Penalty base under section 271(1)(a) excludes tax paid on provisional assessment when computing assessed tax.

For penalty under section 271(1)(a), tax paid pursuant to a provisional assessment under section 141 was not deductible from the assessed tax when computing the penalty base. The retrospective amendment required penalty to be calculated with reference to assessed tax, and the Explanation confined deductions to tax deducted at source under Chapter XVII-B and advance tax under Chapter XVII-C. Tax paid on provisional assessment was treated as tax paid on assessment, but it did not fall within either permitted deduction. The question was answered against the assessee.

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Issues: Whether, for the purpose of penalty under section 271(1)(a), tax paid pursuant to a provisional assessment under section 141 is to be deducted from the assessed tax while computing the amount on which penalty is leviable.

Analysis: The penalty provision, as retrospectively amended, required computation of penalty with reference to the assessed tax, and the accompanying Explanation defined assessed tax as tax reduced only by tax deducted at source under Chapter XVII-B or advance tax paid under Chapter XVII-C. Tax paid on a provisional assessment is a tax paid on assessment and does not fall within either of those two deductions. The retrospective amendment had to be applied while answering the reference.

Conclusion: The tax paid under provisional assessment could not be deducted in computing the penalty base under section 271(1)(a), and the answer was against the assessee.

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