Reassessment proceedings can support concealment penalty where the original return involved suppression for the same assessment year.

Penalty under section 271(1)(c) may be levied in valid reassessment proceedings for concealment committed in the original assessment, because reassessment is treated as part of the same integrated assessment process for the relevant year. The provision operates where the authority is satisfied, in the course of proceedings under the Act, that income was concealed or inaccurate particulars were furnished, and the fact that the concealment arose earlier does not bar penalty once reassessment is lawfully initiated. The earlier view denying penalty in reassessment for an original default was described as unsound, and the approved principle is that penalty may follow any ground available under the penalty provision for that assessment period.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 could be imposed in reassessment proceedings under section 148 for concealment committed in the original assessment proceedings under the Indian Income-tax Act, 1922.

Analysis: The provision authorises penalty where the authority is satisfied, in the course of proceedings under the Act, that income was concealed or inaccurate particulars were furnished. Proceedings under reassessment provisions may be distinct from the original assessment, but they relate to the same assessee and the same assessment year and are supplementary to the original assessment. A reassessment under section 34 of the 1922 Act, corresponding to sections 147 and 148 of the 1961 Act, is part of the same integrated assessment process for bringing escaped income to tax. The earlier contrary view that penalty could not be imposed in reassessment proceedings for a default committed in the original return was held to be unsound. The ratio of the approved authorities was that once reassessment proceedings for the same period are validly taken, penalty may be levied on any ground available under the penalty provision, even if the concealment occurred earlier.

Conclusion: Penalty under section 271(1)(c) could validly be imposed during reassessment proceedings in respect of concealment committed in the original assessment proceedings. The question was answered in the negative against the assessee and in favour of the Revenue.

Ratio Decidendi: Reassessment proceedings for the same assessment year are an integral part of the assessment process, and penalty for concealment may be imposed in such proceedings even when the concealment occurred in the original assessment.

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