Transitional penalty jurisdiction under the Income-tax Act upheld for late returns filed in earlier assessment years.

Penalty for late filing of returns for assessment years governed by the Indian Income-tax Act, 1922 could be imposed under section 271(1)(a) of the Income-tax Act, 1961 where the assessment was completed on or after 1 April 1962. Section 297(2)(g) of the 1961 Act was treated as a transitional provision enabling initiation and completion of penalty proceedings under the 1961 Act for years ending on or before 31 March 1962. The default under section 22(1) of the 1922 Act did not bar recourse to the 1961 penalty provision, so the penalty was held lawfully imposable.

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Issues: Whether penalty for delay in filing returns for assessment years governed by the Indian Income-tax Act, 1922 could be imposed under section 271(1)(a) of the Income-tax Act, 1961 by reason of section 297(2)(g) of the 1961 Act.

Analysis: The returns for the relevant assessment years were filed only after 1 April 1962, and the assessment proceedings had not been completed before that date. Section 297(2)(g) of the Income-tax Act, 1961 authorises initiation and imposition of penalty under the 1961 Act in respect of assessments for the year ending 31 March 1962 or earlier years where the assessment is completed on or after 1 April 1962. The transitional provision therefore governs the penalty jurisdiction, and the default committed under section 22(1) of the 1922 Act does not prevent recourse to section 271(1)(a) of the 1961 Act.

Conclusion: The penalty was lawfully imposable under section 271(1)(a) of the Income-tax Act, 1961, and the question was answered in the negative, against the assessee and in favour of the Revenue.

Ratio Decidendi: Under the transitional scheme in section 297(2)(g) of the Income-tax Act, 1961, penalty proceedings for assessment years ending on or before 31 March 1962 may be initiated and completed under section 271 of the 1961 Act if the assessment is completed on or after 1 April 1962.

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