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TMI Blog1959 (7) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... lieries Limited and Central Kankanee Collieries Limited, the amounts involved being ₹ 25,000 for the calendar year 1944, ₹ 55,348 for the calendar year 1945 and ₹ 55,000 for the calendar year 1946, in each case. After having satisfied himself that income had escaped assessment the Income-tax Officer issued notices under section 34 on the 8th September, 1949, to both the assessees in respect of the three assessment years. The assessees made returns under section 34 and declared the following amounts of income each: Rs. 1945-46 ... 45,325 ... share income 14,000 ... other sources cash introduced shown as income in the absence of proof. Total 59,325 1946-47 ... 31,772 ... share income 23,448 ... other sources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person-- (a) has without reasonable cause failed to furnish the return of his total income which he was required to furnish by notice given under sub-section (1) or sub-section (2) of section 22 or section 34 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by such notice, or (b) has without reasonable cause failed to comply with a notice under sub- section (4) of section 22 or sub-section (2) of section 23, or (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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was, therefore, that it was not competent for the Income-tax Officer to levy penalty in the course of proceedings under section 34 of the Income-tax Act for a default not committed in the course of those proceedings. I am unable to accept this argument as correct. It is true that once an assessment has been made under section 23 of the Act or an order is passed by the Income-tax Officer that no assessment can be levied, the proceedings are closed, and the proceedings cannot be reopened and the result of the proceedings cannot be altered in any manner except in the manner provided by section 33A, 33B, 34 or 35 of the Income-tax Act. It is also manifest that under section 34 of the Act there is no de nova assessment in the sense that it is op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uggest that the Income-tax Officer can impose penalty under that section only if the default occurs in the curse of the section 34 proceeding. The opening clause of section 28 states that "if the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate 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 parti? culars of such income,......". Grammatically speaking, the phrase "in the course of any proceedings" only governs the satisfaction of the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal and not concealment by the assessee of the particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Durga Prasad v. Commissioner of Income-tax [1931] 5 I.T.C. 471. With great respect I think that that decision does not lay down the correct taw on the point. On the contrary, I would prefer to follow the decision of the Madras High Court in Govindarajulu Iyer v. Commissioner of Income-tax [1948] 16 I.T.R. 391, as I have already indicated. For the reasons expressed I hold that in the circumstances of tins case the levy of penalty upon both the assesses under section 28 of the Income-tax Act is legally valid. I would accordingly answer the question of law referred by the Income-tax Appellate Tribunal to the High Court in favour of the Income-fax Department and against the assesses. The assessee must pay the costs of this reference. Hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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