Tambe, J.:— This is a reference under s. 66(1) of the Indian Income-tax Act, 1922 (hereinafter called “the Act”) at the instance of the assessee. The question that falls for consideration is the construction of s. 28(1)(c) of the Act. We are here concerned with assessment year 1948–1949, the relevant previous year being S.Y 2003.

2. The assessee is a firm dealing in hessian twine, gunny bags, etc. on wholesale basis. In S.Y 2003, the Disposal Directorate sold to Laxmichand Govindji, a kariana merchant of Rajkot, two lakhs anti-gas water-proof bags under a delivery order dated May 1947 in the name of L.G Vaidya (Laxmichand Govindji). The payment of Rs. 1,80,000 for these bags was made by a firm known as Bhivandiwala & Co., on May 16, 1947. The payment was made by the said firm on behalf of Laxmichand. The next day of payment, Bhivandiwala & Co. received sum of Rs. 90,000 from Laxmichand (L.G Vaidya). The assessee under the power of attorney from the said Laxmichand of date June 12, 1947, sold the aforesaid bags from its (assessee's) own godown during the S.Ys 2003 to 2005, the corresponding assessment years being 1948–1949, 1949–1950 and 1950–1951. The sale-proceeds were credited to the account of Laxmichand. Out of these sale proceeds, the assessee paid the remaining balance of Rs. 90,000 to Bhivandiwala & Co. in due course of time. At the end of S.Y 2005, the credit balance of the sale proceeds amounting to Rs. 53,785 was in the books of account of the assessee.

3. The said balance was not repaid by the assessee to Laxmichand till the year 2010 and even at that time, it is said that the said amount was paid in cash. In respect of these transactions, the assessee showed a profit of Rs. 10,000 for the entire lot of two lakhs of bags. The profits were shown as Commission at Rs. 5 per 100 units. The said amount of profits of Rs. 10,000 was spread over the relevant three previous years for the assessment years 1948–1949, 1949–1950 and 1950–1951. Now the books of account of Laxmichand did not disclose any transaction in respect of the sales of these gunny bags, nor were there any entries relating thereto. In his return, for the assessment year 1949–1950, the relevant previous year being S.Y 2004, Laxmichand disclosed an income of Rs. 1,000 as estimated profits from this business of sale of bags besides his profits in the kariana business. The Income-tax Officer started inquiries. Laxmichand later submitted revised return declaring Rs. 13,000 as true profits from this business.

4. In the course of the said inquiries, the Income-tax Officer also commenced inquiry as regards the balance of Rs. 53,785 in the books of account of the assessee of S.Y 2005. He examined various witnesses including Laxmichand and Maneklal of Bhivandiwala & Co. and as a result of the inquiries, he came to the conclusion that the transactions relating to gunny bags were really the business of the assessee land not of Laxmichand. He further found that from the said business, the assessee had earned profits amounting to Rs. 24,000 in S.Y 2003, Rs. 13,000 in S.Y 2004 and Rs. 12,000 in S.Y 2005, which the assessee had suppressed in filing its return for the corresponding assessment years 1948–1949, 1949–1950 and 1950–1951. The Income-tax Officer further found that the amount of Rs. 90,000 said to have been paid by Laxmichand to Bhivandiwala & Co. on May 17, 1947, was in fact paid not by Laxmichand but by the assessee itself from a source not disclosed by the assessee to the Department. He accordingly included this amount of Rs. 90,000 also in the total income of the assessee for the assessment year 1948–1949. The Income-tax Officer also issued a notice under sub-s. (3) of s. 28 to the assessee, calling upon it to show cause why a penalty should not be imposed upon it for concealing the income in the said three assessment years.

5. We are here concerned only with the imposition of penalty in the first assessment year 1948–1949. It would, therefore, be sufficient if facts relating to the imposition of penalty for this year are mentioned. Now the income returned by the assessee in this assessment year was Rs. 45,904. The total income assessed by the Income-tax Officer amounted to Rs. 1,62,135. The details of the computation of the said income have not been given in the Statement of the Case. But it is necessary to know these details to appreciate the rival contentions which the parties raised before the Tribunal as well as before us. We would, therefore, state the details of computation relating to which there is no dispute between the parties. Now, in the assessment the Income-tax Officer has disallowed certain expenses claimed by the assessee, adding them back to the returned income. The Income-tax Officer determined that figure at Rs. 48,423. Deducting Rs. 288 therefrom as depreciation, the figure arrived at was Rs. 48,135. To this figure were added Rs. 90,000 as income from undisclosed source and Rs. 24,000 concealed profits earned from sale of anti-gas water-proof bags, in all, totalling Rs. 1,62,135. In response to the penalty notice issued under s. 28(1)(c) of the Act, the assessee appeared. The Income-tax Officer held that the tax sought to be avoided on the difference between the returned income of Rs. 45,904 and the assessed income of Rs. 1,62,135, amounted to Rs. 88,993 and one and half limes thereof would amount to Rs. 1,33,489. He, however, imposed a penalty of Rs. 62,000.

6. The assessee appealed against the imposition of the penalty to the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner, it was urged that there was no concealment of the income. The mere fact that the assessee failed to give proper explanation or that the explanation given by the assessee was not accepted by the Income-tax authorities was not sufficient reason or ground for holding that any income was concealed. Reliance was placed on the decision of this Court in Commr. of Inc.-tax v. Gokuldas Harivallabhdas . 1958 34 I.T.R 98.. The Appellate Assistant Commissioner upheld the contention of the assessee in respect of the aforesaid amount of Rs. 90,000 only. According to him, the Income-tax Officer was in error in treating Rs. 90,000 as concealed income for the purposes of imposition of penalty under s. 28(1)(c). He, however, affirmed the finding of the Income-tax Officer in respect of the amount of Rs. 24,000. But according to the Appellate Assistant Commissioner, the maximum penalty which could be imposed for concealment of income of Rs. 24,000 would come to Rs. 30,000 only. In these circumstances, he found that the imposition of a penalty of Rs. 20,000 would, in the circumstances, be proper. In this view of the matter, the Appellate Assistant Commissioner reduced the penalty to Rs. 20,000, from Rs. 62,000, for the relevant assessment year 1948–1949. The Department appealed against the reduction. The assessee also appealed against the imposition of penalty for all the three years. According to the assessee, there was no concealment of any income and therefore, no penalty could be levied. In the appeal filed by the Department, it was contended that on the finding that income amounting to Rs. 24,000 had been concealed by the assessee from the Department, the maximum penalty that could be imposed in law was on the footing that the tax avoided amounted to Rs. 88,993 and the maximum penalty thus amounted to Rs. 1,33,489; the Appellate Assistant Commissioner was in error in holding that the maximum penalty which could be imposed was on the basis of the concealed income only. The Tribunal affirmed the finding of the Appellate Assistant Commissioner that there was no concealment proved relating to the item of Rs. 90,000. The Tribunal, however, did not accept the assessee's contention that there was no concealment in respect of the said income of Rs. 24,000. In the result, the Tribunal affirmed the finding of the Appellate Assistant Commissioner as well as the Income-tax Officer that the assessee had concealed income to the extent of Rs. 24,000 for the assessment year 1948–1949. As regards the maximum amount of penalty permissible under s. 28(1)(c), the Tribunal observed:

“So long as concealment is thus established, either by one item or more, the quantum requires to be computed under section 28(1)(c) not on the basis of the tax on the items proved to have been concealed, but on the difference between the tax on his income as finally assessed and the tax that would have been avoided if the return had been accepted as true.”

7. In support of this view, the Tribunal placed reliance on the decision of the Andhra High Court in Kalidindi Subbaraju Gopalaraju v. Commr. of Inc.-tax . 1955 28 I.T.R 162. In this view of the matter, the Tribunal set aside the order of the Appellate Assistant Commissioner and restored that of the Income-tax Officer observing that as counsel for the assessee did not argue about the quantum of the penalty, he was restoring the order of the Income-tax Officer. In the result, the penalty that has been imposed against the assessee for the assessment year 1948–1949 amounts to Rs. 62,000. On an application by the assessee under sub-s. (1) of s. 66, the Tribunal has stated the case referring to us the following question of law:

“Whether in computing for purposes of levy of penalty under section 28(1)(c) the amount of income-tax and super-tax which would have been avoided if the income as returned had been accepted, such ‘income as returned’ includes items of income too, which though not actually returned had been added in the assessment solely on ground of lack of evidence?”

8. The question thus that falls for consideration relates to the construction of s. 28(1)(c). Section 28 enumerates certain acts of omission and commission referred to in cls. (a), (b) and (c) of sub-s. (1) of s. 28, which attract imposition of penalty. Now, the acts of commission and omission that attract penalty are to state briefly, (a) failure to furnish a return without resonable cause within the time required by the general notice or special notice or s. 34; (b) failure to comply with notice under sub-s. (4) of s. 22 and sub-s. (2) of s. 23; and (c) concealing particulars of his income or deliberately furnishing inaccurate particulars of such income. The material part of s. 28(1)(c) is in the following terms:

“28.(1) If the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person…

(c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income,

he or it may direct that such person shall pay by way of penalty,… in addition to any tax payable by him, a sum not exceeding one and half times the amount of the income-tax and super-tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income…”

9. There are four provisos to sub-s. (1). It is not necessary to reproduce them. Sub-section (2) relates to the powers of the Income-tax authorities and the Tribunal in cases where the profits of a registered firm are distributed otherwise than mentioned in the instrument and sub-s. (3) provides that no order imposing penalty either under sub-s. (1) or sub-s. (2) should be made unless a reasonable opportunity is given to the assessee or the firm to be heard. Sub-section (4) provides that no prosecution for an offence against this Act shall be instituted in respect of the same facts on which a penalty has been imposed. Sub-section (5) requires the higher authorities to send copies of their orders to the Tribunal. Sub-section (6) provides that the Income-tax Officer shall not impose any penalty under this (that) section without the previous approval of the Inspecting Assistant Commissioner.

10. Mr. Kolah, learned counsel for the assessee, contends that on a true construction of the aforesaid material clause, the penalty that could be imposed is only one and half times of the tax payable on the concealed income. Laying emphasis on the word “avoided”, Mr. Kolah argues that the maximum penalty has to be calculated only on the basis of tax ‘avoided’ i.e tax which has been evaded by reason of concealment and not tax that has escaped for any other reason. An assessee may take a mistaken view of fact or law. He may bona fide believing not include certain items of his income. The Income-tax authorities may take a different view and they may add that income. The additions do not attract penalty. Concealment may be for a very small amount and yet on the construction put by the Income-tax authorities and the Tribunal, the maximum penalty that could be imposed against the assessee could be disproportionately heavy to the small amount of concealment. Such is not the intention of the Legislature. On the other hand, the Legislature has provided that the maximum penalty that could be imposed is only one and half times of the tax that the assessee has tried to evade by reason of the concealment of the income. The additions made by the Income-tax authorities of the Tribunal to the income returned by him constitute part of the “income as returned by the assessee.” In the instant case, the only amount that has been added on account of concealment is Rs. 24,000. The rest of the additions on the ground of disallowance of certain expenditure and the addition of Rs. 90,000 as income from undisclosed source are parts of the income returned by the assessee. The maximum penalty thus, which could have been imposed in the instant case was one and half times the tax on the difference between Rs. 1,62,135 and Rs. 1,38,135 (Rs. 48,135 as computed by the Income-tax Officer and Rs. 90,000 added as income from undisclosed source).

11. Mr. R.J Joshi, learned counsel for the Commissioner, on the other hand, contends that s. 28(1)(c) provides that if you find an item of concealment of income irrespective of its extent the maximum penalty that could be imposed is one and half times the difference between the tax on the total income finally assessed and the tax on the income returned i.e income shown by the assessee himself in his return and not income computed by the Income-tax Officer. In the instant case thus, the maximum penalty leviable is one and half times the amount of tax on the difference between the tax on Rs. 45,904 (returned income) and Rs. 1,62,135 (income as assessed by the Income-tax Officer). According to Mr. Joshi, the section only provides the maximum penalty. There is no hardship involved on any assessee. The discretion is left to the departmental authorities as well as the Tribunal to determine the amount of penalty within the maximum limits. The Income-tax authorities in exercise of this discretion would not be imposing a disproportionatly high amount as penalty in cases where the concealment is comparatively small. In support of his contention, Mr. Joshi has referred us to three decisions of the Rangoon High Court to which we would in due course advert and the decision of the Andhra High Court on which reliance has been placed by the Tribunal.

12. Now, the relevant part of s. 28(1)(c) speaks of maximum penalty that could be imposed and the limit is one and half times the income-tax and super-tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income. The construction turns on the true import and meaning of the expression “income as returned” and “income-tax and super tax avoided” in the event of acceptance of income as returned. Now, the expression “income as returned” is well understood in the Income-tax Act. It means income as shown by the assessee in his return and nothing else. The income as determined by the Income-tax Officer is termed as the income computed, or assessed by the Income-tax Officer. It is not understood in the Income-tax Act as income returned. Section 28 has to be read in the context of the provisions of s. 23. In fact, as will be seen on the language of s. 28 itself, proceedings under s. 28 arise when the Income-tax authorities or the Tribunal find certain acts of omissions or commission on the part of the assessee mentioned in the section discovered in the course of assessment. Section 23 relates to assessment. Section 22 requires every person whose total income during the previous year exceeds the amount which is not chargeable to income-tax to file a return of his total income and total world income during the previous year within the time-prescribed. Sub-section (1) requires the Income-tax authorities to give a general notice specifying a certain time within which persons whose income is chargeable to tax for filing a return. Sub-section (2) enables the Income-tax authorities to issue individual notices to persons who in the opinion of the Income-tax-Officers have earned income in the previous year chargeable to tax. When a notice under s. 22(2) is served on such person, he is required to file a return of his total income and total world income earned by him in the previous year within the time allowed in the notice. Sub-section (4) of s. 22 empowers the Income-tax Officer to serve a notice on any person who has either filed a voluntary return or on whom a notice under sub-s. (2) has been served, to produce certain documents. Turning to s. 23, which relates to the procedure to be followed in making assessment, sub-s. (1) provides that if the Income-tax Officer is satisfied without requiring the presence of the assessee or the production by him of any evidence that the return made under s. 22 is correct and complete, he shall assess the total income of the assessee and shall determine the sum payable by him on the basis of such return. In case the Income-tax Officer is not satisfied with the return, sub-s. (2) empowers him to require the person who has madf the return to attend the office producing certain documents and evidence etc., as required by the Income-tax Officer in support of the return filed, on the date fixed by him. Sub-section (3) provides that on the day specified in the notice issued under sub-s. (2) or as soon afterwards as may be, the Income-tax Officer after hearing such evidence as such person may produce and such other evidence as the Income-tax Officer may require, on specified points, shall, by an order in writing, assess the total income of the assessee and determine the sum payable by him on the basis of such assessment. Sub-section (4) relates to the procedure to be followed in making assessment on an estimate of income where the assessee has either not filed the return in response to the notice under sub-s. (2) or has failed to comply with the notice issued by the Income-tax Officer to produce documents. Such an assessment is generally termed as “the best judgment assessment”. It is, therefore, clear that a distinction is made in the Act itself between the assessment on the basis of the acceptance of income shown in his return by an assessee and the assessment made after recording evidence and holding an enquiry. There is thus a vital difference between income assessed and income returned. It is only when the Income-tax authorities or the Tribunal discovers contumacious or fraudulent conduct on the part of the assessee that the provisions of s. 28 relating to imposition of penalty come into play. The expression “income as returned” occurring in s. 28(1)(c), in our opinion, therefore, means income disclosed by the assessee in his return and not income computed or assessed by the Income-tax authorities minus the income added on the ground of concealment.

13. Turning now to the other expression “amount of income-tax and super-tax avoided”, it has been very strenuously argued by Mr. Kolah that the word “avoid” means “evade”. The expression “income-tax and super-tax avoided” means “income-tax and super-tax evaded”. It postulates avoidance of tax by dishonest means. The expression thus means nothing else but tax which has escaped assessment by reason of concealment of income on the part of the lassessee. It is indeed true that one of the shades of the meaning of “avoid” is “to evade”. But there are other shades of the meaning of “avoid” also. For instance, the Concise Oxford Dictionary gives the meaning of the word “avoid” as, “Shun, refrain from (thing, doing), escape, evade”. In what sense the word “avoid” is used would depend upon the context in which it has been used. Now, avoidance of income-tax and super-tax is mentioned in the context of the event of acceptance of the returned income as the correct income. We have already held that the income returned means income as disclosed by an assessee himself in his return and not income as assessed. When understood in this context, it appears to us that the word “avoided” is used in the sense “escaped”. The Legislature wants the Income-tax authorities to ascertain what would have been the amount of tax that would have escaped assessment had the income as shown in the return been accepted as the correct income and one and half times the said amount is the maximum limit within which the penalty could be imposed in a case where the Income-tax authorities or the Tribunal discovers or finds concealment, of income. The Legislature has not linked the amount of tax avoided to the amount of concealment of income. What Mr. Kolah wants us to do is to read the material part of s. 28(1)(c) differently in the following manner:

“One and half times the amount of income-tax and super-tax, if any, which, would have been avoided on account of the concealment of the particulars of his income or deliberately furnishing inaccurate particulars of such income, if the income as returned by such person had been accepted as the correct income.”

14. The Legislature has chosen not to do so. There is no such legislative intent disclosed in the provisions to link the avoidance of tax to the concealment of the income, or to hold that the maximum penalty prescribed in the section is only proportionate to the extent of concealment. In our opinion, the provisions of s. 28(1)(c) are analogous to the provisions of any penal statute. A penal statute defines various kinds of offences and prescribes the maximum penalty for each kind of offence, leaving it to the authorities dealing with any individual cases to impose penalty within the maximum limit prescribed in accordance with the nature or the gravity of the particular criminal act. To illustrate, s. 379 of the Indian Penal Code prescribes the maximum penalty for “theft” as “imprisonment of either description for a term which may extend to three years or with fine or with both.” A person may commit a theft of five rupees or five lacs of rupees. The maximum penalty prescribed for both these offences is the same. In the case of a person guilty of theft of Rs. 5 the Magistrate dealing with the case would impose a very light penalty, but on a person guilty of theft of five lacs of rupees, the Magistrate would impose a heavier penalty, the imposition of penalty being in the discretion of the Magistrate. Such appears to be the nature of the provisions contained in s. 28(1)(c). Clauses (a) to (c) of s. 28(1) define the nature of offences and the operative clause provides the maximum limits of the penalty which could be imposed in the event one or more offences mentioned in cls. (a) to (c) are discovered by the Income-tax authorities or the Tribunal in the proceedings before them. In our opinion, therefore, the maximum penalty that could have been imposed in the instant case is one and half times the amount of tax on the difference between the tax on the returned income of Rs. 45,904 and the tax on the assessed income of Rs. 1,62,135. The Tribunal was, therefore, in our opinion, right in the view it has taken. The view taken by us finds support in the decisions to which reference has been made by Mr. Joshi. The three decisions of the Rangoon High Court relate to the construction of s. 28 as it stood prior to its amendment. There is some difference in the provisions of s. 28(1)(c) then in force and now. However, the concluding part which we have to construe in the instant case was similarly worded in the earlier provision also. The maximum penalty which after the amendment is leviable is one and half times of the income-tax and super-tax avoided, while the maximum penalty that could be imposed prior to the amendment was “a sum not exceeding the amount of the income-tax which would have been avoided”. The earliest decision is Commsr. of Inc.-tax v. A.A.R Chettiar Firm.”3 Facts in that case were that the income returned was Rs. 6,310. The Income-tax Officer found that the true income had been concealed. Then he proceeded to make assessment under s. 23(4) estimating the income at Rs. 74,000. In the proceedings under s. 28, the assessee sought to lead evidence presumably to show that his real income did not amount to Rs. 74,000 but was less and therefore, the maximum penalty which could be imposed on him was much less than on the basis of his real income being Rs. 74,000. The Income-tax Officer, however, did not allow him to lead evidence. When the matter went to the High Court, Full Bench of three Judges held that the maximum penalty that could be imposed under s. 28 is a sum representing the difference between the tax on the income declared by the assessee and the tax on the income ascertained under the Act, in respect of which assessment has been made. As regards the evidence which the assessee had sought to lead showing that his real income was less than Rs. 74,000 and the refusal of the Income-tax Officer to permit the assessee to lead evidence in the penalty proceedings, it was held that

“In an inquiry under Section 28, evidence adduced by the assessee purporting to disclose the real income of the assessee is relevant and admissible in order to show either that no penalty ought to be imposed or that the amount of the penalty ought to be less than the maximum prescribed under Section 28, though not for the purpose of varying or affecting the assessment of tax made and the Income-tax Officer was not justified in refusing to admit such evidence.”

15. At page 286 of the report, the learned Chief Justice observed:

“…In my opinion, the maximum penalty that can be imposed under Section 28(1) is a sum representing the difference between the tax on the income declared by the assessee and the tax on the income ascertained under the Income-tax Act, in respect of which the assessment has been made.”

16. It follows from this decision that the extent of concealment has no relevance in the determination of the maximum limit within which the penalty could be imposed for the offence of concealment. The quantum or the extent of concealment is only relevant in determining the quantum of punishment within the permissible limit. The aforesaid decision in Commsr. of Inc.-tax v. A.A.R Chettiyar Firm was followed in K.M.C Chettiyar Firm v. Commsr of Inc.-tax . 1934 2 I.T.R 159.. It is not necessary to refer in detail to the facts of this case. The correctness of the decision in Commsr. of Inc.-tax v. A.A.R Chettiyar Firm was again considered by a larger Bench of five Judges in A.A.R Chettiyar Firm v. Commsr. of Inc.-tax . 1934 2 I.T.R 386.. Here, the income returned by the assessee in his return was Rs. 6,310. The Income-tax Officer found that there was a concealment and in the assessment made by him under s. 23(4), he assessed the assessee's income at Rs. 75,892. In the penalty proceedings under s. 28, the assessee produced his books of account and other material and it was found that his real income was Rs. 37,526. It was contended on behalf of the assessee that the maximum penalty that could be imposed under s. 28(1) was a difference between tax on Rs. 6,130 i.e the returned income and the tax on Rs. 37,526, i.e the maximum penalty could be imposed only on the basis of the tax on the amount of income that had been concealed from the Court and not on the basis of the difference between the income returned and the income assessed. It was contended that the view taken in Commissioner of Income-tax v. A.A.R Chettiyar Firm was erroneous. The contention raised on behalf of the assessee was not accepted. On the other hand, it was held that the maximum penalty that could be imposed under s. 28(1) is determined by ascertaining the difference between the amount of tax on the income set out in the false return and the amount of tax on the income in respect of which assessment has been made. The view taken in Commissioner of Income-tax v. A.A.R Chettiyar Firm was in turn confirmed by the larger Bench in this case. Again it was pointed out in this case, that the extent of concealment is only relevant for the purpose of determination of the amount of penalty within the maximum limit.

17. The decision of the Andhra High Court in Kalidindi Subbaraju Gopalaraju v. Commr. of Inc.-tax, Madras, relates to the construction of s. 28 after its amendment in 1939. The changes effected by this amendment in brief are addition of (i) failure to file a return; and (ii) failure to produce evidence and material in response to the notices as grounds for imposition of penalty. The measure of maximum penalty also has been increased from one time of income-tax avoided to one and half times of the income-tax and super-tax avoided. Facts in this case were: The assessee had returned an income of Rs. 19,639. In the assessment proceedings, it was found that the account books maintained by the assessee were not true. There was clear evidence to show that the assessee had concealed two items of income of Rs. 1,000 each received by him as sale proceeds of certain article. They were not credited in the books of account. He, therefore, assessed the income of the assessee on estimate basis under s. 23(3) and added an amount of Rs. 35,354 to the returned income of Rs. 19,639. In the penalty proceedings, it was contended on behalf of the assessee that the penalty was to be computed only on the basis of Rs. 2,000, the concealed income. The contention was not accepted. It was held that though there was evidence about concealment only as to the two items of Rs. 1,000 each under s. 28(1)(c) the penalty was to be computed not on the basis of the tax on Rs. 2,000 but on the difference between tax on his income as finally assessed and the tax that would have been avoided if this return had been accepted as true. At page 167 of the report, the learned Judge observed:

“…Once an assessment under section 23(3) has become final, the basis of the levy of the penalty is finally settled. In this case there is a clear finding by the Appellate Tribunal that there was concealment of particulars in regard to the two wagon-loads referred to above. The finding by itself is, in our opinion, sufficient to justify the levy of penalty and the penalty is to be computed with reference to the tax actually paid and the tax that might have been payable if the assessee's original return had been accepted as correct.”

18. Mr. Dwarkadas, learned counsel for the assessee, who replied to the argument of the learned counsel for the Revenue, contended that the decisions have not turned on the construction of the sections, but the observations of the learned Judges made in those cases are limited to the facts in those cases. In the alternative, he contended that if at all the relevant provisions of the Act had been construed in these decisions, they are limited only to cases where assessment is under s. 23(4). We are unable to accept the argument of Mr. Dwarkadas that the decisions in those cases have not turned on the construction of the section, or that the observations are limited only to the facts of those cases.

19. Assuming that the construction canvassed for by Mr. Kolah is a possible construction of s. 28(1)(c), in our opinion, in the instant case, it would not be proper to construe the section in a different manner than as construed by the Rangoon and the Andhra High Courts in the aforesaid decisions. In Maneklal Chunilal & Sons Ltd. v. Commr. of Inc.-tax . 1953 24 I.T.R 375. though this Court did not agree with the view as to the construction of s. 26 taken by the Madras High Court, it accepted the view of that Court, in conformity with the general policy which this Court has laid down in Income-tax matters. Mr. Dwarkadas pointed out to us that in one case we have departed from this rule and taken a view different from the Punjab High Court. Mr. Dwarkadas is right. But as it happened, the decision in Maneklal Chunilal & Sons Ltd. v. Commissioner of Income-tax had not been pointed out to us at that time. However, even assuming that we have once departed from the self-imposed rule mentioned in Maneklal Chunilal & Sons Ltd. v. Commissioner of Income-tax that would not be a good reason for again departing from it specially in this case.

20. Before parting with the case, it is necessary to mention that Mr. Kolah had stated before us that the following observations of the learned members of the Tribunal in para. 11 of its order do not correctly represent the position. The observations are:

“As Shri Kolah did not argue about the quantum in any of the three appeals, for the aforesaid reasons, we set aside the Appellate Assistant Collector's order for the assessment year 1948–1949 and restore that of the Income-tax Officer for that year.”

21. According to Mr. Kolah, he had argued as to the quantum of penalty. In fact, the assessee had even appealed as against the imposition of penalty of Rs. 20,000. It would, therefore, not be proper to say that Mr. Kolah did not argue as to the quantum of penalty when it was proposed to restore penalty of Rs. 62,000. Mr. Kolah also argued that the penalty imposed is disproportionate to the amount of concealed income. Now, there is some force in the contention of Mr. Kolah. The penalty imposed undoubtedly appears to be disproportionately heavy to the amount concealed. It has been found that the amount concealed is only Rs. 24,000. The penalty imposed is Rs. 62,000, nearly two and half times the amount concealed. The quantum of penalty has not been referred to us. A view has been taken in some cases that the quantum of penalty is not a question of law but a question of fact. Section 28 only provides the utmost limit to which penalty could be imposed. The quanum of penalty is left to the discretion of the Income-tax officers and it has been pointed in a decision to which the learned counsel for the revenue had made reference, that the Income-tax authorities in this matter should exercise the discretion in a judicious and equitable manner having regard to the extent of concealment. However, on the question referred to us it does not lie within our power to grant any relief to the assessee.

22. In the result, our answer to the question referred to us is in the negative.

23. The assessee shall pay the costs of the Commissioner.

24. Answer accordingly.