Regular assessment governs advance tax penalty initiation, and a later limitation amendment cannot revive an already expired penalty period.

For advance tax penalty under section 273, "regular assessment" refers to the initial assessment under the Act, so reassessment under section 147 could not provide a fresh basis for initiating penalty proceedings on the facts discussed. The notice issued during reassessment was therefore treated as incompetent, and the assessee succeeded on this issue. The article also notes that an amendment to section 275 extending limitation was procedural but could not revive a penalty period already expired under the unamended provision. As limitation was computed from the original assessment, the later amendment did not save the penalty order, and the assessee succeeded on the limitation issue as well.

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Issues: (i) Whether penalty proceedings under section 273 of the Income-tax Act, 1961 could be validly initiated only in the course of the original regular assessment and not on reassessment under section 147. (ii) Whether the amendment to section 275 of the Income-tax Act, 1961 extending the period of limitation applied to the penalty order passed after the amendment came into force.

Issue (i): Whether penalty proceedings under section 273 of the Income-tax Act, 1961 could be validly initiated only in the course of the original regular assessment and not on reassessment under section 147.

Analysis: The expression "regular assessment" in section 273 was held to mean the first or initial assessment made under the Act for the purposes of advance tax provisions. A reassessment under section 147, when made after the original assessment, did not furnish a fresh basis for initiating penalty proceedings under section 273 in the facts of the case. The satisfaction necessary for invoking the penalty had already arisen in the original assessment proceedings, and the later notice issued during reassessment was treated as incompetent.

Conclusion: The reassessment proceedings could not validly support the fresh initiation of penalty proceedings under section 273; the assessee succeeded on this issue.

Issue (ii): Whether the amendment to section 275 of the Income-tax Act, 1961 extending the period of limitation applied to the penalty order passed after the amendment came into force.

Analysis: The amendment to section 275 was procedural, but it could not revive a limitation period that had already expired under the unamended provision. Since the relevant limitation was to be reckoned from the original assessment, the department's right to pass the penalty order had ended before the amendment became effective. The later amendment therefore did not enlarge the time available in the present case.

Conclusion: The amended limitation provision did not apply to save the penalty order; the assessee succeeded on this issue as well.

Final Conclusion: The reference was answered by holding that the penalty order was barred by limitation and the reassessment notice could not sustain the penalty proceedings under section 273, with the result that the assessee's position was upheld.

Ratio Decidendi: For the purposes of advance tax penalty under section 273, "regular assessment" refers to the initial assessment, and a procedural amendment extending limitation cannot revive a penalty proceeding once the earlier limitation has already expired.

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