Penalty for late filing must follow the 1961 Act where assessment ended after 1 April 1962, subject to limitation.

For assessment years ending on 31 March 1962 or earlier, where assessment was completed on or after 1 April 1962, penalty proceedings had to be taken under the Income-tax Act, 1961 rather than the repealed Income-tax Act, 1922. Section 297(2)(g) made the completion date of assessment decisive for the applicable penalty regime, and penalty was treated as an independent proceeding rather than a mere ation of assessment. On that basis, penalty under section 271(1)(a) of the 1961 Act was the proper provision, but the orders could not survive because the limitation period under section 275(a)(i) had already expired.

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Issues: Whether penalty for late filing of returns relating to assessment years ending on 31 March 1962 or earlier, where assessment was completed after 1 April 1962, was leviable under the repealed Income-tax Act, 1922, or only under the Income-tax Act, 1961, and whether the penalties imposed under the old Act were barred by limitation.

Analysis: The governing provision was section 297(2)(g) of the Income-tax Act, 1961, which fixes the completion of assessment as the decisive date for penalty proceedings. Where an assessment for an earlier year is completed on or after 1 April 1962, the proceedings for imposition of penalty have to be initiated and completed under the Income-tax Act, 1961. The Court relied on the principle that penalty is not a mere continuation of assessment proceedings and that the crucial date for penalty is the date of assessment completion. Since the assessments in these appeals were completed after 1 April 1962, the penalty could only have been initiated under section 271(1)(a) of the Income-tax Act, 1961. As the period prescribed by section 275(a)(i) had already expired, the penalty orders could not stand.

Conclusion: The penalties levied under section 28(1)(a) of the Income-tax Act, 1922 were unsustainable and were cancelled.

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