Law:

Section:

2007] 291 ITR 444 [2007] 164 TAXMAN 203 (KER.) HIGH COURT OF KERALA T.K. Shahal, H. Musaliar v. Commissioner of Income-tax, Trivandrum* C.N. RAMACHANDRAN NAIR, J. OP. NOS 12139, 12153 & 12259 OF 2001 MARCH 6, 2007 Section 28(1)(c) of the Indian Income-tax Act, 1922 - Penalty - For concealment of income - Assessment years 1950-51 to 1952-53 - As regards payment of income-tax for relevant assessment years, assessee had entered into settlement with department whereunder it was agreed that on payment of sum calculated under settlement, department would not levy any penalty or launch prosecution - However, assessee did not remit tax in terms of said settlement and, accordingly, department, after conclusively establishing escapement of income on basis of additional income conceded by assessee in settlement proceedings, imposed penalty under section 41(1)(c) of Travancore Income-tax Act and under sections 28(1)(c) and 18A(9) - Assessee's case was that it was against settlement arrived at between assessee and department whereunder department agreed not to levy any penalty or launch prosecution; and assessee was sick and bed-ridden and, consequently, he was not in a position to receive notice and effectively represent against levy of penalty; there was an inordinate delay in completion of penalty proceedings for relevant assessment years and, therefore, levy of penalty was arbitrary, and barred by limitation - Whether since assessee himself failed to comply with terms of settlement, department could not be bound by same - Held, yes - Whether since department, before levying penalty, had issued detailed notice and had given opportunity to assessee, said levy could not be challenged on ground of violation of natural justice - Held, yes - Whether since no time-bar is provided under Travancore Act or under 1922 Act for levy of penalty for concealment of income, and further, in view of fact that time taken for completion of penalty proceedings was not so unreasonable so as to affect its validity, levy of penalty could not be challenged on ground of limitation - Held, yes - Whether in view of massive concealment of income by assessee, which was conceded by assessee…

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