1944 (1) TMI 16

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....me time the Income-tax Officer discovered that the assessee had not returned income and had deliberately failed to disclose it. On 25th January notice was served upon the assessee to show cause why a penalty should not be inflicted as provided in Section 28. The notice was returnable for the 10th February 1941. It does not appeal on what date the assessee showed cause, but undoubtedly he did so and on May 2, 1941, the maximum penalty was imposed being 1? times the amount of the tax which the non-disclosure, had it succeeded, would have avoided. The material provisions of Section 28 are as follows:- Sub-Section (1): "If the Income-tax the Appellate Assistant Commissioner, or the Appellate Tribunal, in the course of any proceedings u....

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....rved on the assessee to show cause against the imposition of such a penalty. It would appear that the Commissioner, when the matter reached him, sought to impose a penalty but had not served any notice prior to doing so. The second case from the Lahore High Court is Vir Bhan Bansi Lal v. Commissioner of Income-tax, Punjab [1938] 6 I.T.R. 616, in which it was decided that an Income-tax Officer is empowered to make an order imposing a penalty under Section 28 after the assessment order had been finally made and the tax had been paid. In my view neither of those cases support the contention. A further authority was quoted by learned counsel for the assessee, Commissioner of Income-tax, Madras v. Sheik Abdul Kadir [1928] A.I.R. 1928 M. 257. In....

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....y proceedings under this Act is satisfied that any person had concealed income." There is no difference between the procedure which either the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal should adopt. Matters in connection with an assessment would not (sic) before either the Appellate Assistant Commissioner or the Appellate Tribunal before an assessment has been concluded, and consequently any notice under sub-section (3) which either the Appellate Assistant Commissioner or the Appellate Tribunal might see fit to give must be given after the conclusion of the assessment. In my view the answer to the question raised in the present reference should be in the affirmative. McNAIR, J.--I agree, Secti....