Law:

Section:

Section 271(1)(a) , read with section 147 of the Income-tax Act, 1961 (corresponding to section 28(1)(a), read with section 34 of the Indian Income-tax Act, 1922) - Penalty - For late filing of return - Assessment year 1959-60 - Whether assessment proceedings must precede penalty proceedings - Held, yes - Whether penalty proceedings under section 28(1)(a) of 1922 Act initiated in respect of default of non-submission of return in original assessment proceedings could be completed even after reassessment was made - Held, yes FACTS On 17-8-1960 notice was served on the assessee for default under section 28(1)(a) of the 1922 Act. Thereafter, on 19-9-1960, assessment was completed under section 23(4) of the 1922 Act and the demand notice was issued. On appeal the AAC reduced the total income. Subsequently notice was issued under section 34(1)(a) of the 1922 Act for reopening the assessment of the said year. The assessee filed return in response to the above notice. On 25-10-1962, the ITO reassessed the income by adding certain sum as business income to the original assessment. Thereafter the ITO levied penalty under section 28(1)(a) of the 1922 Act. On appeal, the AAC upheld the order of the ITO. Before the Tribunal it was urged that assessment having been reopened under section 34(1)(a) of the 1922 Act the ITO could not subsequently penalise for default, if any, in submitting the return to the original assessment proceedings. It was urged that penalty being in the nature of additional tax should have been levied simultaneously with assessment and inasmuch as the assessment order being dated 19-9-1960, was no longer in existence, there could not be any order for levy of penalty. TheTribunal rejected the said contention and upheld the order of ITO. On reference : HELD In the scheme of the Act, the proceedings for imposition of penalty, though emanating from proceedings of assessment, are independent and separate aspects of the proceedings. Under section 28(6) of the 1922 Act it is provided that no penalty shall be imposed without the previous approval of the IAC. Under section 29 of the old Act as well as section 156 of the new Act, notice of demand stipulates…

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