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TMI Blog1965 (3) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions in groundnuts and groundnut oil. It claimed to have paid losses amounting to Rs. 65,805 in forward transactions and returned an income of Rs. 39,764, after deducting the net loss. The Income-tax Officer found that the alleged payment of losses to the extent of Rs. 57,739 was not proved and that the losses were fictitious. He gave effect to this finding in his assessment orders dated January 31, 1948, and also initated proceedings to levy penalty under section 28(1)(c) of the Income-tax Act (XI of 1922) and section 16 of the Excess Profits Tax Act (XII of 1940). On the appeals preferred by the assessee against the assessment orders, the Appellate Assistant Commissioner held in his order dated May 11, 1951, that " the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal under section 33 of the Income-tax Act and section 19(2) of the Excess Profits Tax Act, a preliminary objection was taken by the department that as the findings in the assessment proceedings had become final, they were not open for reconsideration in the penalty proceedings. The Tribunal overruled this preliminary objection on the ground that the relevant considerations were different in penalty proceedings and that in view of the materials on record, the findings in the assessment proceedings were not binding on it. It considered the evidence afresh, came to the conclusion that the evidence was not sufficient to prove that the assessee was guilty of deliberate concealment of income and allowed both the appeals. The Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firstly, that the income-tax authorities including the Appellate Tribunal are not courts ; and, secondly, that the purpose and the subject-matter of the proceedings in a subsequent year are not the same as those in the previous year. In Seshadri v. Second Addl. Income-tax Officer, a Division Bench of Madras High Court held, after reviewing the authorities and considering section 37 and other provisions of the Income-tax Act, that the Appellate Tribunal is not a court. This view was referred to with approval by a Division Bench of this court in Satyanarayanamurthi v. Income-tax Appellate Tribunal. In New Jehangir Vakil Mills Co. Ltd. v. Commissioner of Income-tax, their Lordships applied the principle that, in matters of recurring annual tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the matter. But if he wants to do so, there should be facts which would entitle him to do it. If fresh facts come to light which on an investigation would entitle the Income-tax Officer to come to a different conclusion from that of his predecessor, we think he is entitled to reopen the question. But if there are no fresh facts, it is difficult to see how he can arbitrarily go behind the finding of his predecessor. The same principles of natural justice or judicial dealing, which courts impose upon Income-tax Officers, would prevent them capriciously setting aside the orders of their predecessors based on enquiry. " The learned judges referred to Viscount Haldane's observations in Local Government Board v. Arlidge, that administrative t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is different and when action is taken under section 28(1)(c), the question for determination is whether the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income. Generally speaking, there is no eadem questio in the two proceedings, although it might happen in a given case that the question for determination in the penalty proceeding was actually decided in the assessment proceeding. Sri Kondaiah has urged that a penalty proceeding is merely a proceeding to levy additional tax for the same year. He has referred to the observation of their Lordships of the Supreme Court in C. A. Abraham v. Income-tax Officer : " By section 28, the liability to pay additional tax which is design ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention that an independent enquiry is necessary in the penalty proceedings before a levy could be justified, observed : " In the circumstances, there is no justification for the contention that the previous proceedings cannot form the basis for the penalty proceedings. " We do not consider that by this observation the learned judges intended to lay down that the determination of matters in previous proceedings is conclusive in penalty proceedings. Under section 28(3) of the Income-tax Act, the assessee has to be heard or given a reasonable opportunity of being heard, before an order directing payment of penalty is made. If the conclusions reached in earlier proceedings cannot be reopened, this statutory mandate for hearing would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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