Penalty notice under section 28 need not precede assessment if the assessee gets a fair hearing before the penalty order.

Section 28 penalty could be imposed where concealment or inaccurate particulars were detected in proceedings under the Act, provided the assessee was given a reasonable opportunity of being heard before the penalty order was made. The court held that sub-section (3) does not require a show-cause notice or hearing to precede completion of the assessment, and the opportunity to be heard may validly follow assessment if concealment is discovered during those proceedings. This position applied equally to the Income-tax Officer, the Appellate Assistant Commissioner and the Appellate Tribunal.

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Issues: Whether, for imposing penalty under section 28, notice to show cause and the hearing contemplated by sub-section (3) had to be given before completion of the assessment.

Analysis: Section 28(1)(c) authorises the penalty when, in the course of proceedings under the Act, the authority is satisfied that the assessee has concealed income or furnished inaccurate particulars. Section 28(3) only requires that no penalty order be made unless the assessee has been heard or given a reasonable opportunity of being heard. The statutory language does not require that such notice be issued before the assessment is completed, and the same position applies whether the authority is the Income-tax Officer, the Appellate Assistant Commissioner, or the Appellate Tribunal. The hearing may validly occur after assessment if the concealment is discovered in the course of proceedings.

Conclusion: The notice under section 28(3) need not be served before completion of the assessment. The penalty was lawfully imposed.

Ratio Decidendi: Section 28 requires only that concealment be discovered in the course of proceedings under the Act and that the assessee be given a reasonable opportunity of being heard before the penalty order is made; it does not require pre-assessment notice.

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