1959 (7) TMI 54

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....te limited companies, Mohalbani Collieries Limited and Central Kankanee Collieries Limited, the amounts involved being Rs. 25,000 for the calendar year 1944, Rs. 55,348 for the calendar year 1945 and Rs. 55,000 for the calendar year 1946, in each case. After having satisfied himself that income had escaped assessment the Income-tax Officer issued notices under section 34 on the 8th September, 1949, to both the assessees in respect of the three assessment years. The assessees made returns under section 34 and declared the following amounts of income each:     Rs.   1945-46 ... 45,325 ... share income   14,000 ... other sources cash introduced shown as income in the absence of proof. &nb....

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....28 of the Income-tax Act, which runs as follows: "28. Penalty for concealment of income or improper distribution of profits.-- (1) If the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person-- (a) has without reasonable cause failed to furnish the return of his total income which he was required to furnish by notice given under sub-section (1) or sub-section (2) of section 22 or section 34 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by such notice, or (b) has without reasonable cause failed to comply with a notice under sub- section (4) of section 22 or sub-section ....

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....ied only in respect of defaults or other acts committed in the course of that proceedings and not in the course of the original proceeding which ended with the assessment. The contention of the assessee was, therefore, that it was not competent for the Income-tax Officer to levy penalty in the course of proceedings under section 34 of the Income-tax Act for a default not committed in the course of those proceedings. I am unable to accept this argument as correct. It is true that once an assessment has been made under section 23 of the Act or an order is passed by the Income-tax Officer that no assessment can be levied, the proceedings are closed, and the proceedings cannot be reopened and the result of the proceedings cannot be altered in a....

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.... proceeding. Even upon the assumption that a proceeding under section 34 is a separate proceeding from the original proceedings, there is nothing in the language of section 28 of the Income-tax Act to suggest that the Income-tax Officer can impose penalty under that section only if the default occurs in the curse of the section 34 proceeding. The opening clause of section 28 states that "if the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person...(c) has concealed the particulars of his income or deliberately furnished inaccurate parti? culars of such income,......". Grammatically speaking, the phrase "in the course of any proce....