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Issues:
1. Relevance of findings in assessment proceedings in penalty proceedings. 2. Whether findings in assessment proceedings operate as res judicata in penalty proceedings. Analysis: 1. The first issue pertains to the relevance of findings in assessment proceedings in penalty proceedings. The court held that the findings in the assessment proceedings are indeed relevant for deciding penalty proceedings. The Income-tax Officer is permitted to consider all materials available during assessment proceedings when dealing with penalty proceedings under Section 28. The court emphasized that there is no legal provision rendering such material inadmissible in penalty proceedings, affirming the relevance of assessment findings in penalty determination. 2. The second issue revolves around whether findings in assessment proceedings operate as res judicata in penalty proceedings. The court clarified that the principle of res judicata does not apply to proceedings before the Income-tax Officer, as it is only applicable to disputes adjudicated by a court involving two parties. The court referenced a previous case to support this stance and highlighted that the considerations for assessment and penalty imposition are distinct. In assessment proceedings, the focus is on determining the total income, whereas penalty proceedings require establishing deliberate concealment or furnishing inaccurate particulars of income. As the facts necessary for each determination differ significantly, findings in assessment proceedings cannot serve as res judicata in penalty proceedings. In conclusion, the court ruled in favor of the assessee on the relevance of assessment findings in penalty proceedings but sided with the Department regarding the application of res judicata. Consequently, the court made no order as to costs and answered the reference accordingly.
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