Retrospective penalty computation under section 271(1)(a) applies to pre-1962 assessments completed after 1 April 1962.

For penalty proceedings relating to a pre-1962 assessment completed after 1 April 1962, section 297(2)(g) of the Income-tax Act, 1961 permits initiation and imposition of penalty under the 1961 Act. The retrospective amendment made by section 13 of the Direct Taxes (Amendment) Act, 1974, including the Explanation to section 271, applies to proceedings under section 271(1)(a). Accordingly, the penalty computation is governed by the amended provision rather than the earlier law, and the earlier view tying penalty to the old Act is rendered inapplicable by the statutory fiction created by the amendment.

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Issues: Whether, in a penalty proceeding for delay in filing the return for assessment year 1961-62 completed after 1 April 1962, the quantum of penalty under section 271(1)(a) of the Income-tax Act, 1961 had to be computed with reference to the assessed tax payable on the date of imposition of penalty and whether the amended provision operated retrospectively.

Analysis: The return for assessment year 1961-62 was ultimately filed after a notice under section 148 of the Income-tax Act, 1961, and the assessment was completed under section 143(3) of that Act. Section 297(2)(g) expressly permitted initiation and imposition of penalty under the 1961 Act for assessments for the year ending on 31 March 1962 or earlier years, if completed after 1 April 1962. The retrospective amendment introduced by section 13 of the Direct Taxes (Amendment) Act, 1974, including the Explanation to section 271, therefore applied to all proceedings governed by section 271(1)(a). The earlier view that penalty had to be linked to the old Act was held inapplicable in light of the statutory amendment and the legal fiction created by it.

Conclusion: The question was answered in the negative and in favour of the Revenue.

Ratio Decidendi: Where penalty proceedings for a pre-1962 assessment are validly initiated and completed under section 271(1)(a) read with section 297(2)(g) of the Income-tax Act, 1961, the amended provision, including its retrospective Explanation, governs the computation of penalty.

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