Statutory hearing requirement bars penalty where no separate notice or reasonable opportunity is given before levy.

Penalty under section 36(2) of the Assam Agricultural Income-tax Act, 1939 cannot be imposed unless the assessee is first heard or given a reasonable opportunity of being heard. Mere demand letters do not satisfy the statutory requirement of a show-cause notice for penalty, and the power is discretionary rather than automatic on default. On the facts, no separate notice or hearing before levy was shown, so the penalty was invalid and liable to be quashed.

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Issues: Whether penalty under section 36(2) of the Assam Agricultural Income-tax Act, 1939 could be sustained without a notice and reasonable opportunity of being heard to the assessee.

Analysis: Section 36 treats an assessee as in default on non-payment by the due date and empowers the authority to recover penalty in addition to the tax due. The proviso to section 36(2) expressly bars imposition of penalty unless the assessee has been heard or given a reasonable opportunity of being heard. On the facts, the demand letters did not amount to a show-cause notice for penalty, and no material was produced to show that a separate notice or opportunity had been given before levying penalty. The power to impose penalty is discretionary and cannot be exercised mechanically on mere default.

Conclusion: The penalty was invalid for breach of the statutory safeguard in section 36(2) and was liable to be quashed.

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