Successor income-tax authority must give fresh hearing before imposing penalty after jurisdiction changes.

Where penalty proceedings under the Income-tax Act, 1922 are continued by a successor Income-tax Officer after transfer of jurisdiction, the statutory requirement of notice and a reasonable opportunity of being heard remains mandatory. The continuation provision in section 5(7C) does not remove the safeguard in section 28(3). Accordingly, the successor officer must afford a fresh hearing before passing the penalty order, and the assessee's awareness of the jurisdictional change or failure to demand rehearing does not cure the defect. A penalty order made without that opportunity cannot stand.

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Issues: Whether the successor Income-tax Officer, after transfer of jurisdiction, could impose penalty under the Income-tax Act, 1922 without giving the assessee a fresh opportunity of being heard.

Analysis: Penalty proceedings had been initiated by one officer, then remained pending when jurisdiction shifted to another officer. The statutory safeguard under section 28(3) required that no penalty order be made unless the assessee had been heard or given a reasonable opportunity of being heard. The continuation provision in section 5(7C) did not extinguish that safeguard. The fact that the assessee knew of the change of jurisdiction and had not demanded rehearing did not relieve the successor officer of the duty to give notice and afford a hearing before passing the penalty order.

Conclusion: The successor officer was bound to give the assessee an opportunity of being heard, and the penalty order passed without such opportunity could not stand.

Final Conclusion: The reference was answered in favour of the assessee, affirming that penalty proceedings continued by a successor officer must comply with the hearing requirement.

Ratio Decidendi: Where penalty proceedings are continued by a successor income-tax authority, the statutory requirement of notice and reasonable opportunity of being heard remains mandatory and cannot be displaced merely because jurisdiction has changed or the assessee did not request rehearing.

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