Penalty proceedings under the Income-tax Act, 1961 apply to post-1962 assessments, with no split between the two enactments.

Penalty proceedings linked to an assessment year ending on 31 March 1962, where the assessment was completed after 1 April 1962, were treated as governed by section 271 of the Income-tax Act, 1961. The analysis rejects the argument that section 297(2)(g) preserved the penalty quantum under the 1922 Act, relying on the Supreme Court rulings in Jain Brothers and Singh Engineering Works. Those decisions establish that penalty proceedings under section 297(2)(g) are to be applied under the 1961 Act and that its penalty provisions operate mutatis mutandis to such proceedings. There was no basis for splitting the penalty between the two Acts, so the 1961 Act applied.

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Issues: Whether penalty proceedings for an assessment year ending on 31 March 1962 and completed after 1 April 1962 are governed by section 271 of the Income-tax Act, 1961, and whether the penalty law can be treated as retrospective in the absence of express words.

Analysis: The reference concerned the applicability of the penalty provisions of the 1961 Act to a default arising in relation to the assessment year 1961-62, where the assessment was completed after 1 April 1962. The contention that section 297(2)(g) preserved the quantum of penalty under the 1922 Act was rejected in light of the binding Supreme Court decisions in Jain Brothers and Singh Engineering Works, which held that proceedings for penalty initiated under section 297(2)(g) are governed by section 271 of the 1961 Act and that the provisions of the new Act apply mutatis mutandis to such proceedings. The Court held that there was no warrant for splitting the penalty between the two Acts.

Conclusion: The penalty provisions of the Income-tax Act, 1961 applied to the case, and the questions were answered in the affirmative in favour of the Revenue and against the assessee.

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