Reassessment-Based Penalty Computation Upheld for Failure to File Return After Valid Reopening Notice

On valid reopening under section 148, reassessment is treated as an assessment for consequential purposes, so failure to furnish the return within the time allowed attracts penalty under section 271(1)(a) unless reasonable cause is shown. The notice under section 148 was properly issued and served, the assessee did not comply within time, and no reasonable cause for the default was established. For quantification, the penalty was held referable to the tax on the assessed income determined in reassessment, not confined to the income alleged to have escaped assessment. The levy was therefore upheld.

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Issues: Whether penalty under section 271(1)(a) was leviable for failure to furnish the return in response to notice under section 148, and whether the penalty had to be computed on the assessed income or only on the escaped income.

Analysis: Once valid reassessment proceedings were initiated, the completed assessment stood reopened and the assessment made pursuant thereto was to be treated as an assessment for all consequential purposes, since assessment includes reassessment. The notice under section 148 was found to have been properly issued and served, and the assessee failed to file the return within the time required by that notice. No reasonable cause was shown for the default. The contention based on section 139(8) was not accepted in the light of the substituted provision and the concession made. For quantification, the penalty was held to be referable to the tax on the assessed income determined in the reassessment and not confined to the income alleged to have escaped assessment.

Conclusion: Penalty under section 271(1)(a) was exigible and the levy was upheld in favour of the Revenue.

Ratio Decidendi: On valid reopening of an assessment, reassessment is treated as an assessment for consequential penal liability, and penalty for failure to comply with notice under section 148 is to be computed on the assessed income for the reassessment period.

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