SIVAGAMINATHA MOOPANAR AND SONS Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE are petitions for the issue of writs of prohibition forbidding the first respondent, the Income-tax Officer, Second Circle, Madurai, and the Collector of Madurai from proceeding with the collection of penalties levied against the petitioner by the first respondent for the assessment years 1944-45, 1945-46, 1946-47 and 1947-48, the four petitions relating to the four years mentioned above.

(2.) THE petitioner is a yarn dealer. Part of his business consists of exports to Ceylon. For the assessment year 1944-45 he submitted a return to the Income-tax authorities claiming a loss of Rs. 23,891. In regard to the next year, 1945-46, his return disclosed a net profit of Rs. 25,152. THE returns in respect of both the years were taken up for consideration together by the then Income-tax Officer, Madurai, Sri Rathnaswami, who came to the conclusion that the returns of the petitioner should not be accepted and that he had deliberately furnished false particulars regarding his income and after making some additions computed his total income for the year 1944-45 as resulting in a profit of Rs. 3,914. THE tax payable on this income was Rs. 183-15-0 for which a demand notice was issued. For the year 1945-46 the Income-tax Officer determined the net assessable income at Rs. 1,28,376. THE tax computed on the basis of this figure came to Rs. 67,951-4-0 for which a demand notice was issued under section 29 of the Act. THE assessments were completed and these assessment orders were passed on 31st March, 1947. On the previous day, that is on 30th March, 1947, he issued a notice to the petitioner to show cause why a penalty should not be levied for the deliberate concealment of his income and for furnishing false particulars of such income under section 28(1) (c). THE assessee took the assessment order in appeal to the Appellate Assistant Commissioner and when that was dismissed, to the Income-tax Appellate Tribunal. This appeal was dismissed on 10th December, 1949. We shall complete the narration of the assessment proceedings for the years 1946-47 and 1947-48 before referring to the penalty proceedings in regard to which notice had been issued relating to the years 1944 to 1946. For the year 1946-47 the assessees return disclosed a net income of Rs. 18,668 while for 1947-48 the assessee returned an income of Rs. 16,623. THE assessments in respect of these two years were taken up at the same time by Sri Ram, Income-tax Officer, Madurai, who had succeeded Sri Rathnaswami. This was completed by an order dated 22nd December, 1949. THE Income-tax Officer found that there had been suppression of income and adding back the items not disclosed in the accounts, the income for 1946-47 was computed in the figure of Rs. 52,270 and that for the succeeding year 1947-48 at Rs. 43,205 and tax on the above basis was demanded. THE petitioner did not file any appeal against the assessment orders relating to these two years but applied to the Commissioner in revision. THEse revisions were disposed of by an order dated 22nd November, 1950. THE result of this order was that in respect of the year 1946-47 the assessee got some relief by the cancellation of an addition of Rs. 7,444 to his income, while the revision in respect of this assessment for 1947-48 was completely dismissed.

(3.) THE next point is as regards section 28 offending against the equal protection of laws guaranteed by article 14 of the Constitution. To understand the objection it would be necessary to set out the circumstances under which the authorities might impose penalties under section 28. Under this section, the authorities empowered to impose a penalty are three in number, viz., (1) the Income-tax Officer, (2) the Appellate Assistant Commissioner and (3) the Income-tax Appellate Tribunal. Each of them has the power to levy penalties in the course of proceedings before him or them. THE grounds which might give rise to these penalties are enumerated in three clauses (a) , (b) and (c) of sub-section (1). THEy run thus :