CHENNURU VENKATARAMANAIAH CHETTY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS application under article 226 of the Constitution is on behalf of the assessee for the issue of a prohibition, prohibiting the Income-tax Officer, Vizianagaram, from proceeding further in pursuance of the notice issued to the petitioner in respect of the assessment year 1947-48 under notice issued under section 28 of the Indian Income-tax Act (XI of 1922). The section 28 of the Indian Income-tax Act on March 21, 1952, and the assessment in respect of those years was completed on the same date, i.e., on March 21, 1952. The order levying the penalty was issued on 31st January, 1955. The assessee preferred an appeal against this order to the Appellate Assistant Commissioner an the Appellate Assistant Commissioner cancelled the order imposing penalty, on June 13, 1956, on the ground that there was no hearing given to the assessee before the order was passed. Therefore, accepting the contention of the assessee, the order of the imposition of the penalty was cancelled. After this on 12th July, 1956, the Income-tax Officer issued a fresh notice calling upon the petitioner to appear before him on a particular day and to show cause why the order imposing the penalty should not be made under section 28(1) of the said Act. The notice also gave the petitioner to show cause in writing. It is the issue of this notice that is now being challenged by the petitioner in this writ petition.

(2.) THE main contention of the learned counsel for the petitioner is that after the proceedings relating to the assessment were completed, the Income-tax Officer became functus officio and he had, therefore, no jurisdiction to issue a notice under section 28(1) of the Act. A further argument is advanced that when the Appellate Assistant Commissioner had cancelled the order of penalty, the Department ought to have appealed against the order, and that not having done so, that order became final and the Income-tax Officer could not have issued a fresh notice in the face of the order.For an appreciation of the contentions raised by the learned advocate appearing on behalf of the petitioner, it is necessary to consider the provisions of section 28 of the Indian Income-tax Act. THE relevant provisions of section 28 are as under :

(3.) THIS question, in my opinion, did not directly arise in the case before the Madras High Court, and further there can be no doubt about it that in that in the instant case, the proceedings relating to the levy of penalty were initiated at the time when they were pending before the Income-tax Officer, and because of a defect in the notice issued and which did not comply with section 28, sub-section (3), of the Act, that notice was held to be invalid and the order cancelled. The case referred to above can only be an authority for the proposition, that the proceedings relating to the levy of penalty should be initiated when such proceedings are pending before the authorities concerned. There can be no doubt that in the instant case the penalty proceedings were initiated when the Income-tax Officer had seisin of the case. In my opinion, this decision of the Madras High Court cannot help the case of the petitioner.