K SADIANNA SHETTY Vs. INCOME TAX OFFICER SECOND ADDL

JUDGEMENT

(1.) THE only question raised in this petition is whether or not an order of the Income-tax Officer levying penalty on a dissolved firm is valid. THE facts necessary to be stated for the purpose of understanding the position in this matter may be shortly stated as follows :

(2.) AFTER making his order of assessment dated 31st May, 1952, as hereinbefore mentioned which was served on the assessee on 12th June, 1952, the Income-tax Officer had also issued a notice under section 28 of the Income-tax Act calling upon the firm to show cause why a penalty should not be levied under the said section for concealing the particulars of its income. The said notice was served on 13th June, 1952, and on 22nd July, 1952, the assessee firm sent its objection. Thereafter on 6th November, 1955, the assessee firms made a request to the Income-tax Officer for postponing the penalty proceedings till its appeal was heard. No reply was sent to the said letter. On 18th November, 1953, the said firms was dissolved. On 15th September, 1955, a further notice was issued by the Income-tax Officer addressed to the firms calling upon it to support its explanation. Thereafter the matter stood adjourned from time to time and ultimately on 9th March, 1956, the Income-tax Officer imposed a penalty of Rs. 25,000. The said penalty was imposed on the firm but it was adjusted against the the sum of Rs. 13,175-3-0 being the total of the several sums due to the partners and the balance of Rs. 11,824-7-0 was ordered to be paid on or before 30th March, 1956. Thereafter on 16th March, 1957, a notice of demand under section 29 of the Indian Income-tax Act, 1922, was issued. The said notice was addressed as follows :

(3.) SECTION 3 provides as follows :