Penalty under section 271B may be initiated after assessment, if issued within the limitation period.

Penalty proceedings under section 271B are not required to be initiated simultaneously with assessment proceedings, because the provision does not make contemporaneous initiation a condition for valid action. The distinction applied in cases under section 271(1), where satisfaction must arise in the course of proceedings, was held not to govern section 271B. A notice for penalty may therefore follow completion of assessment if issued within the limitation period under section 275. On the facts, initiation was timely and the assessee's challenge failed.

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Issues: Whether penalty proceedings under section 271B of the Income-tax Act, 1961 could be initiated after completion of assessment proceedings.

Analysis: Section 271B is an enabling penalty provision for failure to get accounts audited or furnish the audit report as required by section 44AB. Its language does not make initiation of penalty proceedings dependent on simultaneous pendency of assessment proceedings. The distinction drawn in cases dealing with section 271(1), where satisfaction must be reached in the course of proceedings, was held not to control section 271B. The provision operates differently, and the notice for penalty may validly follow assessment so long as it is within the limitation period under section 275. On the facts, proceedings were initiated within the prescribed period.

Conclusion: Penalty proceedings under section 271B could be initiated after completion of assessment proceedings, and the challenge by the assessee failed.

Ratio Decidendi: Where the text of a penalty provision does not require contemporaneous initiation with assessment proceedings, the Assessing Officer may initiate penalty action after assessment, provided the action is within the statutory limitation period.

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