Implied waiver of penalty proceedings barred later penalty action after reassessment under the Income-tax Act.

Penalty for delayed filing under section 271(1)(a) was held unsustainable where no penalty proceedings were initiated when the assessment was first completed under section 143(1). The omission at the initial assessment stage was treated as an implied waiver of penal action, and that waiver could not be displaced merely because the assessment was later reopened and completed under section 143(3). On that basis, the later initiation of penalty proceedings was found unjustified and the penalty was cancelled.

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Issues: Whether penalty under section 271(1)(a) of the Income-tax Act, 1961 could be levied when no penalty proceedings were initiated at the stage of assessment under section 143(1) and the assessment was later reopened and completed under section 143(3).

Analysis: The return was filed beyond the due date and penalty was imposed for delayed filing. However, no penalty proceedings were initiated when the assessment was first completed under section 143(1). On the facts, this omission was treated as an implied waiver of penal action. Once such waiver was inferred, there was no justification for initiating penalty proceedings at the later stage of assessment under section 143(3).

Conclusion: Penalty under section 271(1)(a) was not sustainable and was cancelled.

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