Penalty proceedings after 1 April 1962 must follow the 1961 Act, and jurisdictional defects invalidate the order.

For an assessment year governed by the old Act but completed on or after 1 April 1962, penalty proceedings had to be initiated under the Income-tax Act, 1961, because the critical date was the completion of assessment, not the assessment year to which it related. The document also states that the penalty notice and order were invalid where the officer lacked jurisdiction under section 274(2), as the relevant power vested in a higher authority on the facts. The penalty proceedings were therefore fundamentally defective and the assessee succeeded on the jurisdictional objection.

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Issues: Whether the penalty proceedings for an assessment year governed by the old Act, but completed after 1 April 1962, had to be initiated under the Income-tax Act, 1961, and whether the penalty order was invalid for want of jurisdiction under the relevant statutory scheme.

Analysis: For assessment years ending on or before 31 March 1962, where the assessment was completed on or after 1 April 1962, the saving provision required penalty proceedings to be taken under the Income-tax Act, 1961. The critical date for penalty was the date of completion of assessment, not the earlier year to which the assessment related. On the facts, however, the officer who issued notice and proceeded to impose penalty lacked jurisdiction under section 274(2) of the Income-tax Act, 1961, because that power vested in the higher authority in the circumstances of the case. The penalty proceedings were therefore fundamentally defective.

Conclusion: The penalty order was invalid, and the assessee succeeded on the jurisdictional issue.

Ratio Decidendi: Where assessment is completed after 1 April 1962 in respect of an earlier assessment year, penalty proceedings must conform to the Income-tax Act, 1961, and an order passed by an lacking statutory jurisdiction is void.

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