Srinivasa Chari, J.
1. This application under article 226 of the Constitution is on behalf of the assessee for the issue of a prohibition, prohibiting the Income-tax Officer, Vizianagaram, from proceeding further in pursuance of the notice issued to the petitioner in respect of the assessment year 1947-48 under notice issued under section 28 of the Indian Income-tax Act (XI of 1922). The section 28 of the Indian Income-tax Act on March 21, 1952, and the assessment in respect of those years was completed on the same date, i.e., on March 21, 1952. The order levying the penalty was issued on 31st January, 1955. The assessee preferred an appeal against this order to the Appellate Assistant Commissioner an the Appellate Assistant Commissioner cancelled the order imposing penalty, on June 13, 1956, on the ground that there was no hearing given to the assessee before the order was passed. Therefore, accepting the contention of the assessee, the order of the imposition of the penalty was cancelled. After this on 12th July, 1956, the Income-tax Officer issued a fresh notice calling upon the petitioner to appear before him on a particular day and to show cause why the order imposing the penalty should not be made under section 28(1) of the said Act. The notice also gave the petitioner to show cause in writing. It is the issue of this notice that is now being challenged by the petitioner in this writ petition.
2. The main contention of the learned counsel for the petitioner is that after the proceedings relating to the assessment were completed, the Income-tax Officer became functus officio and he had, therefore, no jurisdiction to issue a notice under section 28(1) of the Act. A further argument is advanced that when the Appellate Assistant Commissioner had cancelled the order of penalty, the Department ought to have appealed against the order, and that not having done so, that order became final and the Income-tax Officer could not have issued a fresh notice in the face of the order.For an appreciation of the contentions raised by the learned advocate appearing on behalf of the petitioner, it is necessary to consider the provisions of section 28 of the Indian Income-tax Act. The relevant provisions of section 28 are as under :
'28. (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 an 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 (2) of section 23, or
(c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he or it may direct that such person shall pay by way of penalty, in the case referred to in clause (a), in addition to the amount of the income-tax and super-tax, if any, payable by him, a sum not exceeding one and half times that amount, and in the cases referred to in clauses (b) and (c), in addition to any tax payable by him, a sum not exceeding one and half times the amount of the income-tax and super-tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income :...
(3) No order shall be made under sub-section (1) or sub-section (2) unless the assessee or partner, as the case may be, has been heard, or has been given a reasonable opportunity of being heard.'
3. Section 28(1) envisaged the directing of the payment of penalty, where the Income-tax Officer or the Appellate Assistant Commissioner or the Appellate Tribunal, as the case may be, is satisfied that any person has without reasonable cause failed to furnish and annual return of his total income or the other things mentioned in sub-clauses (a) to (c). The question is whether the words occurring in section 28(1), 'in the course of any proceedings under this Act' mean that the notice that is contemplated to be issued under this section has to be issued during the course of the proceedings pending before the authorities mentioned herein. A reading of sub-section (1) of section 28 would make it abundantly clear that if during the course of the proceedings pending before the authorities, the authorities are satisfied about the matters mentioned clauses (a), (b) and (c) they would issue a notice directing the payment of penalty. The argument is, that the issue of notice is restricted to the period when the proceedings are pending before the authorities concerned. The correct import of that section appears to be that if the authorities satisfied during the proceedings pending before it, then it gives the authority the power to issue a notice for the payment of penalty. The detection as regards the concealment of the particulars of the income or the non-furnishing of the return of the total income has to be made during the time when the proceedings are pending before the authorities. It would not be open to the authorities to levy a penalty on their getting information with regard to the matters mentioned in clauses (a), (b) and (c) of sub-section (1) of section 28 of the said Act, after the proceedings are over. In my opinion, the restriction imposed is only with regard to the satisfaction of the authorities within the time when the proceedings are pending before them. The Calcutta High Court held the same view. The learned Judges in Guru Prosad Shaw v. Commissioner of Income-tax, observed :'Any of these three person has to be satisfied during the course of proceedings under the Act.'
4. The learned counsel for the petitioner invited my attention to a case reported in Sivagaminatha Moopanar and Sons v. Income-tax Officer, II Circle, Madurai. My attention was drawn to the observations in that case which are to the following effect :
'... proceedings for the levy of a penalty must be initiated by an authority when such authority is in seisin of the assessment or other proceedings in the course of which it is found that the assessee has brought himself within the mischief of section 28.'
5. This question, in my opinion, did not directly arise in the case before the Madras High Court, and further there can be no doubt about it that in that in the instant case, the proceedings relating to the levy of penalty were initiated at the time when they were pending before the Income-tax Officer, and because of a defect in the notice issued and which did not comply with section 28, sub-section (3), of the Act, that notice was held to be invalid and the order cancelled. The case referred to above can only be an authority for the proposition, that the proceedings relating to the levy of penalty should be initiated when such proceedings are pending before the authorities concerned. There can be no doubt that in the instant case the penalty proceedings were initiated when the Income-tax Officer had seisin of the case. In my opinion, this decision of the Madras High Court cannot help the case of the petitioner.
6. for the assessee invited my attention to the decision of the Lahore High Court in Banarsi Das v. Commissioner of Income-tax. The question raised in that case was whether the imposition of the penalty without notice being served under section 28(3) of the Indian Income-tax Act was valid, and as notice was not served as required by law, it was held that the imposition of penalty by the Commissioner was invalid. The question now under consideration was never before that court.Yet another decision of the same court brought to my notice was that in the case of Vir Bhan Bansilal v. Commissioner of Income-tax. Here the question formulated for the consideration of the High Court was :
'Whether, although notice issued under section 28 of the Act a day before the assessment order was made by the Income-tax Officer, that Officer had power on a date subsequent to the date of the assessment order to impose a penalty under section 2 ?'
7. The assessee's contention, as is being contended here, was that the Income-tax Officer became functus officio after making the assessment and, therefore, could not impose any penalty, especially where the tax had been paid. In that case also the learned Judges held that the satisfaction of the authorities with regard to concealment of income or of deliberate furnishing of inaccurate particulars of income has to be arrived at during the course of the proceedings.
8. The decision of the Kerala High Court in Jos Chacko Poothokaran v. Income-tax Officer, Ernakulam Circle, was also relied upon by the learned counsel for the petitioner. In that case, the penalty proceedings were initiated and on appeal, the appellate authority cancelled the penalty on the ground that no personal hearing was given to assessee. Subsequent to that, the Income-tax Officer commenced not become ab initio void, but that he was proceedings initiated by him, at any rate, do not become ab initio void, but that he was competent to institute fresh proceedings for the levy of the penalty. This order was questioned before the High Court. The learned Judge who decided the case came to the conclusion that the order of the Income-tax officer could not be sustained because of the orders of the Appellate Assistant Commissioner cancelling the order of penalty. While observing so, the learned Judge also stated that section 31(3) (b) of the Indian Income-tax Act provided for appeal to the Appellate Tribunal against such an order and that no action was taken under sub-section (2) of section 33. Under those circumstances, it was held that the Income-tax Officer ought not to have ignored the order of the Appellate Assistant Commissioner. In this case also, the question now canvassed before this court does not appear to have arise directly, and I do not think that decision could help the petitioner in this case.In Guru Prosad Shaw v. Commissioner of Income-tax already referred to the assessee was assessed to income-tax and the Income-tax Officer discovered at that time that he had not returned the income and had deliberately failed to disclose it and this was on 23rd January, 1941. On the subsequent day, a notice under section 28(3) of the Indian Income-tax Act was served on him to show cause why penalty should not be imposed. The contention that was raised was that the notice under sub-section (3) of section 28 ought to have been given before the closing of the assessment and the non-issue of the notice before the proceedings closed was fatal to the proceedings. The learned Judges, while dealing with this contention, repelled this contention and held that there was nothing under section 28 from which it could be gathered that the notice under sub-section (3) of section 28 was to be given before the conclusion of the assessment and they further held that the penalty was lawfully imposed. The learned Judges referred to the decision of the Madras High Court in Commissioner of Income-tax v. Sheik Abdul Kadir. As observed in that case, what is required under section 28 is that the discovery by the Officer or the satisfaction of the Officer should be before the proceedings are closed. That alone could be said to be the limitation imposed under section 28(1) of the Act. Further it would not be correct to say that the notice issued in the first instance by the Income-tax Officer and the subsequent notice which is sought to be questioned now are identical. The first notice was with regard to the imposition of penalty and the notice that was issued on January 12, 1956, was a notice giving an opportunity to the assessee to appear and show cause why penalty should not be imposed on him as required by sub-section (3) of section 28 of the Act.For these reasons, I am of the opinion, that there are no merits in this writ petition. The writ petition is therefore dismissed with costs. Advocate's fee Rs. 100.