TMI Blog1959 (7) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ieries Limited, the amounts involved being ₹ 25,000 for the calendar year 1944, ₹ 55,348 for the calendar year 1945 and ₹ 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 so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees. Under section 66(1) of the Income-tax Act the Income-tax Appellate Tribunal has submitted the following question of law for the determination of the High Court: Whether on a proper construction of section 34 and section 28 of the Income-tax Act of 1922, the levy of penalties in section 34 proceedings is valid? The answer to this question depends upon the proper interpretation of section 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 fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is, assessment which has escaped totally or partially, and such proceedings, are separate and distinct from a prior proceeding under section 23 of the Act. Mr. Mitra also addressed the argument that if there has been an assessment under section 23 of the Act and thereafter there is a proceeding under section 34 because of the escape of any time of income from the assessment, then penalty could be levied 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 Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding which is initiated with the publication of the general notice under section 22(1) of the Act. My view is that so long as the proceedings under section 34 relate to the assessment for the same period and for the same assessee as the original assessment, the Income-tax Officer is competent to levy a penalty on any ground open to him under section 28(1), even though the default relates to the prior 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 proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of the proceedings taken by him under section 34 of the Act, to levy a penalty under section 28(1)(a) for failure without reasonable cause to furnish a return pursuant, to the notice under section 22(1). It was also observed in that case that so long as the proceedings under section 34 relate to the assessment for the same period as the original assessment, the come-tax Officer was competent to levy a penalty on any ground open to him under section 28(1), even though it related to a prior proceeding. Learned counsel referred to the decision of the Allahabad High Court in Mayaram Durga Prasad v. Commissioner of Income-tax [1931] 5 I.T.C. 471. With great respect I think that that decision does not lay down the correct taw on the point ..... X X X X Extracts X X X X X X X X Extracts X X X X
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