in favour of the assessee. 
"Whether on the facts and in the circumstances of 
the case, the Income-tax authorities were justified in 
imposing a penalty on the assessee under Section 
28 (1 ) ( c) of the Income-tax Act ?" 
The assessee during the assessment year 1947-48, the correspond-
ing previous year being the financial year ending on March 31, 
1947 was a partner in the firm 'of M/s. Haji Sk. Md. Hussain 
Md. Jan o

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