Saving clause under the Income-tax Act, 1961 permits penalty proceedings for pre-1962 assessments completed after the new Act began.

Section 297(2)(g) of the Income-tax Act, 1961 preserves the power to initiate and impose penalty where the assessment relates to a year ending on or before 31 March 1962 and the assessment is completed on or after 1 April 1962. On that construction, penalty proceedings under section 271 read with section 274 were validly available even though the assessment had arisen under the repealed Income-tax Act, 1922. The reference to section 271(1) did not exclude such cases because the saving clause specifically authorises action under the 1961 Act for the protected category of assessments.

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Issues: Whether, in respect of an assessment for 1961-62 completed after 1 April 1962 under the Indian Income-tax Act, 1922, penalty proceedings could validly be initiated and concluded under section 271 read with section 274 of the Income-tax Act, 1961.

Analysis: Section 297(2)(g) of the Income-tax Act, 1961 expressly preserves the power to initiate and impose penalty in respect of assessments for the year ending on 31 March 1962 or any earlier year where the assessment is completed on or after 1 April 1962. The assessment year in question fell within that category and the assessment was completed after the commencement of the 1961 Act. The reference to section 271(1) being confined to proceedings under that Act did not assist the assessee, because the saving clause in section 297(2)(g) authorises penalty under the 1961 Act notwithstanding that the assessment proceedings had arisen under the repealed Act.

Conclusion: Penalty proceedings were validly initiated and concluded under section 271 of the Income-tax Act, 1961, in favour of the Revenue.

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