1986 PLP (Trib (PTD)

Rs. 16,795 1980‑81 Rs. 18,671

5. Simultaneously show‑cause ‑notices were served upon the assessee under section 116 of the Ordinance for concealment of income from pro perty. As explanation submitted by the assesses did not find favour with the Income‑tax Officer, the assessee was charged to penalty under section 111 of the Ordinance as under:‑ Assessment year Penalty imposed under section 111 of the Ordinance. 1978‑79 Rs. 1,913 1979‑80 Rs. 719 1980‑81 Rs. 1,000

6. Against imposition of ,penalty, the assessee filed appeals before the learned C.I.T. (Appeals) which were disposed of vide appeal Nos. 1357 to 1360 dated 13‑3‑1985. In consequence thereof, quantum of penalty was reduced to 50% of the tax evaded by the assessee. In other words, quantum of penalty was fixed as under by the learned C.I.T. (Appeals)‑: Assessment year Quantum of penalty fixed by the learned CIT (Appeals). 1978‑79 Rs 950 1979‑80 Rs. 350 1980‑81 Rs. 500

7. Reduction allowed by the learned C.I.T. (Appeals) in the quantum of penalty‑for the charge years 1978‑79, 1979‑80 and 1980‑81 was contested by the department before the Tribunal. In this connection, the only griev ance of the department is that the learned C.I.T. (Appeals) fell into an error in reducing penalty to 50% of the tax evaded by the assessee as according to section 111 of the Ordinance minimum penalty for conceal ment of income is equal to the tax which would have been evaded if the income as returned by the assessee had been accepted as the correct income.

8. The learned DR has at the outset drawn my attention to section 111 of the Ordinance according to which penalty for concealment of income could not be less than 100% of the tax sought to be evaded. He has invited my attention to the relevant part of the said section which is set out below:‑ "He or it may impose upon such person a penalty not exceeding 21 times but in no case less than the amount of tax which would have been evaded if the income as returned by such person had been accented as the correct income."

9. Arguing further, the learned D R has stated that in this case, tax evaded in respect of the charge years 1978‑79, 1979‑80 and 1980‑81 amoun ted to Rs. 1,913, Rs. 719 and Rs. 1,000 respectively. He has, therefore, submitted that according to law, penalty could not be less than the amount of tax sought to be evaded. Finally, be has strongly pleaded for restoration of penalty imposed by the Income Tax Officer.

10. The learned counsel of the assessee, on his part, has stated that in the relevant part of section 111, the word used is "may" instead of "shall". He has accordingly emphasised that penalty could be imposed at less than the tax evaded by the assessee.

11. After giving my earnest consideration to arguments of both the parties, it is my considered opinion that the word "may" has to be interpreted with reference to first part of the sentence which prescribes ceiling of penalty for concealment of income. The discretion given by the word "may" therefore, by virtue of second part of the sentence ranges from minimum of 100% to 250% of the tax evaded by the assessee. In the present case, undoubtedly tax evaded by the assessee was Rs. l 913 Rs. 719 and Rs 1,000 for the charge years 1978‑79, 1979‑80 and 1980‑81 respectively. This fact has not been controverted by the learned AR of the assessee. Therefore, according to the provisions of section III of the' Ordinance penalty could not be less than the amount of tax which would have been evaded if the income as returned by the assessee had been accepted as the correct ii come In other wards, penalty could not be less than 100% of the tax evaded by the assessee. On account of this legal position, I have been left with no other alternative but to vacate the order of the learned C.I.T. (Appeals) and restore that of the Income‑tax Officer in respect of each year. In consequence of this finding, all the departmental appeals succeed. M.Y.H. Appeals allowed.