COMMISSIONER OF INCOME TAX WEST BENGAL Vs. ANWAR ALI

JUDGEMENT

(1.) THE Judgment of the court was delivered by

(2.) THIS is an appeal by special leave from a judgment 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 :

(3.) THE first point which falls for determination is whether the imposition of penalty is in the nature of a penal provision. THE determination of the question of burden of proof will depend largely on the penalty proceedings being penal in nature or being merely meant for imposition of an additional tax, the liability to pay such tax having been designated as penalty under Section 28. One line of argument which has prevailed particularly with the Allahabad High court in Lal Chand Gopal Das's case (supra) is that there was no essential difference between tax and penalty because the liability for payment of both was imposed as a part of the machinery of assessment and the penalty was merely an additional tax imposed in certain circumstances on account of the assessee's conduct. THE justification of this view was founded on certain observations in C. A. Abraham v. Income-tax Officer, Kottayam and Another. It is true that penalty proceedings under Section 28 are included in the expression "assessment" and the true nature of penalty .has been held to be additional tax. But one of the principal objects in enacting Section 28 is to provide a deterrent against recurrence of default on the part of the assessee. THE section is penal in the sense that its consequences are intended to be an effective deterrent which will put a stop to practices which the Legislature considers to be against the public interest. It is significant that in C. A. Abraham's case (supra) this court was not called upon to determine whether penalty proceedings were penal or of quasi-penal nature and the observations made with regard to penalty being an additional tax were made in a different context and for a different purpose. It appears to have been taken as settled by now in the sales tax law that an order imposing penalty is the result of a quasi-criminal proceedings : (Hindustan Steel Ltd. v. THE State of Orissa). In England also it has never been doubted <PG>189</PG> that such proceedings are penal in character ; Fattorini (Thomas) (Lancashire) Ltd. v. Inland Revenue Commisssioner.