Transitional penalty provisions under the Income-tax Act, 1961 governed delayed return cases where assessment was completed after commencement.

Where an assessment year ended before 31 March 1962 but the assessment was completed after 1 April 1962, penalty proceedings for delay in filing returns were governed by section 271 of the Income-tax Act, 1961, read with section 297(2)(g), rather than by the Indian Income-tax Act, 1922. On that transitional construction, the penalty had to be initiated and completed under the 1961 Act, and the Tribunal's contrary view was rejected. The reduced penalties sustained on the Tribunal's basis were therefore not maintainable, and the reference was answered against the assessee and in favour of the Revenue.

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Issues: Whether penalty for delay in filing returns relating to assessment years ending before 31 March 1962 but completed after 1 April 1962 was to be determined under the Income-tax Act, 1961, and whether the penalty could be sustained even though the amount imposed was below the minimum prescribed under that Act.

Analysis: The assessment years in question ended before 31 March 1962, but the assessments were completed after 1 April 1962. The governing transitional scheme required section 271 of the Income-tax Act, 1961, to be applied in such cases, read with section 297(2)(g) of that Act. On that construction, the penalty proceedings had to be initiated and completed under the 1961 Act, not under the Indian Income-tax Act, 1922. The reduced penalties fixed by the appellate authority were therefore not sustainable on the basis adopted by the Tribunal, and the reference was answered against the assessee.

Conclusion: The questions were answered against the assessee and in favour of the Revenue.

Final Conclusion: The Tribunal's view was rejected, and the penalty liability was held to fall to be determined under the transitional provisions of the Income-tax Act, 1961.

Ratio Decidendi: Where an assessment year ended before 31 March 1962 but the assessment was completed after 1 April 1962, penalty proceedings are governed by section 271 of the Income-tax Act, 1961, read with the transitional provision in section 297(2)(g) of that Act.

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