Regular assessment under income tax law includes a first assessment made through section 34, sustaining interest liability.

For purposes of interest under section 18A(6) of the Indian Income-tax Act, 1922, a first assessment completed through section 34 was treated as a regular assessment. The court reasoned that section 23 supplies the concept of regular assessment, while section 34 is only a procedural route for assessing escaped income or a non-filer; using section 34 does not convert an initial assessment into a reassessment. The earlier precedent relied on was confined to reassessment after an original section 23 assessment. Accordingly, the challenge to the levy of penal interest failed and the demand was sustained.

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Issues: Whether an assessment made for the first time by resort to section 34 of the Indian Income-tax Act, 1922, is a "regular assessment" for the purpose of levying interest under section 18A(6).

Analysis: Section 18A(6) fastens liability to simple interest with reference to the tax determined on the basis of the regular assessment, while section 23B uses the expression "regular assessment" in contradistinction to a provisional assessment. The scheme of the Act shows that a regular assessment is an assessment made under section 23, and section 34 is only a procedural provision enabling assessment where a return has not been filed or income has escaped assessment. When section 34 is invoked for the first assessment of a new assessee, the assessment remains the initial assessment under section 23 and does not become a reassessment merely because the machinery of section 34 was used. The earlier decision relied upon was confined to a case of reassessment after an original assessment under section 23 and did not exclude the levy of interest where the first assessment itself was completed through section 34.

Conclusion: An initial assessment completed through section 34 is a regular assessment, and interest under section 18A(6) is validly leviable. The contention against the levy fails and is rejected.

Final Conclusion: The petitions challenging the levy of penal interest did not succeed, and the impugned demand was sustained.

Ratio Decidendi: For the purpose of section 18A(6), "regular assessment" means the first assessment made under section 23, even if section 34 is employed as the procedural route for making that assessment; it is not confined to assessments made without resort to section 34.

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