Penalty under section 273(a) cannot rest on reassessment proceedings, because reassessment is not a regular assessment under the Act.

Penalty under section 273(a) was treated as unsustainable because reassessment under sections 147 and 148 is distinct from a regular assessment under section 2(40), which is confined to assessments made under sections 143 or 144. The statutory satisfaction required for penalty proceedings under section 273 must arise in connection with a regular assessment, and that condition was not met when the proceedings were initiated and concluded in reassessment. The Revenue's challenge therefore failed, and the penalty could not be validly imposed on the basis of the reassessment proceedings.

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Issues: Whether penalty under section 273(a) of the Income-tax Act, 1961 could be levied when the proceedings were initiated and concluded in the course of reassessment under sections 147(b) and 148, and whether such reassessment constituted a "regular assessment" within section 2(40).

Analysis: Section 2(40) defines "regular assessment" as an assessment made under sections 143 or 144. Reassessment under section 147 read with section 148 is distinct from a regular assessment and does not fall within that definition. Since section 273 can operate only where the Income-tax Officer forms the requisite satisfaction in proceedings connected with a regular assessment, initiation of penalty proceedings in the course of reassessment does not satisfy the statutory condition. On that basis, penalty under section 273(a) was held not to be sustainable.

Conclusion: Penalty under section 273(a) could not be validly imposed on the basis of reassessment proceedings, and the Revenue's appeal failed.

Final Conclusion: The reassessment proceedings were held not to be regular assessment proceedings for the purpose of section 273, so the penalty could not stand.

Ratio Decidendi: Penalty under section 273 can be levied only when the statutory satisfaction is reached in proceedings connected with a regular assessment under sections 143 or 144, and reassessment under sections 147 and 148 does not satisfy that condition.

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