Law:

Section:

Section 271(1)(c) read with section 277 of the Income-tax Act, 1961 - Penalty - For concealment of income - Whether proceedings resulting in levy of penalty against a delinquent assessee for violation of any of prescribed statutory provisions of Income-tax Act, cannot be equitable to a punishment inflicted on said assessee as if he has committed an offence which is triable by a criminal Court and, therefore, such penalties do not in any way violate article 20(1) of Constitution - Held, yes FACTS For the assessment year 1959-60, the petitioner company submitted a return of a total income of Rs. 4,89,758. The ITO did not accept the return and completed the assessment re-determining the total income at Rs. 8,10,980. While completing the petitioner's assessment on 16-3-1964, after the coming into force, the new Act, the ITO initiated proceedings for levy of penalty by issuing a notice under section 271(1)(c) of the new Act. The Officer referred the subject under section 274(2) of the new Act to the IAC, who had issued the impugned notice under section 274(2), read with section 271(1)(c) of the new Act. While challenging the impugned notice, the petitioner claimed that on a comparison of the provisions relating to the imposition of penalty under the old Act and the new Act, the petitioner had been discriminated since proceedings were initiated under the new Act for the imposition of penalty notwithstanding the fact that the petitioner's assessment related to an assessment year anterior to 1-4-1962. It was suggested that the proceedings sought to be commenced, though for the purpose of imposing a penalty, was virtually to book the petitioner as if it had committed an offence, and that not being available to the revenue, since the old Act prohibited such a process against a delinquent assessee, the provisions under which proceedings were initiated should be struck down as offending article 20 of the Constitution of India. HELD The question whether a given provision in a status is a penal one or not is sometimes not easy of comprehension. This is because the word "penal" is somewhat ambiguous in its scope and content. A penalty may be the subject-matter of a breach of…

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