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TMI Blog1974 (3) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... eturns have been annexed to the writ petition and marked collectively with the letter "A". Thereafter, the said notice under section 20A of the Act was served upon the petitioner. Pursuant to the said notice, the petitioner's Advocate appeared before the Commercial Tax Officer and submitted that there was no sale of containers on account of sale of mustard oil in sealed containers and, as such, the petitioner was not under any statutory obligation to include the price of the containers in the taxable turnover, nor could there be any question of concealment or noninclusion of the price of containers used for the purpose of selling mustard oil. The Commercial Tax Officer was, accordingly, requested not to proceed with the said notice. The said contentions made on behalf of the petitioner were rejected by the Commercial Tax Officer and the hearing of the penalty proceeding was fixed on 9th September, 1970. The petitioner has questioned the validity and legality of the impugned notice and challenged the jurisdiction of respondent No. 1, the Commercial Tax Officer, to initiate the penalty proceeding. Respondents Nos. 1 to 3 have opposed this rule and have filed an affidavit-in-opposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceeding has been started under section 11, no notice of penalty can be issued prior to the completion of the assessment. In order to consider the said contentions of Mr. Ghosh, it is necessary to refer to the provisions of section 14(1) and section 20A(1) of the Act, which are as follows: "14. (1) The Commissioner may, subject to such conditions as may be prescribed, require any dealer- (a) to produce before him any accounts, registers, or documents, (b) to furnish any information, relating to the stock of goods of, or purchases, sales or deliveries of goods by, the dealer or relating to any other matter, as may be deemed necessary for the purposes of this Act." "20A. (1) If the Commissioner in the course of any proceedings under this Act is satisfied that any dealer(a) has concealed any sales or any particulars thereof, or (b) has furnished incorrect statement of his turnover or incorrect particulars of his sales in the return submitted under sub-section (2) of section 10 or otherwise, with intent to reduce the amount of the tax payable by him under this Act, the Commissioner may, after giving such dealer a reasonable opportunity of being heard, by an order in writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d incorrect statement of his turnover or incorrect particulars of his sales in the return submitted under sub-section (2) of section 10 or otherwise. On the grounds as specified in clauses (a) and (b) above, a penalty proceeding can be started. The relevant facts as mentioned in clauses (a) and (b) can only be ascertained from the returns filed by the dealer and other materials including the documents and books of account. A direction for the production by the dealer of any accounts, registers or documents, or for furnishing any information, relating to the stock of goods of, or purchases, sales or deliveries of goods, by the dealer or relating to any other matter, may be necessary for the purpose of the Commissioner's satisfaction within the meaning of section 11. After the documents are produced or the information is furnished by the dealer, the Commissioner will then consider whether the returns furnished are correct and complete. If he is not satisfied, in that case, he will issue a notice under section 11 for the purpose of giving the dealer an opportunity of being heard for making a best judgment assessment of the amount of tax due from the dealer. In my opinion, as the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate particulars of the income. The power to impose penalty under section 28 depends upon the satisfaction of the Income-tax Officer in the course of proceedings under the Act; it cannot be exercised if he is not satisfied about the existence of conditions specified in clauses (a), (b) or (c) before the proceedings are concluded. The proceeding to levy penalty has, however, not to be commenced by the Income-tax Officer before the completion of the assessment proceedings by the Income-tax Officer. Satisfaction before conclusion of the proceeding under the Act, and not the issue of a notice or initiation of any step for imposing penalty is a condition for the exercise of the jurisdiction." On the basis of the said observations, it is contended on behalf of the petitioner that even a notice under section 20A cannot be issued before the completion of the assessment proceedings. The observation of the Supreme Court that "the proceeding to levy penalty has, however, not to be commenced by the Income-tax Officer before the completion of the assessment proceedings by the Income-tax Officer" prima facie lends support to the said contention of the petitioner. It appears from the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subsequently." After making the said observations the Supreme Court referred to the observation made in its earlier decision in Commissioner of Income-tax v. S.V. Angidi Chettiar[1962] 44 I.T.R. 739 (S.C.)., referred to above. From the observations of the Supreme Court made in the subsequent decision, referred to above, it follows that a penalty proceeding can be started both before and after the completion of the assessment proceedings but the satisfaction of the Income-tax Officer or the Appellate Assistant Commissioner must be made during the course of such a proceeding. In an earlier Bench decision of this Court in Guru Prosad Shaw v. Commissioner of Income-tax, Bengal[1944] 12 I.T.R. 233., it has been held that there is nothing in section 28 of the Income-tax Act, 1922, from which it can be said that the notice under sub-section (3) must be given before the completion of the assessment. From the decisions referred to above, I am of the view that under section 20A a notice for a penalty proceeding can be issued in the course of an assessment proceeding and before the completion thereof, if the Commercial Tax Officer is satisfied about the requirements of clause (a) or cla ..... 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