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of <h1>High Court upholds penalties for concealing income in filed tax returns, dismisses challenge on notice validity.</h1> The Madras High Court dismissed the petitions under section 66(2) of the Indian Income-tax Act, upholding penalties imposed for concealing income ... - Issues:Petitions under section 66 (2) of the Indian Income-tax Act for direction to the Appellate Tribunal to state a case and refer a question of law for decision. Assessment years 1943-44 and 1944-45. Imposition of penalties for concealment of income particulars in filed returns. Confirmation of penalties by the Appellate Assistant Commissioner and Tribunal. Points of law raised: 1. Continuation of concealment till assessment date. 2. Validity of notice under section 28(3) preceding penalty imposition.Analysis:The petitions before the Madras High Court involved invoking jurisdiction under section 66(2) of the Indian Income-tax Act to direct the Appellate Tribunal to state a case for legal questions. The penalties in question were imposed for concealing income particulars in the filed returns for the years 1943-44 and 1944-45. The petitioner admitted to certain discrepancies in the returns during examinations before the Income-tax Officer, leading to penalties under section 28(1)(c) for deliberate concealment or furnishing inaccurate particulars of income. The penalties were initially confirmed by the Appellate Assistant Commissioner and later by the Tribunal upon appeal.The first legal point raised was regarding the continuation of concealment till the assessment date. The argument was that since the petitioner admitted to the discrepancies before the assessment was finalized, there was no ongoing concealment up to the assessment date as required by section 28(1)(c). However, the court found no merit in this argument, emphasizing that deliberate concealment in any return attracts section 28(1)(c). The court noted that the original returns did not disclose significant portions of income, establishing deliberate concealment.The second legal issue pertained to the validity of the notice under section 28(3) preceding the imposition of penalties. The petitioner contended that the notice did not comply with the requirements of section 28(3), thereby vitiating the penalty order. While this argument was not raised earlier in the proceedings, the court addressed it to provide clarity. The court referred to a decision from the High Court of Orissa, highlighting the necessity of affording the assessee a reasonable opportunity to be heard before imposing a penalty. The court disagreed with the interpretation that the notice must only allow a personal appearance, stating that offering the option to send written explanations also fulfills the requirement of being heard. Ultimately, the court found the notices issued to the petitioner to be in conformity with the law, upholding the legality of the imposed penalties.In conclusion, the petitions were dismissed by the Madras High Court, with costs awarded to the respondent. The court affirmed the penalties for concealment of income particulars, rejecting the arguments raised regarding the continuation of concealment and the validity of the notice preceding penalty imposition.
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