GURU PROSAD SHAW Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE short point raised in his reference is whether under S. 28 of the IT Act a notice is required to be given for purposes of an assessee showing cause why a penalty should not be imposed before the close of the assessment.

(2.) THE relevant facts are shortly as follows. On 23rd Jan., 1941, an assessment was made upon the assessee and at the same time the ITO discovered that the assessee had not returned income and had deliberately failed to disclose it. On 25th January notice was served upon the assessee to show cause why a penalty should not be inflicted as provided in S. 28. The notice was returnable for the 10th Feb., 1941. It does not appeal on what date the assessee showed cause, but undoubtedly he did so and on 2nd May, 1941, the maximum penalty was imposed being 1 1/2 times the amount of the tax which the non-disclosure, had it succeeded, would have avoided. The material provisions of S. 28 are as follows : Sub-s. (1) : "If the ITO, the AAC, or the 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 1-1/2 times the amount of 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." Sub-s. (3) : "No order shall be made under sub-s. (1) or sub- S. (2) unless the assessee or partner, as the case may be, has been heard, or has been given a reasonable opportunity of being heard." The question raised in the present reference is as follows : "Whether on the facts and in the circumstances of the case the penalty was lawfully imposed."

(3.) ALL that S. 28 requires is that there should be a discovery and the person discovering it is satisfied that as an assessee has concealed particulars of his income or deliberately furnished inaccurate particulars, in the course of any proceedings under the IT Act. There is nothing in S. 28 from which it can be said that the notices under sub-s. (3) must be given before the conclusion of the assessment, and attention had not been drawn to any other section in the Act by which such requirement in necessary. In my view the matter is concluded by the wording of sub-s. (1) of the section. It states, "If the ITO, the AAC, or the Tribunal in the course of any proceedings under this Act is satisfied that any person had concealed income." There is no difference between the procedure which either the ITO, the AAC or the Tribunal should adopt. Matters in connection with an assessment would not (sic) before either the AAC or the Tribunal before an assessment has been concluded, and consequently any notice under sub-s. (3) which either the AAC or the Tribunal might see fit to give must be given after the conclusion of the assessment.