Penalty for prior return-default can be imposed during continuation of assessment proceedings under reopening notice.

Where an assessee failed to furnish a return under the general notice, the assessment proceedings under Section 34 were treated as a continuation of the same proceedings begun by that notice, not as a separate and independent process. The phrase "in the course of any proceedings" in Section 28 was read broadly enough to cover a penalty imposed during Section 34 proceedings for the earlier default under Section 22(1). The argument that penalty could be confined only to defaults after the Section 34 notice was rejected, and the contention that that notice extended time under the proviso to Section 22(1) was not accepted.

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Issues: Whether, where an assessee failed to furnish a return under the general notice, penalty under Section 28(1)(a) could be levied in proceedings initiated under Section 34 read with Section 22(2) for the same assessment period.

Analysis: The default under Section 22(1) was held not to lapse merely because no notice under Section 22(2) had been issued within the assessment year. Proceedings under Section 34 were treated as relating to the same assessment proceedings begun by the general notice, and not as a wholly distinct and independent set of proceedings. The expression in Section 28 referring to satisfaction of the Income-tax Officer "in the course of any proceedings" was read to include proceedings under Section 34 concerning the same assessee and the same assessment period. The attempt to confine penalty only to defaults committed after the Section 34 notice was rejected. The contention that the Section 34 notice operated as an extension of time under the proviso to Section 22(1) was not entertained.

Conclusion: Penalty under Section 28(1)(a) was validly leviable in the Section 34 proceedings for the earlier failure to furnish the return under Section 22(1).

Ratio Decidendi: For the same assessee and assessment period, proceedings under Section 34 do not break the continuity of assessment proceedings begun by the general notice under Section 22(1), and a penalty under Section 28(1)(a) may be imposed in the course of such proceedings for a prior default in furnishing the return.

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