1960 (11) TMI 126 - HC - Income Tax

Summary

Issues:
1. Interpretation of section 28(3) of the Indian Income-tax Act regarding the imposition of penalty without issuing a fresh notice.
2. Validity of the penalty imposed under section 28(1)(c) for wilful concealment of income.

Analysis:

Issue 1: Interpretation of section 28(3) of the Indian Income-tax Act
The case involved the imposition of a penalty on the assessee for wilful concealment of income. The question arose whether a fresh notice under section 28(3) was required before the penalty could be imposed by a succeeding Income-tax Officer. The High Court examined the provisions of section 28(3) in conjunction with section 5(7C) of the Act. It was established that a successor-in-office had the authority to continue proceedings and impose penalties without issuing a fresh notice if the assessee did not demand the reopening of the proceeding. The Court relied on the interpretation of section 28(3) which requires a reasonable opportunity of being heard, either orally or in writing, before the imposition of a penalty. The decision was supported by a precedent from the Madras High Court, emphasizing that a notice calling for a written or oral explanation fulfills the requirements of section 28(3). The Court disagreed with a Calcutta High Court decision and held that the succeeding officer could pass an order based on the explanation provided to the predecessor if the assessee did not demand the reopening of the proceeding.

Issue 2: Validity of the penalty imposed under section 28(1)(c)
Regarding the validity of the penalty imposed under section 28(1)(c) for wilful concealment of income, the assessee contended that there was insufficient material to prove deliberate suppression. The Court distinguished a previous case where the source of income was supported by evidence, unlike the present case where the account books did not mention the source clearly. The Court found that the assessee failed to provide evidence to establish that the amount belonged to the individual claimed. Based on the lack of evidence and discrepancies in the explanation, the Court concluded that there were enough grounds for the income-tax authorities to determine wilful suppression of income under section 28(1)(c). Consequently, the penalty imposed was deemed legally valid in this case.

In conclusion, the High Court upheld the penalty imposed under section 28(1)(c) for wilful concealment of income, ruling against the assessee on both issues raised by the Income-tax Appellate Tribunal. The assessee was directed to pay the costs of the reference.