Penalty for concealment can survive reassessment proceedings when a later corrected return does not erase the original default.

Penalty under section 28(1)(c) of the Income-tax Act, 1922 may be imposed in reassessment proceedings under section 34 where an assessee had initially concealed income. The court reasoned that concealment is not confined to the original return; it can arise in the return filed in response to the section 34 notice, because the phrases "in the course of any proceedings" and "as returned" are wide enough to cover reassessment proceedings for the same assessee and assessment year. Acceptance of a later corrected return does not erase an earlier deliberate default, so the penalty power continues to apply.

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Issues: Whether penalty under section 28(1)(c) of the Income-tax Act, 1922 could be levied in reassessment proceedings under section 34 when the assessee had originally concealed income but later filed a return in the section 34 proceedings showing the correct income and that return was accepted.

Analysis: Section 28(1)(c) authorises penalty where, in the course of any proceedings under the Act, the authority is satisfied that an assessee has concealed the particulars of income or deliberately furnished inaccurate particulars. The concealment need not be confined to the original return filed at the first assessment stage; it may equally arise in the return filed in response to notice under section 34. The words "in the course of any proceedings" and "as returned" are wide enough to include reassessment proceedings relating to the same assessee and the same assessment year. Acceptance of a later return in section 34 proceedings does not wash away deliberate concealment in the earlier return, and a revised or corrected return does not condone a deliberate default already committed. The power to levy penalty therefore survives in section 34 proceedings, and the Department is not barred merely because the reassessment return was accepted.

Conclusion: Penalty was leviable under section 28(1)(c) of the Income-tax Act, 1922, and the answer to the reference was rightly in the affirmative in favour of the Revenue.

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