Case Name : Dr. S. Reddappa Vs. Union of india
Citation :  232 ITR 62 (kar.)
Court : Karnataka high court
Section : 234A
Meaning : The dictionary meaning of the word ‘compensate’ is to make good the financial loss or injury sustained; the neutralisation of opposing forces; payment; process of compensating for sense of failure or inadequacy by concentrating on achievement or superiority, real or fancied, in some other sphere; and the dictionary meaning of the word ‘penal’ is imposing, constituting a punishment, a penalty; to put under a disadvantage. In the fiscal statute, the word ‘compensatory’ would mean to make good the loss suffered by the revenue on account of facts of commission and omission attributable to the assessee. If, under the tax laws, the assessee is obliged to pay to the state, for the purposes of providing amenities to society, his failure to do the needful can be enforced by making provisions, compelling such assessee to perform the statutory and social obligation and not to avoid the payment of tax, compulsorily resorted to, by illegal means. In the case of failure to perform the statutory and social obligation, an assessee can be directed to compensate society for his acts of commission and omission, as appears to have been done by incorporating the impugned sections in the act. Creating circumstances for compelling the assessee to discharge his statutory obligation cannot be termed to be a penalty. The collection of tax being an act of the state for providing protection, security and other amenities to the society, cannot, in all circumstances, be termed to be either a penalty or a punishment. The failure on the part of the assessee to abide by the provisions of the income-tax act has been made a basis for forcing him to compensate society by paying interest in terms of the offending sections.