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Becker Gray And Co. (1930) Ltd. v. Income-Tax Officer, Central Circle-I, Calcutta, And Others

Calcutta High Court

Jul 1, 1977

Judgment

Subsequent
References

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Factual and Procedural Background

The appellant is a company engaged in purchase and sale of jute fabrics and an assessee under the Income-tax Act, 1961. For the assessment year 1964–65 the Income-tax Officer (ITO) passed an assessment order on March 18, 1969, making several additions to the appellant's income, including a large addition of Rs. 27,62,346 (excess commission and interest) and further additions (including amounts of Rs. 8,000 and Rs. 21,942.24 for alleged commissions). On February 25, 1969, the ITO issued a notice under section 271/274 alleging concealment or furnishing of inaccurate particulars and calling the appellant to show cause on April 18, 1969. On the same day a second notice referred the case to the Inspecting Assistant Commissioner under section 274(2), indicating that a penalty under section 271(1)(c) was being considered. On February 6, 1971 the Inspecting Assistant Commissioner issued a show-cause notice under section 271(1)(c). The appellant filed a writ petition under Article 226 challenging the notices and seeking quashing. A rule nisi was issued; the learned Single Judge (Sabyasachi Mukharji, J.) discharged the rule. The present appeal challenges that discharge.

Legal Issues Presented

Whether the Income-tax Officer had the requisite satisfaction in the course of proceedings under the Act (section 271(1)(c)) to initiate penalty proceedings.
Whether the ITO properly referred the matter to the Inspecting Assistant Commissioner under section 274(2) — i.e., whether the ITO must determine that the minimum penalty imposable exceeds Rs. 1,000 before making a referral.
Whether a penalty notice can lawfully be issued before the completion of assessment proceedings.
Whether the penalty proceeding became infructuous after the Appellate Assistant Commissioner deleted the large addition of Rs. 27,62,346 on appeal.
Whether the impugned notices were invalid for failing to specify particulars of income said to be concealed, thereby depriving the assessee of a reasonable opportunity of being heard under section 274(1).

Arguments of the Parties

Appellant's Arguments

The ITO was not satisfied during the assessment proceedings about the existence of conditions in clause (c) of section 271(1), and thus lacked jurisdiction to issue the penalty notice.
The ITO referred the matter to the Inspecting Assistant Commissioner without recording any reason and without being satisfied that the minimum penalty imposable exceeded Rs. 1,000; therefore the referral under section 274(2) was invalid.
The penalty notice was vague and did not indicate particulars of income allegedly concealed or in respect of which inaccurate particulars were furnished; without particulars the appellant could not properly show cause and was denied reasonable opportunity under section 274(1).
The penalty proceeding had been started only in respect of the addition of Rs. 27,62,346; because the Appellate Assistant Commissioner later deleted that addition on appeal, the penalty proceeding had become infructuous and should be quashed.
The issue of a penalty notice prior to completion of the assessment proceedings was impermissible, relying on the Supreme Court's observations in Angidi Chettiar (1962) 44 ITR 739.

Respondents' Position (as reflected in the record and affidavit)

The record (including the assessment order and the endorsement at its foot) shows that the ITO had prima facie satisfaction during the assessment proceedings and had issued a penalty notice; the fact of issuance/endorsement indicates satisfaction in the course of proceedings.
The ITO made substantial additions (including Rs. 27,62,346) when completing assessment and referred the matter to the Inspecting Assistant Commissioner on a prima facie consideration that the minimum penalty would exceed Rs. 1,000.
An affidavit sworn by Amalendu Chatterjee (an Income-tax Officer) stated that income suppression was concluded on various counts and listed additions made in several assessment years; the affidavit also admitted that the department accepted the Appellate Assistant Commissioner's order deleting the large addition.
The department (respondents) accepted that particulars could and should be supplied before the hearing and that the learned judge had directed the ITO to furnish the necessary particulars to the appellant.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Commissioner of Income-tax v. Angidi Chettiar, [1962] 44 ITR 739 (SC)	Held that the power to impose penalty depends on the satisfaction of the Income-tax Officer in the course of proceedings under the Act; satisfaction must exist during proceedings though the issue of notice is a consequence and not equivalent to satisfaction.	The court relied on this authority for the proposition that satisfaction during proceedings is a condition precedent to imposing penalty and that an endorsement or reference in the assessment order can indicate such satisfaction. The court interpreted Angidi Chettiar as not prohibiting the initiation of penalty proceedings by notice before completion of assessment, when satisfaction existed during proceedings.
D.M. Manasvi v. Commissioner of Income-tax, [1972] 86 ITR 557 (SC)	Explained that issue of notice need not occur during assessment proceedings; what matters is that the ITO or Appellate Assistant Commissioner was satisfied during the course of proceedings — satisfaction precedes notice, and notice may follow.	The court relied on this decision to reject the contention that the penalty notice was illegal because it was issued before completion of the assessment. The court held that notice may be issued before or after completion of assessment if satisfaction existed in the course of proceedings.

Court's Reasoning and Analysis

The court proceeded issue-by-issue, applying statutory provisions and cited authorities strictly as set out in the record.

On the requirement of satisfaction under section 271(1)(c):
- The court reiterated that a condition precedent to imposition of penalty is the ITO's satisfaction in the course of proceedings under the Act. A penalty proceeding can be initiated on a prima facie satisfaction.
- It observed that the ITO had issued the penalty notice during assessment proceedings, had relevant materials before him, made large additions in the assessment order (including Rs. 27,62,346), and recorded at the foot of the assessment order that a notice under section 274 had been issued. These facts furnished sufficient evidence of prima facie satisfaction to justify issuance of the notice.
- The court expressly held that such satisfaction need not always be recorded in writing in each case; whether it exists depends on facts and circumstances.
On the reference under section 274(2) to the Inspecting Assistant Commissioner:
- The court construed section 274(2) as requiring the ITO to consider whether the minimum penalty imposable exceeds Rs. 1,000, but not to determine the exact quantum of penalty. The required consideration is prima facie in nature.
- If the facts make it apparent that the minimum penalty would exceed Rs. 1,000, it would be unreasonable to find that the ITO failed to apply his mind. Thus a referral may be valid without a detailed recorded determination of exact penalty quantum.
On the timing of the penalty notice relative to completion of assessment:
- The court interpreted Angidi Chettiar and the later Supreme Court decision in D.M. Manasvi to mean that the crucial point is the ITO's satisfaction during the course of proceedings and not the temporal coincidence of the notice with completion of assessment.
- The court held that a penalty notice may be issued before or after completion of assessment so long as the ITO was satisfied as required by section 271(1) during the proceedings.
On whether the penalty proceeding became infructuous after deletion of Rs. 27,62,346 on appeal:
- The appellant relied on statements in paragraph 3(c) of the respondents' affidavit (sworn by Amalendu Chatterjee) to contend that the penalty was based solely on that deleted sum. The court found the affidavit paragraph inartistically drafted and not definitive proof that the penalty proceeding was initiated only with reference to that single sum.
- The court examined the records and noted other additions (including Rs. 8,000 and Rs. 21,942.24) which the Appellate Assistant Commissioner upheld. Given the absence of definite proof that the penalty was confined solely to the deleted item, the court refused to hold the penalty proceedings infructuous merely because that addition was later deleted on appeal.
On the requirement of particulars under section 274(1):
- Section 274(1) requires that no order imposing penalty shall be made unless the assessee has been heard or given reasonable opportunity; it does not prescribe the form or timing of any notice specifying particulars.
- The court observed that, while the statute does not mandate particulars in the initial notice, reasonable opportunity to be heard necessarily implies that the assessee should be supplied with particulars sufficiently before the hearing.
- The learned Single Judge had directed the ITO to supply the items of income alleged to be concealed before the Inspecting Assistant Commissioner proceeds. The court accepted that direction and found no basis to strike down the notices as invalid for want of particulars at this stage.

On these bases the court found all the appellant's contentions to be without substance.

Holding and Implications

Holding: The appeals were dismissed. Specifically, the court dismissed the appeal against the order discharging the appellant's rule nisi; the appeal failed and was dismissed, and F.M.A. No. 1079 of 1965 (involving the same facts and points) was also dismissed.

Implications:

Direct effect: The challenge to the ITO's penalty notices failed and the penalty proceedings may continue before the Inspecting Assistant Commissioner. The court upheld the view that the ITO's prima facie satisfaction (evidenced by the assessment additions and endorsement) was sufficient to issue the notice and to refer the matter under section 274(2).
The court directed (and approved the Single Judge's direction) that the ITO must furnish particulars of the income alleged to be concealed or inaccurately stated to the appellant prior to hearing before the Inspecting Assistant Commissioner, so as to secure a reasonable opportunity to be heard under section 274(1).
The court ordered no costs in view of the facts and circumstances and vacated all interim orders.
The decision applied established Supreme Court authorities (Angidi Chettiar and D.M. Manasvi) and did not purport to lay down a new legal principle beyond the application of those precedents; hence, no new precedent beyond the application of existing case law was announced by this judgment.

Show all summary ...

The Judgment of the Court was delivered by

Dutt, J.:— This appeal is directed against the judgment of Sabyasachi Mukharji J. whereby his Lordship discharged the rule obtained by the appellant on its application under article 226 of the Constitution.

2. The appellant-company carries on the business of purchase and sale of jute fabrics and is an assessee under the Income-tax Act, 1961. On February 25, 1969, the Income-tax Officer issued a notice under section 271/274 of the Income-tax Act, 1961, alleging that in course of the proceedings for the assessment year 1964-65, it appeared to him that the appellant had concealed the particulars of its income or deliberately furnished inaccurate particulars of such income. By the said notice, the appellant was requested to appear before the Income-tax Officer on April 18, 1969, and to show cause why an order imposing penalty should not be made under section 271 of the Income-tax Act, 1961. On the same day, the Income-tax Officer issued another notice to the appellant under section 271/274, inter alia, stating therein that the case for levy of penalty under section 271(1)(c) was being referred by him to the Inspecting Assistant Commissioner under section 274(2) of the Act. On March 18, 1969, the assessment order for 1964-65 was passed by the Income-tax Officer. At the foot of the said order it was stated that the penalty notice under section 274 had been issued for default under section 271(1)(c) of the Income-tax Act, 1961. Thereafter, on February 6, 1971, the Inspecting Assistant Commissioner issued a notice to the appellant calling upon it to show cause why an order imposing a penalty should not be made under section 271(1)(c) of the Act. The appellant filed a writ petition in this court challenging the legality of the said notices and praying for quashing of the same. A rule nisi was issued on the said petition of the appellant. It was contended by the appellant that the Income-tax Officer was not satisfied during the course of the assessment proceedings about the existence of the conditions mentioned in clause (c) of sub-section (1) of section 271. It was further contended that the Income-tax Officer had referred the matter to the Inspecting Assistant Commissioner without recording any reason and without being himself satisfied that the minimum penalty imposable was more than Rs. 1,000. It was submitted that the impugned notices were vague inasmuch as they did not indicate the particulars of income which the appellant had concealed or in respect of which the appellant had deliberately furnished inaccurate particulars. In the absence of the said particulars the appellant could not properly show cause and, therefore, it did not get a reasonable opportunity of being heard as contemplated by section 274(1) of the Act. Sabyasachi Mukharji J. negatived all the contentions of the appellant and discharged the rule. Hence, this appeal.

3. Before we consider the contentions of the appellant we may mention that in the assessment order for the assessment year 1964-65, the Income-tax Officer made an addition of Rs. 25,10,315 on account of excess commission alleged to have been paid by the appellant to White Lamb Finlay, a company carrying on the business of jute fabrics in the United States of America. Further, a sum of Rs. 2,52,031 being the alleged interest on extended credits was also added by the Income-tax Officer. The total addition made by the Income-tax Officer on this account amounted to Rs. 27,62,346. Besides this amount, further additions were also made by the Income-tax Officer including a sum of Rs. 8,000 and a sum of Rs. 21,942’24 alleged to have been paid by the appellant to one Narain and to one Peekeydee respectively on account of commission.

4. The first point that has been argued on behalf of the appellant is the absence of satisfaction of the Income-tax Officer under section 271(1)(c) which provides that if the Income-tax Officer or the Appellate Assistant Commissioner, in the course of any proceedings under the Act, is satisfied that any person has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty as mentioned in clause (iii). Section 274(1) provides that no order imposing a penalty shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. In Commissioner of Income-tax v. Angidi Chettiar, [1962] 44 ITR 739, it was observed by the Supreme Court as follows at page 745:

“The power to impose penalty under section 28 depends upon the satisfaction of the Income-tax Officer in the course of proceedings under the Act, it cannot be exercised if he is not satisfied about the existence of conditions specified in clauses (a), (b) or (c) before the proceedings are concluded. The proceeding to levy penalty has, however, not to be commenced by the Income-tax Officer before the completion of the assessment proceedings by the Income-tax Officer. Satisfaction before conclusion of the proceeding under the Act, and not the issue of a notice or initiation of any step for imposing penalty is a condition for the exercise of the jurisdiction. There is no evidence on the record that the Income-tax Officer was not satisfied in the course of the assessment proceeding that the firm had concealed its income. The assessment order is dated the 10th of November, 1951, and there is an endorsement at the foot of the assessment order by the Income-tax Officer that action under section 28 had been taken for concealment of income indicating clearly that the Income-tax Officer was satisfied in the course of the assessment proceeding that the firm had concealed its income.”

5. There can, therefore, be no doubt that the condition precedent to the imposition of penalty is the satisfaction of the Income-tax Officer in the course of the proceedings under the Act. Before any penalty is actually imposed on an assessee, the Income-tax Officer has to be satisfied about the conditions mentioned in clauses (a), (b) or (c) of section 271(1). A proceeding for imposition of penalty can be initiated by the Income-tax Officer upon a prima facie satisfaction about the said conditions. In the instant case, the Income-tax Officer has made certain additions including the addition of the said sum of Rs. 27,62,346 on account of excess commission and interest. It has been already stated that at the foot of the assessment order, the Income-tax Officer has recorded that a notice under section 274 had been issued for default under section 271(1)(c). It is contended by Mr. Pronab Pal, learned advocate appearing on behalf of the appellant, that before issuing the penalty notice it was incumbent upon the Income-tax Officer to record his prima facie satisfaction about the conditions specified in clause (c). It is true that the Income-tax Officer should be prima facie satisfied before the penalty notice is issued, but it does not mean that he is required to record such satisfaction in writing in every case. Whether the Income-tax Officer was so satisfied before he issued a penalty notice under section 271(1) depends on the facts and circumstances of each case. In the present case, the notice was issued by the Income-tax Officer during the course of the assessment proceedings. He had all the relevant materials before him when he issued the notice. Further, in the assessment order he added a huge sum of money and also recorded that he had already issued a penalty notice. The facts stated above furnish sufficient evidence to show that the Income-tax Officer was prima facie satisfied in issuing the penalty notice.

6. It is next contended on behalf of the appellant that the Income-tax Officer acted without jurisdiction in simultaneously issuing a second notice on the same day the penalty notice was issued, referring the penalty proceeding to the Inspecting Assistant Commissioner under section 274(2) of the Act. It is urged that the Income-tax Officer cannot refer the penalty proceeding to the Inspecting Assistant Commissioner unless he is satisfied that the minimum penalty imposable exceeds the sum of Rs. 1,000. It is contended that in making a reference under section 274(2), the Income-tax Officer acts judicially or quasi-judicially which implies a determination by him of the amount of penalty that may be imposed. Such determination can be made only after the completion of the assessment proceedings and not before that. Section 274(2) provides:

“Not with standing anything contained in clause (iii) of sub-section (1) of section 271, if in a case falling under clause (c) of that sub-section, the minimum penalty imposable exceeds a sum of rupees one thousand, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty.”

7. The contention of the appellant is that the Income-tax Officer has to come to a finding as to the amount of penalty that will be imposed on an assessee and if the minimum amount of penalty imposable exceeds the sum of Rs. 1,000, he shall refer the proceeding to the Inspecting Assistant Commissioner. Section 274(2) does not cast a duty on the Income-tax Officer to determine the exact amount of penalty that may be imposed on an assessee. At the same time, when the jurisdiction of the Income-tax Officer depends on the question whether or not the minimum amount of penalty imposable exceeds Rs. 1,000, he has, of necessity, to consider the same. Such consideration by the Income-tax Officer is not final and conclusive but a prima facie consideration, and depends on the amount of concealed income of the assessee. He need not come to a definite finding as to the actual amount of penalty that may be imposed on the assessee. In our view, it will be sufficient compliance of the provision of section 274(2), if the Income-tax Officer refers a penalty proceeding to the Inspecting Assistant Commissioner on a prima facie consideration about the minimum penalty imposable on the assessee. After the proceeding is referred to by the Income-tax Officer, the Inspecting Assistant Commissioner shall have all the powers for imposition of penalty. All that is necessary for such reference is that the Income-tax Officer should apply his mind as to whether the minimum penalty imposable would exceed the sum of Rs. 1,000. It has been earlier pointed out that the Income-tax Officer added large sums of money and there can be no doubt that the minimum penalty imposable under section 271(1)(iii) would be more than Rs. 1,000. It may be that the Income-tax Officer in making the reference acts quasi-judicially but when the facts and circumstances are such that it is apparent on the face of them that the minimum penalty imposable would exceed Rs. 1,000 it would be unreasonable to hold that the Income-tax Officer did not apply his mind. We are unable to accept the contention of the appellant that, in all cases, the Income-tax Officer has to record a finding about the quantum of penalty that may be imposed on an assessee before he makes a reference under section 274(2).

8. The next point that has been argued on behalf of the appellant is that the penalty notice could not be issued by the Income-tax Officer before the completion of the assessment proceedings. Strong reliance was placed on behalf of the appellant on the observation of the Supreme Court in Angidi Chettiar's case, [1962] 44 ITR 739 (SC) referred to above, that the proceeding to levy penalty has, however, not to be commenced by the Income-tax Officer before the completion of the assessment proceedings. It seems to us that by the said observation, the Supreme Court did not intend to lay down as an abstract proposition of law that the penalty proceeding cannot be initiated by the issue of a notice before the completion of the assessment proceedings. In this connection, we may refer to a later decision of the Supreme Court in D.M Manasvi v. Commissioner of Income-tax, [1972] 86 ITR 557. Khanna J., who delivered the judgment of the court, observed as follows at page 561:

“The fact that notices were issued subsequent to the making of the assessment orders would not, in our opinion, show that there was no satisfaction of the Income-tax Officer during the assessment proceedings that the assessee had concealed the particulars of his income or had furnished incorrect particulars of such income. What is contemplated by clause (1) of section 271 is that the Income-tax Officer or the Appellate Assistant Commissioner should have been satisfied in the course of proceedings under the Act regarding matters mentioned in the clauses of that sub-section. It is not, however, essential that notice to the person proceeded against should have also been issued during the course of the assessment proceedings. Satisfaction in the very nature of things precedes the issue of notice and it would not be correct to equate the satisfaction of the Income-tax Officer or the Appellate Assistant Commissioner with the actual issue of notice. The issue of notice is a consequence of the satisfaction of the Income-tax Officer or the Appellate Assistant Commissioner and it would, in our opinion, be sufficient compliance with the provisions of the statute if the Income-tax Officer or the Appellate Assistant Commissioner is satisfied about the matters referred to in clauses (a) to (c) of sub-section (1) of section 271 during the course of proceedings under the Act even though notice to the person proceeded against in pursuance of that satisfaction is issued subsequently.”

9. Thereafter, Khanna J. referred to the observation made in Angidi Chettiar's case, [1962] 44 ITR 739 (SC) which has been quoted above. It thus appears that the issue of a penalty notice is of little significance but what is important is the satisfaction of the Income-tax Officer before the notice is issued. It is clear from the above observation of Khanna J. that the penalty notice may be issued either before or after the completion of the assessment proceedings, but no such notice should be issued by the Income-tax Officer unless he is satisfied as to the conditions mentioned in clauses (a) to (c) of section 271(1). There is, therefore, no substance in the contention of the appellant that as the penalty notice was issued before the completion of the assessment proceedings, it is illegal and invalid.

10. The appellant has placed reliance on certain subsequent facts which will be stated presently. Against the order of assessment of the Income-tax Officer, the appellant preferred an appeal to the Appellate Assistant Commissioner, who by his order dated February 23, 1972, that is, during the pendency of the rule nisi, deleted the addition of the said sum of Rs. 27,62,346 made by the Income-tax Officer. He, however, upheld the addition of the sum of Rs. 8,000 and Rs. 21,942.24/- on account of alleged payment of commission to Narain and Peekeydee. It has been strenuously urged by Mr. Pronab Pal that the penalty proceeding was started by the impugned notices treating the said sum of Rs. 27,62,346 as the concealed income and when the addition of the said sum has been deleted by the Appellate Assistant Commissioner ‘the penalty proceeding has become infructuous and should be quashed. In support of his contention that the penalty proceeding was started on the basis of the said sum of Rs. 27,62,346 strong reliance has been placed on paragraph 3(c) of the affidavit-in-opposition of the respondents which was sworn by Amalendu Chatterjee, the Income-tax Officer, Central Circle I, Calcutta, who is not the Income-tax Officer, who issued the penalty notice. In paragraph 3(c), it has been stated as follows:

“After persual of the concerned papers the income tax authorities also came to the conclusion that there has been suppression of income on various counts in respect of this carpet backing cloth export business. As the exports had been made actually by Messrs. Becker Gray & Co. (1930) Ltd., in the case of that company the following additions were made:

Rs. 1962-63 Asstt. year. Excess commission to White Lamb Finlay … 11,27,730 Concealed profits retained in U.S.A … 5,16,200 1963-64 Asstt. year. Excess commission to White Lamb Finlay … 19,46,970 Profits retained in U.S.A, under-invoicing, etc, … 15,54,162 Interest on extended credits … 4,86,000 1964-65 Asstt. year: Excess commission to White Lamb Finlay … 25,10,316 Interest on extended credits … 2,52,031 1965-66 Asstt. year. Excess commission to White Lamb Finlay … 27,15,830”

11. It is submitted on behalf of the appellant that the statements in paragraph 3(c) clearly suggest that the penalty proceeding was started by the Income-tax Officer only in regard to the said sum of Rs. 27,62,346 and not on any other amount. Our attention has also been drawn to paragraph 3(i) of the affidavit-in-opposition wherein it has been categorically admitted that the order of the Appellate Assistant Commissioner has been accepted by the department. If the penalty proceeding has been started in respect of the said sum of Rs. 27,62,346 as contended on behalf of the appellant, then it must be beld that, as the Appellate Assistant Commissioner has set aside the addition of the said sum by the Income-tax Officer, the penalty proceeding would no longer be maintainable. But the question is whether the penalty proceeding has been started on the basis that the said sum was the concealed income of the appellant or in respect of which the appellant had furnished inaccurate particulars. It is difficult to place reliance on the statements made in paragraph 3(c) of the affidavit-in-opposition. The said paragraph has been sworn by the said Amalendu Chatterjee as true to his information derived from the records. The records were produced before us by the learned advocate for the respondents, but it does not appear from the records that the Income-tax Officer issued the penalty notice only on the basis of the said sum of Rs. 27,62,346. After perusal of the other paragraphs of the affidavit-in-opposition, it seems to us that the deponent of the same did not mean by the statements made in paragraph 3(c) that the penalty proceeding was started only relating to the said sum as the alleged concealed income of the appellant or in respect of which the appellant had furnished inaccurate particulars. The said paragraph has been inartistically drafted and, in view of the facts stated “above, it cannot be said with definite certainty that the Income-tax Officer started the penalty proceeding only on the basis of the said sum, regard being also had to the fact that he made other additions including the addition of the said sums of Rs. 8,000 and Rs. 21,942.24 which were upheld by the Appellate Assistant Commissioner. In these circumstances, we are unable to accept the said contention of the appellant that the penalty proceeding has become infructuous after the said order of the Appellate Assistant Commissioner.

12. It is next contended on behalf of the appellant that as the particulars about the concealed income of the appellant have not been given in the impugned notices, they are not in conformity with the provisions of section 274(1) of the Act which enjoins that a reasonable opportunity should be given to the assessee of being heard before any penalty is imposed. In other words, it is submitted that for want of particulars the assessee is unable to show cause and, as such, he is deprived of a reasonable opportunity of being heard. This, contention, in our view, is without any substance. Under section 274(1) no order imposing a penalty shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. Section 274(1) does not provide for the issue of any notice, but only requires that the assessee should either be heard or be given a reasonable opportunity of being heard before the imposition of penalty. The penalty has not yet been imposed. The learned judge has directed the respondent-Income-tax Officer to give to the appellant the items of income which the appellant is supposed to have concealed or in respect of which the appellant has deliberately furnished inaccurate particulars, before the Inspecting Assistant Commissioner proceeds with the matter. Mr. B. Pal has assured us that the Income-tax Officer would comply with the said direction of the learned judge. It is also submitted by him that in all cases before the hearing, the assessee is supplied with the particulars. In the absence of any provision in the statute, it is difficult for us to direct the Income-tax Officer to mention the particulars in the penalty notice. At the same time, there is no bar to mentioning the particulars in the notice. All that is contemplated by section 274(1) is that the assessee must be given a reasonable opportunity of being heard. Such an opportunity implies that he should be supplied with the particulars sufficiently before he is heard. That stage has not yet reached and the learned judge, in our opinion, has rightly directed the Income-tax Officer to furnish the necessary particulars to the appellant. In these circumstances, we do not think that there is any substance in the contention of the appellant that as no particulars have been given in the impugned notices, they should be struck down as illegal and invalid. No other point has been argued in this appeal. As all the contentions of the appellant fail, this appeal also fails and it is dismissed, but in view of the facts and circumstances of the case, there will be no order for costs. All interim orders are vacated.

13. F.M.A No. 1079 of 1965.—In this appeal, the facts and the points involved are the same as in the above appeal. For the reasons given above, this appeal is also dismissed without any order for costs. All interim orders are vacated.

Sharma, J.:— I agree.