M/s. GUDUTHUR BROS. vs THE INCOME-TAX OFFICER, SPECIAL CIRCLE, BANGALORE.

The Supreme Court held that the imposition of penalty under Section 28(1)(a) of the Indian Income-tax Act, 1922, was invalid as the Income-tax Officer failed to provide the appellants with an opportunity to be heard as mandated by Section 28(3). The Court ruled that the Appellate Assistant Commissioner's order to set aside the penalty was valid, and the Income-tax Officer was permitted to continue proceedings from the point of illegality without needing an express remand. The earlier case of Jos Chacko Poothokaran v. Income-tax Officer was not applied in this context.