Penalty proceedings under Income-tax law need not start before assessment ends if hearing is later given before the order.

Section 28 of the Income-tax Act, 1922 allows penalty proceedings where the authority forms satisfaction about concealment or inaccurate particulars during the course of assessment or appellate proceedings. The provision does not require the show-cause notice to be served before assessment is completed; it is enough that the assessee is given a reasonable opportunity of being heard before the penalty order is made. On that construction, the notice was not invalid for being issued after completion of assessment, and the penalty was upheld as lawfully imposed.

---

---

Issues: Whether, for penalty proceedings under Section 28 of the Income-tax Act, notice to show cause must be issued before the assessment is concluded, and whether the penalty imposed was lawfully made.

Analysis: Section 28(1) requires the Income-tax Officer, Appellate Assistant Commissioner, or Appellate Tribunal to be satisfied in the course of proceedings that there has been concealment of income or furnishing of inaccurate particulars. Sub-section (3) only requires that no penalty order be made unless the assessee has been given a reasonable opportunity of being heard. Nothing in the section makes it imperative that the notice to show cause must be served before the assessment is completed. The statutory language permits satisfaction during the course of proceedings, while the opportunity of hearing may be given thereafter.

Conclusion: The notice was not required to be issued before the close of the assessment, and the penalty was lawfully imposed.

Final Conclusion: The reference was answered in the affirmative, upholding the penalty proceedings and the resulting imposition of penalty.

Ratio Decidendi: Under Section 28 of the Income-tax Act, 1922, the authority may initiate and continue penalty proceedings so long as satisfaction as to concealment is reached during the course of the proceedings, and the assessee is given a reasonable opportunity of being heard before the penalty order is made.

---