Concealment penalty and hearing notice requirements upheld where later disclosure did not cure original concealment.

Deliberate concealment in an income-tax return continued to attract penalty under section 28(1)(c) of the Indian Income-tax Act, 1922, because a later disclosure did not erase the original concealment where the facts had already been discovered by the Income-tax Officer. The contention that the penalty notice was invalid also failed, as section 28(3) required only a reasonable opportunity of being heard, and a notice allowing either personal appearance or a written explanation satisfied that requirement. The penalty proceedings were therefore upheld and the concealment penalties sustained.

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Issues: (i) whether disclosure made before completion of assessment negatived concealment so as to exclude the penalty under section 28(1)(c) of the Indian Income-tax Act, 1922; (ii) whether the notice issued under section 28(3) of the Indian Income-tax Act, 1922 was invalid for want of a proper opportunity of being heard.

Issue (i): whether disclosure made before completion of assessment negatived concealment so as to exclude the penalty under section 28(1)(c) of the Indian Income-tax Act, 1922

Analysis: The penalty provision applied where there had been deliberate concealment in the return. The assessee's later admission did not wipe out the original concealment, especially where the authorities found that the disclosure was made only after the Income-tax Officer had already discovered the facts. The return for one year was also filed after examination by the Officer, and the concealment in the original returns remained established.

Conclusion: The contention failed and the penalty under section 28(1)(c) was held to be attracted.

Issue (ii): whether the notice issued under section 28(3) of the Indian Income-tax Act, 1922 was invalid for want of a proper opportunity of being heard

Analysis: Section 28(3) required only that the assessee be heard or be given a reasonable opportunity of being heard. A notice permitting the assessee either to appear in person or to send a written explanation satisfied that requirement. The giving of an additional written option did not destroy the opportunity of personal hearing, and the assessee could not complain that the notice was defective on that ground.

Conclusion: The notice was held valid and the penalty proceedings were not vitiated.

Final Conclusion: The petitions were rejected on both grounds, and the penalties imposed for concealment of income were upheld.

Ratio Decidendi: A return containing deliberate concealment attracts penalty notwithstanding a later disclosure before assessment, and a notice that affords either personal hearing or a reasonable opportunity to explain in writing satisfies the statutory requirement of being heard.

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