Finality of dropped penalty proceedings barred fresh initiation on the same facts for the same assessment year.

Fresh penalty proceedings under section 271(1)(c) were not permissible for the same assessment year after earlier proceedings had been dropped on the basis of voluntary disclosure and that order had attained finality. The Court held that, once the competent authority had exercised its discretion and closed the original penalty matter on identical facts, the Revenue could not reopen the issue years later by initiating a second round of proceedings. The issue was answered in favour of the assessee and against the Revenue.

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Issues: Whether fresh penalty proceedings could be initiated under section 271(1)(c) of the Income-tax Act, 1961 for the same assessment year after the earlier penalty proceedings had been dropped.

Analysis: The discretion conferred by section 271(1)(c) is to initiate penalty proceedings where warranted, but once the competent authority had directed that the earlier proceedings be dropped on the footing that the assessee's disclosure was voluntary, and that order had become final, the Revenue could not reopen the matter for the same assessment year by commencing fresh penalty proceedings years later. The finality of the earlier decision and the proper exercise of discretion barred a second initiation on identical facts.

Conclusion: Fresh penalty proceedings for the same assessment year were not permissible; the question was answered in favour of the assessee and against the Revenue.

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