Fresh penalty notice valid where satisfaction arose during proceedings and authority was still seisin of the matter.

Section 28 requires the tax authority to form satisfaction about a specified default during the course of proceedings under the Act before initiating penalty action; the critical limit is the timing of that satisfaction, not the later service of notice. Where the default was detected and penalty proceedings were initiated while the authority was still seisin of the matter, a fresh notice under section 28(3) was not barred merely because assessment proceedings had ended. Earlier cancellation of the penalty order for want of hearing did not prevent fresh proceedings being taken in accordance with law.

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Issues: Whether a fresh notice for penalty under section 28 could be issued after completion of the assessment proceedings and after the Appellate Assistant Commissioner had cancelled the earlier penalty order for want of hearing.

Analysis: Section 28 requires that the Income-tax Officer, Appellate Assistant Commissioner or Appellate Tribunal must be satisfied during the course of proceedings under the Act that the assessee has committed one of the defaults specified in clauses (a) to (c). The limitation is on the time when the authority acquires satisfaction and initiates penalty action, not on the stage at which the eventual notice is served. If the default is detected and penalty proceedings are initiated while the authority is still seisin of the matter, a later notice under section 28(3) is not barred merely because the assessment proceedings have since concluded. The earlier cancellation of the penalty order for defect of hearing did not render the authority powerless to begin fresh proceedings in accordance with law.

Conclusion: A fresh penalty notice was validly issuable, and the assessee's objection that the Income-tax Officer had become functus officio failed.

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